U.S. Markets close in 42 mins

Amgen's Management Presents at 2013 Citi Biotech Conference - (Transcript)

Amgen Inc. (AMGN) 2013 Citi Biotech Conference - (Transcript) September 4, 2013 2:00 PM ET


Scott Foraker - VP and General Manager of Biosimilars, Amgen

Tom Wintner - Associate, Edwards, Wildman & Palmer


Yaron Werber - Citi

Liav Abraham - Specialty Pharma and Generic Analyst, Citi

Yaron Werber - Citi

Thanks everybody and welcome once again to the 8th Annual Citi Biotech Conference here in Boston. It's really a great pleasure to move on to very much a hot topic of biosimilars and really a very distinguished panel here with us to talk about what are the challenges and opportunities for both branded and biosimilar drug makers.

Let me introduce, Liav Abraham, all the way on the left. You all know is the Citi Specialty Pharma and Generic Analyst. Liav is going to co-moderate the panel with me. And I would like to introduce Scott Foraker, who is the Vice President and General Manager of Biosimilars at Amgen. He is right here in the middle.

To my immediate left is Tom Wintner, who is an associate at Edwards, Wildman & Palmer, which is a law firm here in Boston and there is not a ton of attorney so far, who has really written extensively about biosimilars because this is a very new area as you can imagine and Tom actually has done quite a lot of work and I think this is really going to be one of the focus for his career.

And then to our left is Michael [Weiss], who is Senior Consultant at Define Health, which is a strategy management consulting that’s specifically focused on biopharma. So everybody, thanks so much for coming. We really appreciate it.

Scott, lets maybe start with you because Amgen is in very interest position that you are both kind of a defender of your branded product, but at the same time you guys really have a lot of expertise in-house, many [stats] and a partnership obviously with (inaudible) on biosimilars.

So you have kind of a lot that you can share with us. So one, let’s discuss some of the things that we’ve seen so far is companies in the space like Teva, like Biogen and Samsung, they’ve had some setbacks at Rituxan and [Merck] is snagged and both Aranesp and Enbrel and as a result Merck is now partners with the [three] what’s known as Samsung Bioepis which is Biogen, Samsung and Merck partnership. What are some of the challenges that are facing biosimilars were trying to come to market, technological, resource capability, regulatory.

Scott Foraker

Thanks Yaron. So I would characterize the problems or issues or challenges really in two categories. One, technical and the other is capital. So let’s start with capital. So just to get in to this business, very capital intensive business which is going to be play some limit on those that can play, and I am talking about the developed markets primarily the U.S. and the EU where the regulatory bar will be high, the showing of biosimilarity requirement pie, and so the technical requirements are going to be very, very challenging to show that you can have a highly similar drug.

Of course the best you can do with the biosimilar unlike a small molecule generic product is to show that it’s similar, and how similar, similar enough is a great question that regulators are being challenged with. We are doing our best to dial with in similarity as much as possible and I think we are doing a pretty good job. But the fact of the matter is that it’s been difficult to on a 100 or more quality attributes to dial in biosimilarity and so that’s part of the technical challenge.

Fortunately, we at Amgen have all sorts of capabilities that we can tap into having done biologics for 30 years. All the way from developing the molecule, manufacturing, having an existing commercial infrastructure, and so forth. So we are in a very privileged position and the challenge for me is to figure out how to tap into all of that knowledge and expertise and know-how and do it in an effective efficient way so that it doesn’t become a distraction for the broader organization. That’s different than most of our competitors which are trying cobble together these capabilities through partnerships or other means. So I would say the challenges are different for us than other companies but very significant technical challenges particularly in the developed markets.

And then also in terms of capital, it takes roughly two years and about $10 million to $12 million to get a small molecule generic product to market, which again is a chemical entity which you can get identical to the referenced products. With biosims which of course are made in living cells so you can’t get them identical to the referenced product, the best you can do is come close and some will come closer than others and all biosims will not be the same.

