Amgen Inc. (NASDAQ:AMGN) Q3 2023 Earnings Call Transcript

Amgen Inc. (NASDAQ:AMGN) Q3 2023 Earnings Call Transcript October 31, 2023

Operator: My name is Julianne, and I'll be your conference facilitator today for Amgen's Third Quarter 2023 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. There will be a question-and-answer session at the conclusion of the last speaker's prepared remarks. [Operator Instructions] I would now like to introduce Justin Claeys, Vice President of Investor Relations. Mr. Claeys, you may now begin.

Justin Claeys: Thank you, Julianne. Good morning, and welcome to our third quarter 2023 earnings call. Bob Bradway will lead the call and be followed by a broader review of our performance by Murdo Gordon, Vikram Karnani, who joined Amgen from Horizon Therapeutics following the October 6, 2023 acquisition close, Dave Reese and Peter Griffith. Given the timing of these Horizon Therapeutics acquisition close, our third quarter results do not include any contribution from Horizon. Vikram will provide select information from Horizon's third quarter product sales for future context. You should have received a link to our slides that we have posted. Through the course of our discussion today, we will make some forward-looking statements and use non-GAAP financial measures to describe our performance. And just a reminder that actual results can vary materially. I would now like to turn the call over to Bob.

A biotechnologist holding a test tube with a ground-breaking drug, showing off the company's pioneering developments.

Robert Bradway: Okay. Thank you, Justin and thank all of you for joining our call. It's an exciting time here at Amgen. And we're continuing to execute well this year, serving many more patients around the world with medicines such as Repatha, EVENITY and Tezspire, advancing a number of promising first-in-class medicines rapidly through our pipeline and preparing for our next wave of biosimilar launches. However, as this is our first earnings call following the close of our acquisition of Horizon Therapeutics, I thought we might turn our attention there first. The Horizon acquisition, coupled with our purchase of ChemoCentryx, which we acquired a little more than a year ago, gives Amgen a significant rare disease business that fits squarely within our overall strategy and will be additive to the growth we expect from our base business.

At the heart of our strategy of course is innovation. First, our best-in-class medicines that make a big difference for patients suffering from serious diseases. The medicines in our rare disease portfolio like Tavneos, Tepezza, KRYSTEXXA and UPLIZNA fit this description perfectly and they'll benefit from Amgen's decades of experience in inflammatory diseases. These medicines are also early enough in their lifecycles that we can positively impact their growth by leveraging Amgen's capabilities in process development, lifecycle management and manufacturing. Finally, we spent the past decade or so building out our international footprint with Amgen medicines now available in about 100 countries. And today our rare disease sales come almost exclusively from the U.S. So, we'll be able to leverage our global presence to quickly bring these medicines to patients around the world.

You'll hear more in a minute from Vikram Karnani, who joined us through the Horizon acquisition and is leading a newly created rare disease business that is now the fourth leg of Amgen's commercial stool, alongside our inflammation, oncology and general medicine businesses. Turning to our financial performance in the quarter. Total revenues were up 4% and earnings per share were up 6% compared with a year ago. Volume increased 11% globally, which represents our fourth consecutive quarter of double-digit volume growth. And we achieved good balance across all of our geographic regions and therapeutic areas. Seven of our medicines generated record sales in the quarter. And I'll highlight one of these, BLINCYTO, which delivered 55% sales growth in the third quarter.

We see continued upside potential for BLINCYTO as it is increasingly used in earlier lines of therapy and as practice guidelines are updated to reflect the role this medicine can play in treating a broad range of patients with acute lymphoblastic leukemia. Turning to our pipeline. We had the opportunity to discuss six potential first-in-class oncology assets with you recently following ESMO. Three of these have earned Breakthrough Therapy designations from the FDA; tarlatamab, BLINCYTO and LUMAKRAS in combination with Vectibix in colorectal cancer. We also continue to progress trials for bemarituzumab in gastric cancer, for Xaluritamig in prostate cancer and for AMG 193, our PRMT5 inhibitor, which has generated responses across six solid tumors.

I'll just quickly note that AMG 193 was identified through our proprietary DNA encoded library technology which we added through the 2019 acquisition of Nuevolution, and it demonstrates our leadership in the emerging field of multi-specific drugs that can address pathways that have long been recognized but considered inaccessible to traditional drug discovery efforts. In other pipeline news, we've completed enrollment in our Phase 2 obesity study for maridebart cafraglutide, which was formerly known as AMG 133. And finally, the FDA has accepted our BLA for our biosimilar to EYLEA. Looking at our business, we feel we have good momentum across the board. We have everything we need with the portfolio, the pipeline and the people to deliver attractive sales and earnings growth through the end of the decade and beyond.

