Analyst Conference Summary
Adjusted (non-GAAP) EPS was given as $1.14, up 2% from $1.12 in Q2 2007. Adjusted net income was $1.235 billion, down from $1.265 billion year-earlier.
Cash and equivalents ended at $8.5 billion, debt at $11.2 billion. Capital expenditures were $165 million. $1.5 billion was spent on repurchasing shares.
Cost of sales was $515 million; R&D expense $809 million; selling, general and administrative expense $904 million; amortization $73 million; other costs (mainly amortization of acquisitions) $284 million. total operating expenses were $2.585 billion. Operating income was $1.18 billion. Income tax provision $247 million. Non-GAAP expenses were $400 million less, leaving adjusted operating income of $1.579 billion.
Enbrel sequential revenue decline was due to unusual inventory levels in Q1; review for expansion to pediatric psoriasis continues. Vectibix growth will be dependent on label expansion. New competition is emerging for ESAs in Europe, but so far are mainly taking shares from competitors, not Aranesp.
Continuing to work with FDA to complete review of Nplate.
Denosumab Phase 3 study enrollments are complete except for one. The recent Phase 3 results met all primary and secondary endpoints, showed a statistically significant reduction of vertebral fractures and new non-vertebral and hip fractures. Adverse reactions were similar to those associated with placebos. Denosumab has been shown to be the most potent of the drugs. The results of the Phase 3 study for fractures associated with prostate cancer were also positive.
In the 2nd half of 2008 Phase II clinical results are expected fro AMG 223 for hyperphophatemia in ESRD and AMG 317 for asthma.
How are you thinking about upcoming denosumab trials? Phase II skeletal related events studies showed Denosumab is more effective in elevating bone mineral density than alendronate. So we are optimistic about what the data set will be. The fact that the safety profile was so balanced was extremely encouraging.
Will you partner denosumab? Will assess our options. The data being so good would make it easier to launch it ourselves.
Industry leading R&D levels versus managing costs? There is a tradeoff. We don't spend a certain percent on R&D. Right now we see many opportunities to invest in our pipeline. Post-approval trials will also add to R&D expense. There are opportunities to do R&D more efficiently.
PMO is a large and underserved market. We have an experienced commercial team. 80% of physicians feel a need for a new therapy because current therapies are usually dropped within a year; tolerability is a major issue. Believes will be a first-line therapy.
Denosumab pricing? Early to say, but we will be competitive and we will be fair.
AMG 785? We love this product, but there is still a long way to go and we are doing additional studies to see how to move foreward with that agent.
Revenue guidance includes lower Aranesp revenues? Yes.
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Copyright 2008 William P. Meyers