But just to get that product to market will be about $150 million to $200 million, which is our personal experience and also what we are finding actually is also be an industry average and that excludes important other cost component such as the cost of building the manufacturing facility in the first place and that if you can even get all the right technical know-how and then also the commercial sales and the structure too which some companies are just trying to build.

So there are two significant cost components there which are excluded from my calculation of the $150 million to $200 million. So, again the comparison small molecule generic, identical, takes two years to do $10 million to $12 million, biosim best you can do is be similar together close as you can. Seven years generally to get us to market and $150 million to $200 million.

And so those technical challenges as well as those capital challenges are creating quite a bit of issues and that’s why you see generally, if you see all the things that are happening it boils down to those two root causes and the things you see as Yaron referred to is partnerships fracturing, trails being delayed, and in many cases those are the two real causes.

Yaron Werber - Citi

Can you maybe with Amgen specifically, why did you guys choose Actavis and what was the reason to do the partnership as oppose to going at alone.

Scott Foraker

We are doing partnership with Actavis, we have a six product portfolio of the highest selling monoclonal antibodies, four on oncology, two in [insulin]. We expect that we will be able to launch this portfolio beginning in 2017 and it’s got peak year sales of roughly the reference products, the six reference products of over $40 billion. So it’s a great business opportunity for Amgen, if we get just product their share, 5% would be a couple of billion revenue for us. So we think it’s a great opportunity for us and leverage earning expertise. So you might say, if you guys have all the capabilities which I said we do, why did you seek a partner at all and why partner with Actavis.

The reason for that is, because it is so capital intensive as I had mentioned before, we were looking at having to spend a 150 million to 200 million times of fixed product portfolio over in the next five to six years about a $1 billion of spend, and we were already challenge from a P&L perspective of having too many good opportunist to invest in our, the innovative side of the business, before that $1 billion stepping [stone] in along for biosimilars.

And so we decided very early on it at the outset and this was in 2011 to seek a partner that would commit a substantial sum of capital and we searched and talked to over 30 partners worldwide anything from private equity players to companies that were looking to get into the business to existing big pharma players. And we found the best partnership possible with Actavis, because they were prepared to get into biologics and this was the way they were going to do it. It was a big strategic place for them to get into biologics, they were willing to make a $400 million commitment, they were willing to co-fund our oncology investment, and we were strategically aligned and thinking that this would be more of a branded like sale than a true generic sale and positioning.

And so we had philosophical alignment, they were willing to make the capital investment, it was a big strategic investment and so far so good it's working out beautifully.

Yaron Werber - Citi

But if you look at the FDA, the FDA has been very upfront in sharing information on the number of meetings, the number of (Inaudible) requests they have gotten, the number of sort of novel biosims that are coming to them. And if you look between December 2012 and let with the first in March 2013 that was in flat lined. There was essentially no new products coming to them, the number of meetings just went up by smidge and I can share all the information with you here. So it looks like the technical hurdle as you mentioned are a lot higher than people originally expected. Can you help us understand before you file an IND in the manufacturing stage and the pre-clinical stage, what do you have to show, how much characterization does the FDA really need?

And then importantly, what do you reference yourself to? Do you refer yourself to the product that's currently in the market or do you reference yourself to the product that was originally approved because over time, Enbrel, now versus Enbrel 15 years ago it's a little bit different?

Scott Foraker

You reference yourself to the product that's currently on the market. So literally what you do is you buy reference product indifferent of the developed territories, test it, do analytical characterization and then what you try to do is match it on 100 or more quality type attribute and what's difficult is you start, you see a couple of the product attributes that aren’t quite right. You try to dial those in and that throws some of the others that were fine off and so it's very, very challenging to get a 100 or more characteristics correctly, which just underscores some of the technical challenge and what you have to do is demonstrate more than you do for an innovative product to enter phase 1.