As always, I want to thank Amgen employees around the world, including some 2,000 new colleagues focused on rare diseases for their commitment to strong execution on behalf of the patients we serve. With that, I'll now turn it over to Murdo Gordon. Murdo?

Murdo Gordon: Thanks, Bob. I'm pleased with our performance in the third quarter. Execution is strong across the business with record quarterly sales for seven brands and robust volume growth across our general medicine, inflammation and hematology/oncology portfolios. Product sales increased 5% year-over-year. Volume growth was 11% with strength across our regions. U.S. volume growth was 11% and volume growth in our Europe, Latin America, Middle-East and Canada region was 8%. Consistent with our international expansion strategy, Asia-Pacific continues to be our fastest growing region with 27% volume growth in the quarter. Starting with our general medicine business, which includes Repatha, Prolia, Evenity and Aimovig. Overall revenue for these four products grew 21% year-over-year in the third quarter, driven by 20% volume growth.

Repatha sales increased 31% year-over-year in the third quarter, with volume growth of 44%, partially offset by lower net selling price. In the U.S., volume growth of 45% was driven by a record number of new patients starting treatment, more than doubling year-over-year. We saw declining net selling prices in the US, primarily driven by new formulary coverage by CVS in July for commercial patients. Outside the U.S., we saw a 43% volume growth with strength across our regions. There are still many more patients around the world who can benefit from Repatha and we're rising to meet that challenge by investing and executing to drive awareness amongst physicians and patients. In the U.S., we have significantly expanded our primary care sales force and activated more than 15,000 new prescribers this year.

We're also increasing promotion to patients through direct-to-consumer media efforts. Transitioning to bone health, Prolia sales grew 14% year-over-year in the third quarter, primarily driven by 7% volume growth and higher net selling price. We expect volumes for Prolia to grow supported by real-world evidence data presented earlier this year that demonstrate Prolia's superiority in reducing fracture risk when compared to alendronate in treatment-naive patients with post-menopausal osteoporosis. EVENITY had record sales of $307 million for the quarter, driven by 48% volume growth. Osteoporosis disproportionately impacts postmenopausal women, and the diagnosis and treatment rates for these patients are low. In 2023, we expect approximately 3 million patients in the U.S. will be treated for post-menopausal osteoporosis, an estimated 40% of treated patients will be at very high risk of fracture.

But only 6% of those high risk patients will be treated with a bone-building product. EVENITY plays an important role in the bone builder market with a 58% share in the U.S. and a 44% share in Japan. There's much more work to be done and we'll continue to invest to ensure EVENITY reaches the patients who need it. Otezla sales declined 10% year-over-year, driven by lower net selling price, unfavorable changes to estimated sales deductions, and lower inventory levels, partially offset by 1% volume growth in the U.S. Otezla net price declines were driven by higher rebates to support and expand access for commercial and Medicare Part-D patients. Our U.S. Otezla business has been impacted by free drug programs associated with new treatment options that have entered the psoriasis marketplace.

We're beginning to see a reduced impact of these free drug programs as physicians and patients are experiencing barriers to access, given prior authorization requirements for these newer therapies. We have strong conviction in the growth potential of Otezla, with its unique indication for all severities of psoriasis, combined with an established clinical profile, broad payer coverage, a lack of testing required for initiation and convenient oral administration. To realize that potential, we have increased our investment to ensure physician and patients understand both the importance of treating psoriasis systemically and the safety and efficacy profile that Otezla offers. We are already seeing positive results from that increased investment, including significant growth in the number of patients requesting educational information and taking action on the Otezla website that generally indicate preparation for a discussion with the healthcare professional.

And also recently increased our dermatology sales force by 20% to educate physicians about the benefits of Otezla for appropriate patients. With these increased investments, we expect to drive a return to growth for Otezla. Enbrel sales decreased 6% year-over-year, primarily driven by an 8% decline from unfavorable changes to estimated sales deductions. Year-over-year volume increased 1% in the third quarter and the number of new patients in the U.S. starting treatment increased by 22% driven by improved payer coverage and Enbrel's 20-plus year track record of safety and efficacy. For the remainder of 2023, we expect our improved coverage will lead to continued growth in new patients and declining net selling price. Tezspire continues to show strong growth with $161 million in sales in the third quarter.