So for an innovative product to enter phase 1, as you know, you just have to sow basic safety in animals. In addition to doing that for biosimilars, what you have to do is you have to show the analytical characterization on these 100 or more attributes to the FDA and demonstrate to them that you truly have achieved biosimilarity and only then will they let you continue on. and so it was funny when we first started off doing this, some of our scientist would ask, why do we have to do all this? What if, you know, that it was not something that they were used to having to create the sort of package for our Phase 1 study.

And but sure enough that’s really what's required in the FDA is clearly taking a stepwise approach where they're requiring that upfront demonstration of biosimilarity before they're letting you go on, so much more upfront investment not only in terms of dollars, but work too.

Yaron Werber - Citi

Right, and my question also has to be with how available the technology and where is the science on the characterizing with oscillation patterns in the large molecules. And does the branded company, which presume we doesn't even know this is going on, how do you introduce your own data into the equation and when would that happen? Because at some point there could be differences in the way you guys characterize it and, it's just going to make it up Enbrel versus, or EPO versus somebody else and we both might be very different, between the different tests, I don't know if you can?

Scott Foraker

Well, typically we don’t share information with the way the biosimilar regulatory pathway is set up, until you do your filing, so you do you’re what's the equivalent of a BLA filings, so information isn’t really shared until that point in time. Of course, and there may be some publications, which occur prior to that time, but that’s basically all that, so there's not a lot of interaction or data sharing or information between the originator and the biosimilar developer, correct.

Yaron Werber - Citi

Clear, Tom, maybe let me ask the question, because this is the pathway to getting a biosimilar approved is vastly different than the way to get a small molecule generic. So may be help us understand how there is no Orange Book patents here and when they biosim essentially files they have to alert the branded that they're going to filing how does that impact the strategy, what's the were the branded company do adopt -- whole (Inaudible) patent litigation going to work out help us understand how things are going to play out?

Tom Wintner

Sure so in the original small molecule generic space which is the area that I used to do a lot of litigation in and still do a lot of litigation in, everything is quite well known because it all stems from legislation from 1984, known as the Hatch-Waxman Act so it's called Hatch-Waxman litigation and a litigation and when we originally started looking at this new legislation that Congress had passed that was effective in March of 2010 to create an abbreviated pathway or it so called abbreviated pathway for biosimilars, we were sort of comparing it to the procedures that were used under the Hatch-Waxman Act but very quickly you realized that they're totally different themes and in many respects you need to look at other comparative models for example like the European system that’s been in place since 2005 with the first biosimilars approved I think that was 2006 or 2007 in that market. But even then you only have up to now 14 or 15 that have actually been approved.

Yaron mentioned the Orange Book, so in the small molecule world once a branded company has an NDA approved the patents that underlie that product that cover that product are listed in what’s called the Orange Book, anybody can go online and can find out. So for particular, take your product LIPITOR or whatever the case might be, you can see might be one patent, might be five patents those are the patents that are going to be at issue most likely sometimes there are some subsequently issued patents, but most likely those are the patents that are going to be at issue in any branded versus generic litigation. And so the generic company knows which of the patents to attack if it wants to attack or which are the patents to stay away from, if it wants to simply wait until those expire and or if you wants to try to design on those patterns.

In this instance there is Orange Book, so there is no similar listing for a particular biologic product. And that portfolio could be one or two patents, it could be 50 patents and you can all of us here can imagine the breath of those portfolio because they could cover manufacturing and process and all sorts of different things other than a simply what we think of this compound patents and formulation patents or method of use patent.

All of those in theory could be asserted and until the a passage of biosimilar act, there really was no mechanism for any biosimilar or you know Quasi generic to even, enter the market they had to file their own biologic licensing application their own BLA even get there.

Now that has obviously change, but one of the big problems is that and we talked about INDs, we've talked about discussions that some biosimilar applicants have had with FDA, there has yet to be a formal after sort of abbreviated biologics licensing application file.

So there is no, and we don’t yet know what that is -- that looks like that's totally uncharted territory and its only at that moment when one of those is actually filed and sort of designated complete for FDA purposes and for some old products that could be filed as quickly as today or yesterday from newer products. They have to wait until four years from the issuance of the BLA license before someone can even file.

And that moment things are going to start to get interesting in terms of patent litigation because within a very short period of time, within 20 days of that sort of application being sort of approved as complete the biosimilar company has to provide with some of his confidential access to its own application to the reference listed company, the branded company, the innovator company.

Following that, now there is a big question as to how much access they're actually going to provide, there is a trade secrets issue there. It is the flipside of the Abbott's Citizen Petition and we can talk about that as a later date. After that the branded company has only 60 days to sort of put forward a lift of which patents would like if thinks or it has a good faces to believe cover that particular product.

And then the generic company puts forward sort of the need things it's statement as to why it believes any of those patents are either invalid, unenforceable or not infringed. And that's sort of the classic what we call a paragraph 4 moment.

The paragraph 4 notification or certification moment in the small molecule world. But that moment has yet to occur and there are a lot of what if you look at the act, it's extremely thin in terms of how that patent litigation, some people call it that is actually is going to take place.

And so my expectation is that the initial litigation will be less about patents themselves and more about what the act actually means, if and when people aren't actually complying with certain aspects of it or doing something a little bit differently from what the acts envisioned. I think the microphone is [going off]. And we'll speak out loud in the meantime.

Yaron Werber - Citi

You mentioned the (Inaudible), there's going to be a lack of clarity as to what the product is actually going to be in to litigation related to the process. As we have signed a citizen sufficient, wherein they are actually claiming that by virtue of the fact that the brand, the biosims are going to try to get access to, or use or reference, the blended data, that’s going to essentially trespassing a property or I forget that’s the legal term that they are using. For each drug there was a [prove] subsequent or before 2010.

Scott Foraker

The basic theory is what's known as unconstitutional takings which is essentially the same theory whereby if the government takes over your backyard for purposes of building a highway or decides to take your house on the beach because it wants to for hurricane control or whatever the case. If they take private property, they have to provide just compensation. The question of course what are they actually taking in private property, and then what just compensation would be.

What happened in 2012 now as (inaudible) has asserted the citizen petition which is a petition directed at the FDA to either do or not do something. It's essentially and this is where the biosimilars world and the small molecules generic world are similar. The whole premise of the Hatch-Waxman Act of 1984 was to allow a generic company, it allowed the FDA to essentially rely on the data from the branded company. All the clinical data, all the trials that showed that a particular product was safe and effective and then if the generic company came in and says hey, what we are making is, our A is the same as their A, it’s identical, we can show that by NMR spectra, we can show that by whatever means. There is no need for us to do clinical trials because we can simply rely on all these data that the innovator had put forward all these clinical studies.

In the biosimilar world that’s essentially what the act envisioned. Again the FDA relying on data that had been generated for the reference product at the safety, purity and potency and assuming that the biosimilar can show that there are no clinically meaningful differences. Again, because it may be much more difficult to show perfect correlation in terms of structure whatever the case might be in terms of folding, post translation or modification.

But clinically meaningful differences in terms of safety, potency and purity and so that’s where those two things are similar. What Abbott has said is we’ve now spent hundreds of millions if not billions of dollars and their claim is with respect to a particular compound in (inaudible) but it is actually for all biologics that were approved prior to all BLAs that were approved prior to the enactment of the biosimilar’s act so prior March 23, 2010 and it saying, you FDA cannot act on an abbreviated application for any BLA that was approved prior to that, because that would represent an unconstitutional taking because essentially you would be relying on private property, which they are calling a trade secret, and you have to offer just compensation for that.

That case has not been resolved. The FDA has essentially issued a preliminary response which basically said, we are collecting further responses and we are thinking about it. And it’s unclear exactly how that’s going to be resolved. If the FDA denies the petition which I suspect is likely, the next step would be to challenge it in the court, to essentially challenge the FDA’s action and cease to enjoying the FDA from doing something and or actually seeking making a constitution claim in the course themselves.