Sales increased 21% sequentially, driven by 18% volume growth that benefited from the launch of our self-administered pre-filled single-use pen, which was approved by the U.S. Food and Drug Administration in the first quarter. We've now obtained coverage of the patent with the majority of pharmacy benefit managers, enabling easy access and convenient self-administration for patients in the U.S. with severe uncontrolled asthma. As we expected, Tezspire has both penetrated and helped grow the U.S. asthma biologics market. In 2023, the number of new patients on asthma biologics has increased by over 20% year-over-year and Tezspire's share of this expanded market is approximately 20%. Sales of Tavneos were $37 million in the quarter with 26% quarter-over-quarter volume growth.

In the U.S., approximately 2,300 patients have now been treated with Tavneos by over 1,500 healthcare professionals. We continue to see an increase in awareness of Tavneos by rheumatologists and nephrologists. And exiting the quarter, we saw an increase in new patient start forms. Looking forward, we expect to bring Tavneos to even more patients with ANCA-associated vasculitis. Amjevita sales increased 30% year-over-year for the third quarter, driven by 53% volume growth, partially offset by lower net selling price. Ex-U.S. sales increased 10%, driven by 22% volume growth, partially offset by lower net selling price. Moving to our hematology-oncology business, which includes LUMAKRAS, KYPROLIS, XGEVA, Vectibix, Nplate and BLINCYTO . Strong commercial execution and compelling new clinical data drove 15% volume growth year-over-year for these six innovative products.

BLINCYTO sales grew 55% year-over-year to a record $220 million for the third quarter. Volume growth of 56% was supported by broad prescribing to acute lymphoblastic leukemia patients following positive data from the registration-enabling E1910 study presented late 2022, and updated NCCN guidelines that were issued in May. Long-term, we see significant additional growth potential for BLINCYTO from earlier lines of therapy. LUMAKRAS reported $52 million in sales for the third quarter, a decline of 31% year-over-year. $22 million of this decline was driven by ongoing reimbursement negotiations in France. We see future growth opportunities for LUMAKRAS, driven by launches in new markets and our comprehensive global clinical development program.

Vectibix sales increased 2% year-over-year for the third quarter to a record $252 million, driven by higher net selling price and 4% volume growth, partially offset by unfavorable foreign exchange impact. KYPROLIS grew 10% year-over-year, primarily driven by 8% volume growth. And Nplate sales increased 45% year-over-year for the third quarter, resulting from a $142 million order from the U.S. government. In the fourth quarter, we expect to fulfill an additional $62 million order for Nplate by the U.S. government. Given the strong performance of our hematology-oncology products and the exciting new positive data presented at ESMO on our oncology pipeline, we look forward to helping more patients with their cancer therapy. Overall, our execution is strong across the business, driving growth and demonstrating our dedication to serving patients.

And with the expansion of our rare disease portfolio, we're excited to serve many more patients around the world who can benefit from our therapies. And with that, I'll turn it over to Vikram.

Vikram Karnani: Thanks, Murdo. We're excited to bring together Horizon's medicines, pipeline and rare disease expertise with Amgen's history of leadership in inflammatory diseases, global infrastructure and world-class biologic capabilities. For those that are not as familiar with Horizon's portfolio, I will spend the next few minutes providing some background on our rare disease medicines. Horizon's business delivered $945 million of sales in the third quarter, representing 2% year-over-year sales growth with multiple positive leading indicators. Let me describe in more detail. Tepezza, the first and only medicine approved for the treatment of thyroid eye disease, regardless of disease activity or duration, generated $453 million of sales in the third quarter, representing 2% quarter-over-quarter growth.

We are confident that now as we have officially joined forces and have on-boarded the full commercial team, we will make significant progress in advancing this important product over time to patients. We are driving several initiatives to continue to build the U.S. thyroid eye disease market. In the third quarter, we saw a greater than 50% year-over-year increase in the number of Tepezza prescribers, supported by the April 2023 FDA label update to treat patients with thyroid eye disease, regardless of disease activity or duration. We are pleased with this progress and are continuing to educate the physician community on new clinical data and updated indication across the full spectrum of TED patients. Second, large national and regional payers are continuing to make favorable policy changes to help eligible patients access Tepezza.