Unidentified Company Representative

In 30 seconds or so most likely this is going to end up getting litigated because the FDA will probably come back and either kick the can down [dumb stream] or say that the FDA, the ability for the law right for the congressional law.

Unidentified Company Representative

I think it’s going to get litigated, I think it’s highly unlikely that the FDA is essentially going to scud all its charge to implement the biosimilars act and there is a tremendous amount of stake because of the way the act is written. If someone can only apply four years after the approvals of BLA the obviously target if you are a biosimilar applicant are those targets where the BLA was approved many years ago. So that as of today you are already in that four year window or as of today you might already be in the 12 year window.

So if you had a good enough application you could get a part and so all of those compounds are what added a fighting form in the citizen petition and certainly the congressional pressure against that is going to be high. How the FDA will respond, one never knows. I just think it’s going to wind up ultimately making it’s way to the court.

Unidentified Analyst

And then maybe just very briefly discuss the inner party’s review process and that’s a part of the new U.S.[PTOA] in which you are going to be (inaudible) litigating patents and maybe just in the very high yield.

Unidentified Company Representative

Yeah very quickly I sort look at this is, in the litigation side of the biosimilars around three ways, one there’s litigations that’s contemplated by the act itself. We can all read the act, we can all sort figure out what that’s going to look and I think 5-10 years down the road we are going actually start seeing some of that. The second is sort of litigating about what the act actually means that’s like this added citizen petition and you know that offers a confidential access.

The third piece is sort of litigating outside of the U.S. courts, and one of the mechanisms for doing that is what’s now known as inter partes review which is a new, it’s a new name for a relatively old concept and that is actually challenging the validity, has nothing to do with entrenchment but it’s a mechanism for challenging the validity of a patent within the patent office. So its an administered procedure.

This inter partes review was put in through the America Invents Act, the big patent reform act and we are starting to see more and more of this inter partes reviews being filed through 2013. I am not talking about biosimilars or biologics specifically, I am just talking about the procedure and it is conceivable that follow on biologic applicants, biosimilar applicants not used as a mechanism to challenge the validity of patent that they see at stake, and it would essentially, it would essentially highjack some of the procedures that congress envisions in the BPCIA Act.

Unidentified Analyst

Perhaps just turning it over to you to Mike, what have we learned from the European experience from regarding biosimilar from a regulation perspective, from clinical perspective, marketing perspective, from the payer perspective, and as a follow on to that, how do you see that playing, what could we learn from that and how can we take that across to the U.S. experience going forward?

Unidentified Company Representative

Thanks, the one helps typically we are looking biosimilars as a [player], we are typically working for the innovator and not for biosimilar developer, and the chance we have is try and understand how much of threat it is, what are the timing of the threat, how is it going to effect different regions and what can an innovator do about it. So when we look at the European perspective, we see it's been somewhat successful. We bought multiple products market mostly in oncology, but other areas as well as part of oncology.

And there has been a relatively little safety issues that have been proposed and argued about. But then we look at the commercial opportunity, the biologic market now is about $250 billion to $300 billion globally depending on how you look at it. But the European perspective, or the global biosimilar market is only about $2.5 billion right now.

So, are we missing something? Here we have some successful products that's been (inaudible) some market. Again you can't look at the generic, the small molecule generic experience of it being a [molecule] what you would expect in such that with biosimilars with the price discounts are quite different, we are looking at things that are being brought to market maybe 20%, 30% lower than the innovator molecule.

So you can't really kind of leverage the experience from the (inaudible) molecules and supposed what might be happening in the biosimilar side of things. So clearly Europe is leading U.S. in terms of opening the door for biosimilars. The bar here has been very high as we described earlier the definitions and what might be necessary to bring a molecular to market is still one debate. However, I think we're watching to see what plays out in Europe and seeing how that can be leveraged here.

Unidentified Analyst

I think part of that is obviously the payer system in Europe which is very different than the U.S. What are your thoughts regarding how payors here, in particular, will look at biosimilars and also how physicians will embrace the opportunity and how this would translate in to a commercial opportunity?