To date, we have obtained favorable policy changes for greater than 30% of U.S.-covered lives, which are expected to take effect later this year and early next year. As a reminder, for Tepezza, there is a time lag between a patient being identified for Tepezza treatment and treatment being initiated. It can take up to 90 days for a patient enrollment form to move through the prior authorization process. Once that step is complete, then the patient's infusion needs to be scheduled at an appropriate site of care. This process takes time and we have taken several important steps to minimize the time between patient identification and treatment initiation. Finally, we continue to see approximately 100,000 patients with moderate-to-severe disease in the U.S. that are appropriate for Tepezza, with the majority of these patients in low Clinical Activity Score settings.

Therefore, the patients -- the FDA's label update, combined with favorable medical policy changes by payers and supported by the expanding base of prescribing physicians, gives us a significant opportunity to reach more patients. These positive execution trends underpin our confidence in Tepezza's growth potential in the U.S. Moving on to markets outside the U.S. We continue to see international expansion as a meaningful long-term growth opportunity for Tepezza which received its first ex-U.S. approval in Brazil in the second quarter of this year. We are particularly excited about the opportunity to leverage Amgen's long-standing presence in multiple major ex-U.S. markets, including Europe and in Japan, where we have reported positive data from the Phase 3 OPTIC-J trial.

We also continue to enroll a Tepezza Phase 3 trial in Japanese patients with chronic or low clinical activity thyroid eye disease. KRYSTEXXA, the first and only medicine approved for uncontrolled gout, delivered a record $253 million of sales in the third quarter, representing 32% year-over-year growth. Sales are now annualizing at a $1 billion run rate. Performance in the third quarter reflected continued strong uptake in both the rheumatology and nephrology segments. Strong results were driven by execution across all phases of the patient journey, demand-generation, stakeholder education and adherence to treatment. The FDA approved KRYSTEXXA's label change for combination with methotrexate in July 2022. We have seen a steady increase in uptake since then.

Immunomodulation usage remained above 70% of new patient starts in the third quarter. We see an opportunity to redefine KRYSTEXXA with methotrexate as a standard of care and reach even more of the over 100,000 uncontrolled gout patients in the U.S. UPLIZNA sales increased 54% year-over-year in the third quarter to $67 million. International expansion is also underway with UPLIZNA now launched in multiple ex-U.S. markets, including Germany, France, Italy, Spain and Brazil. Additional indications in development also support UPLIZNA's long-term growth potential with Phase 3 trials underway in both IgG4-related disease, and myasthenia gravis. The rest of Horizon's portfolio generated $173 million of sales in the third quarter, primarily driven by our portfolio of ultra-rare medicines; RAVICTI, PROCYSBI and ACTIMMUNE.

We see an opportunity for this basket of products to continue to generate robust sales. Before I turn it over to Dave Reese, I want to take the opportunity to thank all my colleagues in the rare disease business for maintaining their focus on patients throughout a period of distraction over the last several months. Looking ahead, we are excited to work together by leveraging Amgen and Horizon's combined capabilities to ensure our medicines reach more patients even faster who are suffering from serious and rare diseases globally. I'll now turn it over to Dave.

David Reese: Thank you, Vikram. Good morning, everyone. I'd like to begin by welcoming our new colleagues from Horizon. We are excited to be integrating Horizon's R&D capabilities with Amgen's to advance the promising Horizon pipeline. For R&D, the third quarter was one of high quality execution as we progressed our innovative pipeline with important oncology data readouts, the addition of two breakthrough therapy designations and completion of enrollment on key studies. We also advanced our innovative pipeline through rapid enrollment on multiple registration enabling studies. Starting with general medicine, we have completed enrollment in the Phase 2 study of maridebart cafraglutide in patients with obesity with or without diabetes.

The goal of this study is to generate data that will provide optionality to design a broad Phase 3 program, leveraging the unique properties of maridebart cafraglutide that could potentially allow us to take a differentiated approach. We anticipate top-line data from this 52-week study towards the end of 2024. The Phase 3 outcomes study of Olpasiran are potentially best-in-class Lp(a) targeting small interfering RNA molecule in atherosclerotic cardiovascular disease is enrolling very well. In inflammation, beyond severe asthma, we are investigating additional indications with Tezspire, including separate Phase 3 studies in chronic rhinosinusitis with nasal polyps, which is fully enrolled and eosinophilic esophagitis. We also have a Phase 2 study in COPD that has been fully enrolled with top-line data anticipated in the first half of 2024.

This study has recruited a broad population of COPD patients, including patients with both high and low eosinophil counts. Rocatinlimab, a first-in-class anti-OX40 monoclonal antibody being investigated in patients with moderate-to-severe atopic dermatitis, recruitment is off to a strong start on the ROCKET Phase 3 clinical development program. We have now randomized over 1,500 patients across the program. We are excited to present additional data from our expanded rheumatology portfolio following the acquisition of Horizon, including data from a Phase 2 study of dazodalibep in Sjogren's Syndrome, along with data from KRYSTEXXA, Tavneos, Otezla and other molecules from our broad portfolio at the American College of Rheumatology Convergence 2023 Meeting in November.

I'll be brief with my remarks on our oncology portfolio, given the detailed oncology review last week. Based on the E1910 Phase 3 study, the FDA has granted BLINCYTO Breakthrough Therapy designation for the treatment of adult and pediatric patients with CD19-positive Philadelphia chromosome-negative B-cell precursor acute lymphoblastic leukemia during the consolidation phase of multiphase therapy. We see future growth in BLINCYTO from advancements into earlier lines of therapy and subcutaneous administration. BLINCYTO also serves as a blueprint for how we plan to rapidly progress tarlatamab and Xaluritamig into earlier lines of therapy [indiscernible] setting a lower tumor burden. Along with experts in the field, we are very encouraged by tarlatamab, our BiTE molecule, targeting DLL3.

At ESMO, we presented data from DeLLphi-301, a Phase 2 study in late-stage small-cell lung cancer, where we saw impressive response rates, durability of response, and overall survival in a setting where patients typically have limited options and a very poor prognosis. We are submitting these data to the FDA and are pleased that the FDA has granted tarlatamab Breakthrough Therapy designation for the treatment of adult patients with extensive-stage small-cell lung cancer with disease progression on or after platinum-based chemotherapy. Given our confidence in these data, we are rapidly advancing tarlatamab into earlier lines of treatment with multiple Phase 3 studies underway or planned. Based on emerging clinical data, we are discontinuing PSMA-targeting bispecific AMG 340, and we will focus our efforts on rapidly advancing Xaluritamig in metastatic castrate-resistant prostate cancer.

We expect Xaluritamig dose expansion cohorts to be fully enrolled by the end of the year, and are planning to initiate additional studies in patients with earlier-stage prostate cancer. With AMG 193, a small molecule MTA-cooperative PRMT5 inhibitor, we are encouraged by the responses we've seen across six MTAP-null solid tumors, the manageable safety profile and preclinical evidence of CNS penetrants. We are now rapidly enrolling dose expansion cohorts. And with that, I'll turn things over to Peter for the financial update.

Peter Griffith: Thank you, Dave. I'll review our third quarter results before discussing our updated 2023 guidance. Turning to our third quarter financial results, which are shown on Slide 44, total revenues of $6.9 billion grew 4% year-over-year and non-GAAP earnings per share of $4.96 grew 6% year-over-year. The growth in revenues was due to product sales increasing 5% year-over-year, driven by a 11% volume growth. Third quarter total non-GAAP operating expenses increased 4% year-over-year. We advanced our pipeline and invested in growth opportunities in the quarter, while delivering a non-GAAP operating margin as a percent of product sales of 52%. Non-GAAP cost of sales as a percent of product sales increased 1.3 percentage points on a year-over-year basis to 17.4%, primarily driven by higher profit shares and changes in product mix.

Non-GAAP R&D expenses in the quarter decreased 2% year-over-year due to lower spend in research and early pipeline activities, partially offset by higher spend in later-stage clinical programs and marketed products. Year-to-date, non-GAAP R&D expenses increased 5% due to higher spend in later-stage clinical programs and marketed products, partially offset by lower spend in research and early pipeline. Non-GAAP SG&A expenses in the third quarter increased 1% year-over-year. We continue to focus on prioritizing key investments, digitalization, driving productivity and accelerating use cases for artificial intelligence. Non-GAAP OI&E were a net $225 million expense in the third quarter. The year-over-year favorability was driven primarily by higher interest income and the change in Beijing accounting from equity method to a mark-to-market investments, with the impact included only in our GAAP results.