Tom Wintner

So I think from a reimbursement perspective, the U.S. market, as you point out, it's much more complicated than a single payor system in individual countries in Europe. And we did a quick survey for another biosimilar panel that we did several months ago so as looking in to this question to find out what are payors doing to prepare themselves for the introduction of biosimilars. And what we learned is there's sort of a case by case product or [associate] area case dependent, with a category like diabetes, there is intense interest of ways to save cost on the cost of insulin per se.

So right now payors are starting to implement some policy very similar to what they're doing with small molecule generics. A step at time prior authorization depending on the reimbursement setting to prioritize potentially cheaper biosimilars compared to the innovative molecule or products. on the other side, oncology, they are doing what they typically do, oncology's. They wait for physicians to adopt something for the NCC and to propose some sort of guidelines.

So we don’t see much activity is going on in a oncology market to figure out how healthcare is going to respond to it right now, they're still sitting on the sidelines and watching.

Unidentified Analyst

So basically, the decision of or ultimately the way that to verify some of this will be used will be determined to a certain extent by the various indications whether its oncology where potential, what different pathways on place versus this is other therapeutic areas, where it could be determined by more by on the payer level?

Scott Foraker

Yeah. Absolutely, I think it's a case by case basis and depending on the those theories importance of the data they'll either be able to control the market or there will be more into the physicians (inaudible) to decide if they are want to choose and prescribed a biosimilar product or innovative product and depending on how legislature falls out and how data can be leveraged or bridged to other indications sort of what will impact that.

Unidentified Analyst

You guys have been consulting for some of small makers, small bio-clinic players, what has been with technology anything they shouldn't, in general what's your experience been as a kind of try to strategize to go through this market? And then second question is what do you think the branded makers doing to defend themselves? (Inaudible).

Scott Foraker

So that’s again so two very different questions there, so one what's are the small players doing right and the cases that have been brought to us have been more of company that unique manufacturing capabilities that maybe you can take the cost out, maybe taking a biologic that's normally being manufactured in the [vermillion] sales and being able to produce in bacteria or yeast or something like that companies that have manufacturing equipment like disposable single use bioreactors that are I think more of a contract manufacture right now they are looking at ways to participate little bit more in drug development and take on a little bit risk but potentially when you pull lot more reward down the road.

And the sort of the initial progress we have seen has been I think naïve from that perspective of what kind of cost it takes to get in there. What is the regulatory hurdles what is the capable as small company doing and if you are ultimate they are all looking to seek a partner as that can help them push it forward but the challenge is how does they establish a proof of concept enough to develop the partnership.

And so I think that these small players have sort of dropped out or reconsidered or repositioned the programs to now being more of a innovator in a biosimilar that if you have a manufacturing expression system that inherently is going to change the molecule because of differences in (Inaudible) or what not the uncertainly is that something that’s going to be similar enough in a regulatory standards so therefore it’s probably is more likely that you will be successful you try to differentiate your product and do a full BLA program and I think that’s where many of those companies that have gone.

From a say a form of that has marketed, monoclonal antibody products, we get asked a lot about the monoclonal antibody space because it's a big potential carrot at the end of the road, but it may have the highest hurdle actually realize about biosimilar. So we're doing this on typical life management strategies new indications trying to lay down as much data as you can, to be a barrier for the knock of your product biosimilar.

And that is been quite successful and also it depends on the (inaudible) that you're in if you're in oncology again it's actually a very large barrier and we see things like (Inaudible) or (Inaudible), to best following biologics that look like it have superior profiles, it is very difficult could catch up the innovator in this, this mass amount of data and new indications that they're delaying them

But the challenges is depending on how the interpretation of interchangeability and essentially substitute ability of biosimilars for the innovator plays out, that is definitely barrier for biosimilars but now you can leverage all the data the innovator has and being able to get all the indications by doing an impressive upfront preclinical safety program and having a good vigilance program afterwards.

That may be not such a barrier and additional indication may not have the impact that they used to have. So the next things you see is life cycle management we see reengineering of antibodies improving effective function. The right now the hot area is antibody drug conjugates and immuno-conjugates.

So is our ways to now keep pushing the target product profile, growth in further you're advancing the standard of care, that biosimilars are now coming in and replacing the old standard of care and now you can move the bar higher. And so that's sort of what's going on and plan now and some of the there is a progress I would say.

Yaron Werber - Citi

Scott and maybe I can put you on the spot for a second, go back to you, there's recently there's has been several bills which were introduced actually supported by Amgen and Genentech and then sort of maybe I'm bringing back to you, but this is going to keep the what you guys are doing strategy in both directions relating to essentially, this has to do with substitution at the pharmacy level and how fast the pharmacist has to notify the physicians five year potentially over paper work and safety data follow up.

And increasingly that's going to - this is a state level and the FDA I think just last week opined that they're obviously pretty concerned about this. Because this is only we going to ratchet up the cost of switching patients by putting some of the potential risk in the pharmacy.

So that's a great defensive strategy and that's actually supported in the spirit of making sure that the safety data is there. But at the same time, that's also going to increase the barriers to you guys as you bring biosims into the market.

I guess my question to you how does Amgen look at biosims and is it essentially approach where in you're going to be developing them strategically around the globe in areas where maybe Amgen is not very strong.

For example Enbrel, and I don't want to get into specific targets, but for example Enbrel O-U.S. where you don't have rights for that compound. Is that the way sort of Amgen is thinking about the world defending its territory wherever you're strong and looking at opportunities globally or is there going to be that ultimately it’s going to be as you mentioned in your Analyst Day manufactured by Amgen kind of seal quality and potentially a lot of data and potentially interchangeability, kind of a long shot.

Scott Foraker

Well, our strategy is pretty simple; high-quality and reliable supply. So as you know, with small molecule of generics, there have been problems even with injectibles. Problems with reliability of supply and we at Amgen, we have a motto, every patient every time on the manufacturing side and we're going to do the same on the biosimilar front.

So we're going to be about and high quality, I talked about quality a lot and yes, essentially they will be made by Amgen, meaning it will be made using the same processes and the same factories, manufactured by the same people that have manufactured Amgen biologics for the last 30 years. So it has an Amgen level of quality that physicians, patients, payors can trust and have confidence in.

And our strategy is worldwide. It's absolutely worldwide, and we don’t see ourselves limited to certain specific geographic territories. It's absolutely worldwide. I would say that the developed markets are more interesting to us because we feel like the regulatory hurdles are higher there appropriately, and it's more of a skill game which plays to our strength and fewer competitors, whereas the emerging markets, the regulatory hurdles are somewhat lower in some countries.

In some cases, they are beginning to come up with WHO standards but it's still a mixed bag in the emerging markets. It's interesting for us from an Amgen perspective, because one of our strategy is international expansion. We have been historically a U.S. based company with still over 70% of our revenues coming from the U.S. but we build a European infrastructure on the back of NEUPOGEN starting in the 1990s, which now accounts for roughly 20% or more of our sales and that’s a real business there.

And we are expanding in other geographic territories and biosimilars are going to help us by providing us with more products to take to more patients worldwide. But we do believe that there are going to be different hurdles in different markets and generally speaking the developed markets are going to be more attractive than the emerging market.

Unidentified Analyst

It’s sorted of a Phase 3 program, its going to be a global program that going to be sensitive to both the (inaudible) and FDA requirements or the requirement are just a little bit too unpredictable and different.

Unidentified Company Representative

I would say generally speaking we talk about a global program.

Unidentified Analyst

What is manufacturing claim to that in some sort of the reference product? What are the requirements in from the EU regulatory perspective versus the U.S. and can you, particularly in U.S. can you [patch] data from Europe?