Our third quarter non-GAAP tax rate increased 3.2 percentage points to 16.1%, primarily due to the 2022 Puerto Rico tax law change that replaced the excise tax with an income tax beginning in 2023. We continue to execute on our capital allocation priorities. First, we continue to prioritize investments in both internal and external innovation. In the third quarter, we increased investments in programs, including maridebart cafraglutide, I'll call it mari from now on, Rocatinlimab, Tavneos and ABP 206, our biosimilar to OPDIVO. Second, we continue investing in our business for long-term growth, including through simultaneous construction of our state-of-the-art manufacturing facilities in Ohio and North Carolina. We're excited for the anticipated licensure of our Ohio facility in the first half of 2024.

Additionally, we're making investments in all parts of our business to leverage the power of Generative AI opportunities. Third, we have a strong track record of returning capital to our shareholders and pay dividends of $2.13 per share in the third quarter, representing a 10% increase over the third quarter in 2022. The company generated $2.5 billion of free cash flow in the third quarter of 2023 compared with $2.8 billion in the third quarter of 2022. We will continue to generate strong cash flows. However, Q4 cash flow will be lower than historical patterns due to the timing of tax payments and Horizon transaction-related expenses. Turning to the outlook for the business for 2023 on Slide 46. We're pleased to have closed the acquisition of Horizon Therapeutics.

We're updating our full-year 2023 guidance to include Horizon financial results starting October 6, 2023. So our Q4 results will exclude approximately one week of Horizon's results. We are raising our 2023 revenue guidance to$28.0 billion to $28.4 billion versus previous guidance of $26.6 billion to $27.4 billion. For 2023 non-GAAP earnings per share, we are narrowing the range to $18.20 to $18.80 versus previous guidance of $17.80 to $18.80. We will add Horizon's business into Q4 without material non-GAAP EPS dilution. However, we do expect Q4 non-GAAP EPS to be lower than Q3 non-GAAP EPS because of planned investment increases in our business, including key assets in our innovative pipeline, beginning with mari, Olpasiran and AMG 193, and other strategic business investments, including Generative AI use cases in all parts of our business.

This sequential pattern is consistent with historical trends. And in addition, Q4 non-GAAP EPS will begin to include the recognition of interest expense related to the Horizon financing as a non-GAAP expense, important additional points to consider as you model the remainder of 2023. We now expect other revenue for 2023 to be in the range of $1.2 billion to $1.3 billion versus our prior range of $1.1 billion to $1.3 billion. With the Horizon acquisition, we now anticipate full year non-GAAP operating expense for 2023 to increase from our previous estimate of 3% (ph) to approximately 10% versus last year. Horizon represents approximately 5 percentage points of this 10% year-over-year increase. We continue to expect the full year 2023 operating margin as a percentage of product sales to be roughly 50%.

We continue to expect non-GAAP cost of sales as a percentage of product sales to be between 16% and 17%. We now expect our non-GAAP R&D expenses to increase from our prior guidance of 5% to about 10% year-over-year. Horizon represents approximately 3 percentage points of this 10% year-over-year increase. The additional 2 percentage points are driven by planned increase in our investments in our innovative pipeline, including mari, Olpasiran, and AMG 193. We continue to expect non-GAAP SG&A to be down year-over-year as a percentage of product sales slightly. We now expect non-GAAP OI&E expenses to be in the range of $1.4 billion to $1.5 billion, up from our prior guidance of $1.1 billion to $1.2 billion. We expect Q4 OI&E to be about $700 million, reflecting interest expense related to the Horizon financing, which will be included in our non-GAAP results effective October 6.

And as you begin to model 2024, note that we expect 2024 OI&E to be consistent with this Q4 run rate. This higher interest expense is driven by the $28 billion of debt raised for the Horizon acquisition at a weighted average interest rate of 5.6%. We expect to end 2023 with approximately $65 billion of long-term debt, including the current portion of it, and $11 billion of cash and cash equivalents. For the full year, we anticipate a non-GAAP tax rate of 16.5% to 17%, down from prior guidance of 17.5% to 18.5%. We expect approximately 540 million shares to be outstanding in Q4. This increase from Q3 is driven by the conversion of unvested Horizon equity awards and the Amgen equity awards. Our 2023 capital expenditures are now projected to be approximately $950 million, up from our prior guidance of $925 million.

The addition of Horizon's rare disease team further strengthens our confidence in delivering against our long-term growth objectives. We continue to allocate capital to advance innovation at speed and at scale. And I'm incredibly grateful to our now 26,000-plus colleagues for successfully executing our mission of serving patients. This concludes the financial update. And now, I will ask our operator, Julianne, please open the lines for Q&A and remind our participants of the procedure to ask their questions. Julianne?

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