Unidentified Company Representative

Well, each of the regulatory authorities wants to see that there is biosimilarity with the reference product in their region, okay. And that is the bottom-line, fortunately you can a lot many more times been not the referenced products are close enough between the U.S. and Europe that you can do [bridging] studies and you will be fine, and global studies and you will be fine.

Basically there will be some deviations from that where you are not able to do that, but generally speaking that’s the case. The other thing that I will mention too that surprised us a little bit in a very pleasant positive way, where we have seen some first hand interaction of coordination between the FDA and the EMA with respect to at least one biosimilar and we believe more. And so we think that’s a healthy thing that there are interactions taking place across agencies.

Unidentified Analyst

How has your dialog been with the agencies, the FDA in particular, specially given the fact that here in the U.S. we don’t have specific to the extent documents there is no specific guidelines for specific diseases indications. So how is your dialog with the FDA progressing?

Scott Foraker

That’s a great question. So we are navigating uncertainly that’s the way I would describe it. I would say in our case successfully very successfully navigating uncertainty. In the absence of hard and fast guidelines the FDA is doing things on a case by case basis which is appropriate under the circumstances. We’ve had fantastic interactions with them actually. We feel very confident on the basis of the interactions we’ve had with them that we know exactly what it takes to get our products developed. We’ve had multitude of interactions with them, some relative to specifics of the development of our product, some on the policy level and others as well.

So we feel like the FDA is on top of things, they are in the game, they want to make biosimilars a reality, they are establishing we think an appropriately high hurdle to make sure that patient’s safety comes first and they're trying their best to make them a reality and all I can say is that, I can't speak on behalf of other parties obviously but as far as we're concerned in Amgen, we know exactly what we need to do to develop and register our products on the business of the interactions we had with them.

Yaron Werber - Citi

And what's the as you do you think about it the -- what's the biggest challenges, the biggest challenge showing comparability or is the biggest challenge because you can do 2000 patient Phase III, testing your view (Inaudible) over somebody else's you might, or is it going to be ultimately making or is that preclinical?

Scott Foraker

I mean it’s hard to choose which is more difficult but I would say the work being done upfront is incredibly challenging, And its pushing us to develop even strong analytical capabilities and we've already developed over the last 30 years.

We're of course used to doing this in some respect by doing comparability exercises, when we scale a product up and move this from one plant to the other, a lot of times we'll have to do comparability exercises, and that's proven to be very, very helpful experience in doing with the analytical work.

But it is pushing the boundaries and it is bit of the new frontier even for Amgen. So we are leveraging things that we've done in the past and develop and further honing our analytical capabilities. And that's the beginning that's the front end.

And then in terms of the clinical studies, the clinical studies are always though and there always is a variability and you've got to make sure it's adequately powered and so and so forth. Again, that's where I feel like our biologics experience in developing biologics comes into play and helps a lot also navigating this uncertain regulatory pathway we've been working with the FDA for over 30 years and developing biologic product. So I like we know what we're doing there and we have a open advantage.

And then I think there's challenges on the commercial side too, those are the challenges that run the spectrum I would say and short answer to your question, on the commercial side, it's how are these products going to be sold, when if you look at successful and unsuccessful players in the Europe experience as was referred to previously those that try to approach this as a generic product to make it primarily about price do not significantly promote it to not offer significant wrap around services they fail.

And those that approach it as more of a branded like product, where it wasn't all about price they really invested in the products, put premium services wrapped around it, really promoted the product had followed through with the sales force. Those were the companies that tended to succeed.

And so there are a significant challenges there, but I think the European experience is instructive and tells us that this is more likely to be more branded like than more generic like at least for some period of time, while all of this plays out, the safety, the efficacy, the pharmaco-vigilance, it all outplays out and to what extent payors exert their influence or not and that physician-payor dynamic and how it will evolve overtime, which we expect that will.

But we expect that at least for some period of time, it's going to be more of a branded like sale, while this is all playing out, which again I think is to our great benefit, because that's where we have the experience and infrastructure.

Yaron Werber - Citi

Any questions from the audience?

Earnings Call Part 2: