But we'll fund all of that through broad operational efficiency measures that we're driving across the Company so that that allows us over the next couple of years to deliver attractive earnings growth. We're also, with our strong cash flows, planning to continue to increase the dividend meaningfully over this period. And as we transition through the next couple of years, you'll start to see an acceleration in our growth profile driven by that late stage pipeline that I've talked about driven by the biosimilars molecules and by our international expansion. So the next couple of years, attractive earnings and dividends growth followed by an acceleration in our top line, and Tony will sort of elaborate a little bit on that.

Anthony C. Hooper

So thanks Jon. So in the short to medium term, focusing on the existing portfolio, clearly the number one product we've focused on is our newest which is the D-mab franchise with both Prolia and XGEVA. Prolia, as you know for osteoporosis, continues to grow in the marketplace. You might have seen the April, May data coming out showing the pickup in prescriptions again. This product has been in the market in U.S. now about two years, also expanding into Europe. XGEVA itself continues to grow throughout the world, just launched now recently in France, Italy and Spain, so we're actually getting the entire Europe business up and running. Year-on-year growth first-quarter for XGEVA in the U.S. was about 46%. So we continue to focus over there.

Secondly, Enbrel continues to be a market we focus on quite aggressively, a market that is expanding and growing as patients coming to physicians (indiscernible) use of drug in the earlier stage for mild to moderate disease, and Enbrel itself based on the work we've done around DTC, the sales force and customer compliance persistency has also lift that brand and see some growth coming through that one as well.

Sensipar is now approaching or claiming to be a $1 billion brand as we grow this business throughout the world, and then we have a lot of usage in the filgrastim market itself where we have a strong competitive advantage as we go forward. EPOGEN, we have once again become the drug of choice in the marketplace and we've worked hard to make sure that no patients were left behind and we've actually managed that market exceptionally well to-date.

Looking forward, we see, as Jon just said, the new pipeline's launch being very exciting. Our expansion into different global areas, being a second leg of our expansion strategy, we just recently announced the JVs in both China and in Japan. Let me just clarify the Japan one. I think all the deals done to-date over the time of Amgen in Japan has been pure licenses to other companies. This particular one is a clear JV which allows us to take five assets co-develop and co-promote in Japan, share the expenses, and then build our own JV which becomes a standalone Amgen operation by 2020.

The China joint venture which will allow us to bring to market Vectibix by 2015, this was a company that's actually proven itself around evolving in the marketplace bringing on a new drug to market in China, setting some interesting records in terms of rapid price and reimbursement and access in the marketplace.

And last but not the least, our biosimilar strategy, as we evolve, we have a number of products now in total trials that will be coming to market for the first time in 2017.

Question-and-Answer Session

Terrence Flynn - Goldman Sachs & Co.

That was great. Thank you very much, gentlemen. Maybe to start, Jon, if you could just walk us through your capital allocation strategy, so I mean you talked about growing the dividend, what do you think is kind of an appropriate level that you ultimately want to get to on that front, and then also help us think about kind of maintaining the flexibility on the M&A side?

Jonathan M. Peacock

As I think about our capital allocation strategy, the first thing is to preserve sufficient strategic flexibility to pursue the investments that we need to make, including acquisitions, in support of the strategy that we've outlined. The second subject to that is to maintain an efficient balance sheet by returning any separate capital to shareholders. And the third consideration as I think about capital allocation is within all of that to maintain a credit rating that ensures that we have full access to the capital markets. And you're seeing the kinds of acquisitions and investments that we've made over the last couple of years, we're focused either on finding investments that accelerates our growth in geographic markets that are attractive to Amgen and we've made acquisitions in Turkey and Brazil and we are making investments in our joint ventures in Japan and China. So, we're continuing to sort of broaden our channel and make targeted investments in the markets that are important to our future growth.

But we've also looked for attractive assets where we believe we can add value, either add value in the development of those assets in their clinical trials or in the commercialization of the assets. So the acquisitions we've made with Micromet, with BioVex and with KAI Pharmaceuticals are all in areas that we believe we can bring some value in terms of bringing those molecules to market and delivering a good return for our shareholders in the process. So we are continuing to be active in that regard and we are continuing to ensure that we maintain the flexibility to continue to be active in the market.

And then subject to that, we've made a commitment to return capital to shareholders and we've said we expect to return at least 60% of our net income to shareholders. We're well ahead of that over the last couple of years and the focus of that has been around share buybacks although we initiated a dividend in 2011 and we've increased it by 30% a year for each of the last two years. So in that regard, we're well on the track in terms of returning capital to shareholders. What I've said going forward is that we expect to focus going forward to be on continuing to meaningfully increase the dividend and further share repurchase activity to be more moderate than you've seen over the last couple of years.

Terrence Flynn - Goldman Sachs & Co.

Okay, great. And then I guess in terms of you've also guided of being back in the net cash position this year.

Jonathan M. Peacock

Yes.

Terrence Flynn - Goldman Sachs & Co.

As we think about that, what are the plans for taking on additional debt? It sounds like you want to focus on the credit rating but how should we think about any additional debt here beyond 2013?

Jonathan M. Peacock

So for this year, absent any transaction activity that might predicate it for the next year or two, we don't expect to be back in the public debt market.

Terrence Flynn - Goldman Sachs & Co.

Okay, alright. And then I also know you guys have a big chunk of your cash is ex-U.S.

Jonathan M. Peacock

Yes.

Terrence Flynn - Goldman Sachs & Co.

So maybe help us think about potential uses of cash there and do you expect any progress on tax reform here in the U.S. and any factors that we should monitor?

Jonathan M. Peacock

Yes, I think our biggest growth opportunity as a business is ex-U.S. We still have close to 80% of our business in North America, so we have substantial opportunities to build the business internationally. So we are focused on that, and as you said, much of our cash is ex-U.S. and that kind of sits in the right place. But at the same time, to the extent that we see opportunities to leverage against that cash to return the excess capital to shareholders, we've taken the opportunity to do that. We are generating $5 billion to $6 billion of cash each year. So we're keeping an eye on maintaining the appropriate amount of net cash in the business.

Tax reform, I mean it's a harder one to judge. I think the cash ex-U.S., were we to bring it back now, we pay a significant tax burden on it. The U.S. has a tax regime as I think we all know where we're paying the highest corporate tax rates in the developed world and we have a system unlike the rest of the developed world where if you bring it back, you get fully taxed on it regardless of where those profits were incurred. So we're active, as are many other companies, in encouraging a territorial tax system where profits are taxed where they are incurred and can be brought back to the shareholders in the U.S. largely tax-free in a way that most tax reform systems around the world allow.

Now whether The White House and both sides of Congress are able to reach agreement on that, we'll see. I think both sides of the house and the Treasury believes reform is needed, and we are hopeful within the next few years, we'll see some sensible reform of the tax system which would give us more flexibility in how we use that cash, but in the meantime, if we can borrow at after-tax 2% against that cash, then that's not bad.

Terrence Flynn - Goldman Sachs & Co.

Okay, and if there were to be tax reform, what would be the plan, what would be the – how would you think about deploying that capital?

Jonathan M. Peacock

It would give us more flexibility. We have I think as you know around $24 billion of cash, we have roughly the same amount of debt, we could net some of that given the flexibility, but it would just essentially give us more flexibility.

Terrence Flynn - Goldman Sachs & Co.

Okay, great. Maybe moving to Tony, just was wondering if you could compare and contrast some of the challenges and opportunities at Amgen during your time at Bristol and maybe – the company was in a similar position as you guys are entering now this position where a number of your franchises are going to come under competitive pressure, but then you do have the pipeline coming up, maybe you can just compare and contrast those experiences, and then how do you leverage some of your experience at Bristol into your role at Amgen?

Anthony C. Hooper

So unlike Amgen, most of the companies have to live through a process of reviving, revitalizing the portfolio. I think my role at BMS resulted me having to replace about 85% of the portfolio (indiscernible) near period. So I got the scars of my back doing that. Amgen hasn't done that yet. I think the Amgen situation is uniquely different in that there's not a small molecule sort of loss of patent where you're going to see some dramatic changes. As we look at the rest of the world, the evolution of biosimilars into this market has been much slower, much more cautious, much more (indiscernible) prescribe perspective as well as from a customer pricing perspective. I think as I look forward, Amgen has now started to build over last five quarters sort of a clear ability to deliver in the marketplace a growth and operational effectiveness. So I think we're there and I think the next step is to get people to understand how exciting the pipeline is as we go forward.

Terrence Flynn - Goldman Sachs & Co.

Great. Maybe if we could move on to the commercial franchises. So in your opening remarks, you touched on a number of the drivers here, maybe just to start off on Enbrel, if you could walk us through some of the dynamics on both the demand and pricing side for RA and psoriasis markets, and then your thoughts on potential competition from some of these oral drugs and then maybe a little later from biosimilar competition, not Enbrel specifically but some of the other TNF drugs?

Anthony C. Hooper

Enbrel was the first TNF to come to market and placed in both the rheumatology and the dermatology segment at the moment. We continue to be the market leader in terms of dollar value in both those segments. What's pleasing to see is the acceptance by physicians to prescribe the drug more readily for patients as they come to being diagnosed. The evolution from an (indiscernible) to methotrexate doesn't give a patient really that much value. The lift between methotrexate and a TNF is a dramatic change in the patients' lives and the quality of life, and hence we've seen the expansion of usage in the rheumatology market.

The second piece is our ability to help patients stay on drug a little longer has improved quite dramatically over time. Historically, we'd lose up to 30% of the patients in the first six months. It's very clear that if we even keep a patient on a drug for six months, the possibility of them staying on beyond the six months doubles in fact. So we've spent quite a bit of time there. So, a combination of increasing the number of new patients as well as increasing the number of patients staying on drug for a much longer period.

Terrence Flynn - Goldman Sachs & Co.

Where is that percentage now, it used to be about 30% limit but how far down has it come, or they wouldn't be able to tolerate within the…?

Anthony C. Hooper

No, I mean patients are simply stopping, about 50%. Every 1% is a huge amount of value. I think we're down to about 40%. Now we just have 10% or more people that are staying on that as we go forward, and patients drop out because either they are not being affected, they're not getting response, or they just don't like having to take a drug like this coming in and out of the treatment regimen. But the time the patients are staying on the drug is the one pretty much important now. As regards the RA, I mean I think the market speaks to itself. People are waiting to see the efficacy, they're waiting to see the experience and to see what side (indiscernible) and it's clear that the TNFs continue to dominate the market quite radically.

Terrence Flynn - Goldman Sachs & Co.

And would you anticipate any differences in terms of oral entries into arthritis versus psoriasis in terms of the prescribing base, is there anything, any key differences, is one base more conservative than the other in terms of as we think about these new entrants?

Anthony C. Hooper

I think in both cases, whether you're talking psoriasis or you're talking rheumatoid arthritis, you're talking about a disease that's not going to be cured, you're talking about a disease that a patient is going to be dying with, and therefore the physicians treating these patients and the patients with these diseases truly understand that efficacy has to be your number one criteria you actually look at. And therefore efficacy is going to be something that they look at consistently in terms of do I make a choice for my patient or not. The second one will be how does my patient respond to drug in terms of side effect, (indiscernible) and can they stay longer. So to me, it comes back to efficacy first and then modality second.

Terrence Flynn - Goldman Sachs & Co.

Okay. And then I guess on the biosimilars, how do you see that playing out or placing any pressure more on pricing or market share assuming someone is able to bring a biosimilar HUMIRA to the market at some point?

Anthony C. Hooper

So what we've seen around the world is as the biosimilars come to market, there is an actual expansion of the market that happens in the beginning. So you will see an increased number of patients going on the drug. I think in the beginning, the limited number of biosimilars that would come to market, because it is a high cost to get in, will result in prices remaining stable in the beginning of this particular evolution. There will be some pressure on the marketplace without doubt, but as you know we're developing a HUMIRA biosimilar ourselves, so we intend being right there when the game starts.

Terrence Flynn - Goldman Sachs & Co.

Okay. And in terms of I guess positioning your HUMIRA biosimilar, is it fair to assume that this would be more of a ex-U.S. focus just given Enbrel in the U.S.?

Anthony C. Hooper

So we only have the rights to Enbrel in North America. So the entire rest of the world is an open competitive game for us. In the U.S., although we have Enbrel, there's also a $7 billion HUMIRA business that's going to be challenged and we'd like to be a part of that.

Terrence Flynn - Goldman Sachs & Co.

Okay, great. And then you also have a pipeline drug AMG 827 for psoriasis, just wondering if that drug is successful, I think we're going to get some of the data in 2014, how are you going to position that relative to your current portfolio?

Anthony C. Hooper

So 827 as you know is in a JV development with AstraZeneca in fact and the most recent Phase 2 data was kind of pleasing because up until now we've actually evaluated the efficacy of these drugs at about a positive 75. You can actually reduce the available appearance of the drug by about 75%. We've never looked higher than that because it's been impossible to get there. 827 shows that probably 100 of 62%, so 62% of our patients were shown to be totally clear of the disease, which when you think about a disease, from a social perspective it's pretty important for patients to look clear, this one's really exciting. No doubt in my mind that different patients respond differently on different drugs, there's a lot of unmet medical need that continues to exist in the marketplace in spite of the TNFs being there, and I see a very comfortable co-positioning of these drugs for different patients.

Terrence Flynn - Goldman Sachs & Co.

And would you have to have a separate sales force given your arrangement with AZ or could you…?

Anthony C. Hooper

No, we could use the existing sales force to call on dermatologists. So it will be layered right on top.

Terrence Flynn - Goldman Sachs & Co.

Okay, great. Maybe moving to XGEVA, so you guys have cited the potential for disruption near term from generic Zometa, just wondering what you've seen to-date and is there anything you can do to minimize that impact?

Anthony C. Hooper

So Zometa went generic like the end of March. There are about six generics that have come to market. They've taken about 80% of the business at this particular stage. If I look at the April and May data around overall market share, and our market share in new naive patients, there hasn't been much of a change in that. In fact we've seen a slight increase in the new naive patients over the last month or so. There is a fairly small targeted prescriber base that have been writing about 80% of the XGEVA prescriptions and it's clear that they've made the decision to prescribe the drug based on the clinical data and the generic Zometa hasn't changed their mind.

Terrence Flynn - Goldman Sachs & Co.

And what do you think has been driving the increase among these starts in terms of your market share?

Anthony C. Hooper

It's got to be around the clinical data. I mean (indiscernible) certainly around the fact that our clinical data shows statistically significant efficacy versus Zometa.

Terrence Flynn - Goldman Sachs & Co.

Okay. And then on the XGEVA side of the business, for XGEVA, what other countries that are left here that are going to come onboard and then anything specifically on pricing there on XGEVA that we should think about?

Anthony C. Hooper

So, we have just launched in the first quarter of this year in Italy, Spain and France which is three of the biggest markets in Europe and we've seen a relatively strong uptake. In fact in the first quarter, France went to 10% market share just in about six weeks and I've seen that trend continue into the April and May period.

Terrence Flynn - Goldman Sachs & Co.

And what was it in the U.S., just as a benchmark, like in the early part when it was launched?

Anthony C. Hooper

I can't remember that far back but we didn't get 10% in six weeks. I like to keep on reminding my U.S. team. But France historically has been a rapid uptake market. New innovations they accept very rapidly, move quite fast to put into place. As regards prices, as I look across Europe, with the exception of one or two small companies, and I think it's unfair to include (indiscernible) at the moment, we've seen no dramatic changes or increased pressure in what we've seen over the last two years. So the price decreases we've experienced in Europe for this year to date are pretty much in line with what we had projected and with what we saw in 2011, 2012.

Terrence Flynn - Goldman Sachs & Co.

Okay. And then if we move on to Prolia, so this was obviously the Company's first entry into the primary care space, just thinking forward, what are the opportunities for continued growth here, and then I just wondered why the re-injection rates have been higher in Europe relative to the U.S. and anything you can do to improve that here?

Anthony C. Hooper

So I think in the beginning, everyone thought of Amgen launching specialty drugs and the rapid uptake you see with specialty drugs and we're a bit surprised to see a primary care drug following a primary care line, and I'd like to think of Crystal as an opportunity, right. So we look at Crystal trajectory, I think of Prolia at the same time, highly efficacious, delivering value which is building momentum over time. Every month I see increased levels of prescribing, when you look at the data in the U.S. around April and May, increased prescribing, increased new patients. So I expect this drug to continue to drive. I think we have about a 10% market share now and that is a market share that continues to grow and evolve over time without doubt.

The persistency rates in the U.S. have gone from about 43% to just under 60% in terms of patients coming back for the second injection. In Germany, I have in excess of 90%. Now we can discuss genetics and first how we trade in Germany, but I think the main thing is that the close loop process where patients are encouraged to come back, there is no fee, there's a co-pay which is low, has resulted in a discipline within a market like that that's been much more effective, but we would spend more time making sure patients truly understand the value of the drug and the reason to come back. So a lot of the DTC work we're doing at the moment and integration with patients at the early stage is allowing them to see the value that if you actually come back for that second injection, and then do the BMD scan at 12 months, you see the dramatic improvement and you will understand why you should be coming back. So we focus quite heavily there.

Terrence Flynn - Goldman Sachs & Co.

And do you have a target in mind of where you would like to see that persistency rate get to?

Anthony C. Hooper

I've told the U.S. team to look at what Germany is doing, right. Whether we'll get there or not, it's going to be tough, but it's clear that we need to get better than we are at the moment.

Terrence Flynn - Goldman Sachs & Co.

Okay, great. Maybe just thinking forward to the pipeline here, so you obviously have another potential primary care drug in AMG 145, what are some of the lessons that you've learned from Prolia that maybe you can transfer over to 145 as you think forward to that launch and anything you can do to kind of improve the trajectory right out of the gates there?

Anthony C. Hooper

Okay so a couple of differences between Prolia and 145. 145 will be launched to cardiologists first. So they will focus very clearly around the ACC guidelines to cardiologists to make sure we lock down that part of the market before we get the outcomes data and then move to primary care. The second one is that I think the understanding of the need to lower lipid in order to prevent cardiac events and/or death is much better understood, is something that's measured every time a patient goes for a check-up. So we're not having to teach the market about something additional. A lot of patients are on statin, so this drug will be used on top of statin to bring high-risk patients down to guidelines which in the U.S. is 70 of course. And last but not the least, Prolia has to be physician administered, so you get into the whole (indiscernible) issue, the ASP issue. 145 will be a self-administered drug, so it's simply Medicare Part D or a patient just picking up at the pharmacy.

Terrence Flynn - Goldman Sachs & Co.

Okay. And we get a lot of pushback from investors just on the market opportunity here just given some of those dynamics and the need for an injection into an oral market dominated by generic statin. Can you depend on these patients to really routinely take their injection? What gets you excited about this market as we kind of walk through some of the dynamics and really see the big picture opportunity here for this class of drugs?

Anthony C. Hooper

So when I talk to the members of ACC, I talk to the cardiologists, and you realize that the science around lowering lipids and lowering cardiac events at the same time is just undisputed, I mean it's as clear as day and night to cardiologists. That's what they focus on pretty clearly, that's what the general practitioners understand and that's what patients themselves understand which is why patients like to be put on statin. When you look within that group and you look at how many patients are not actually at go, it's a huge number. And we look at high-risk patients which comes down to 2.5 million plus patient population. These are patients really who have already suffered one event, are at high risk of having a second event and have some or other type of co-mobility in terms of obesity, diabetes, smoking or whatever it is. Every time they go in to be treated, someone checks the lipids and tells them you're not in the guidelines. There's no doubt in my mind that physicians and cardiologists in particular understand that if I can get that patient's lipid down further, we will prevent more events, prevent more deaths and actually take cost out of the system. So I'm excited. I mean I've spent 15 years in the statin market trying to get physicians to prescribe more patients to stay on longer. So I'm excited because I think there's a huge unmet medical need, the drug is going to be delivering levels of efficacy that are really worthwhile having. And three, you can administer it once a month going forward.

Terrence Flynn - Goldman Sachs & Co.

And how – do you think there's a role for DTC here in this patient population?

Anthony C. Hooper

I would not spend time in the beginning with DTC. I really want to make sure that cardiologists understand the mode of action of this particular drug, the rushing off of this drug, make sure we can get input from ACC, they actually write the guidelines, make sure that hospitals just discharges protocols in place, and once we have the outcomes data, then DTC can be a choice. It depends on how much we need to mobilize patients.

The nice thing about this particular one is that we are talking to a specific group of patients, you're not searching or dredging for patients. Any type of DTC we'll be doing is targeted to patients who actually know they already have cardiac disease, so therefore they are aware of it. If you have cardiac disease, it's a bit of a slap on the face, so a wakeup call when you realize how close you've come to d4eath and how you live every day on the edge of having a life or not. So those patients are often searching for you, they have a lifestyle, they have a diet, so you're able to focus on those pretty quickly and do a cost-effective DTC to patients who are already diagnosed.

Terrence Flynn - Goldman Sachs & Co.

And on the commercial build side I guess any leverage from your existing sales force and how much incremental build would be required to launch this product?

Anthony C. Hooper

So at launch we're looking at a dedicated cardiology team, so that we have a small build at the beginning. As we evolve beyond that, there's about a 75% overlap of the Prolia team who call on some of the GPs as well.

Terrence Flynn - Goldman Sachs & Co.

And how big is the Prolia team right now?

Anthony C. Hooper

About 595 reps.

Terrence Flynn - Goldman Sachs & Co.

Okay. And then as you think about – there obviously are a number of other companies entering this space, Regeneron and Sanofi in Phase 3 along with you guys with a number of pharma companies in Phase 2, as you think about the competitive dynamics here, do you view that as a positive as there will be more companies marketing this class of drugs, increasing voice among the need for this class and the new mechanism or do you think that's actually more of a headwind to you guys longer-term?

Anthony C. Hooper

I think rapid education is always valuable in building a marketplace. I mean I take all competition very seriously. I think coming to market first is going to be important, getting to market first, establishing ourselves as one of the leaders is going to be important. Coming to the market with a differential dosing regimen is going to be important where patients with our drug will have the choice of either doing it twice a week or once a month. I think first to market is always a major advantage. Down the line, we will then have to compete within the marketplace.

Jonathan M. Peacock

And just as we've said, this is a big market, and I think Tony had talked about 2.5 million patients who are at high risk and well above goal.

Terrence Flynn - Goldman Sachs & Co.

Okay, great. Maybe just in the last few minutes I wanted to touch on biosimilars. First just there's the potential that Teva could be launching their version of NEUPOGEN and a long-acting version of this NEUPOGEN product later this year. So just would be interested to know if you were in their shoes I guess what would you do to try to compete against Amgen's neupo franchise?

Anthony C. Hooper

So they have the right to come to market in November with a NEUPOGEN like product. Just to remind the folks again that this is not a biosimilar, right. So it's not like you're having someone come to the market who can actually claim similarity to your product. They'll have to do two things, one establish themselves from a clinical perspective first, a use perspective, and they'll have to have their own ASP, and that's where we'll pick up. As regards their longer-acting compound, you know that our Neulasta patent goes until 2015. We have a long history of defending our patents and obviously we'll continue to do that going forward.

How Jeremy Levin will make a decision to come to the market I don't know yet. It's clear that none of us want to spend too much time on the commodity market. So I think he'll be thinking carefully about the value they bring and the quality and continuity of supply because what he's up against is a couple of products that have a combination of years of experience in the marketplace, years of proven efficacy, years of proven safety, and we have a track record of having never shorted a patient ever in the marketplace. A product with the Amgen name on it guarantees quality and continuity of supply which is not many companies have been able to do over the last 10 years.

Terrence Flynn - Goldman Sachs & Co.

Okay. And then as we think about your biosimilar program, I mean big picture, do you see this more a risk or an opportunity? I think there's obviously some debate here among investors and how do you think about it from an Amgen specific perspective?

Anthony C. Hooper

I think having our patent of products eventually challenged by biosimilars is obviously a risk we live with as we go forward but it's probably how the industry works. Having the Amgen skills and competencies around manufacturing large molecules, which when you get close to them, you realize is a clear combination of both science and an art. We started this 25 years ago. I think we're probably the world's expert in doing this. Our ability to manufacture these drugs, to deliver these drugs will put us in a unique place to be competitive. When you think about the risk of bringing drugs like this to market, they are much lower of course than bringing new innovative drugs to market. So we have the risk profile in the market that's lower, and therefore to us, it's a multi-billion-dollar opportunity at a point in time of our Company's lifecycle.

Terrence Flynn - Goldman Sachs & Co.

Great. Got time for anyone's questions from the audience, any questions? No, okay, great. Thank you very much, gentlemen.

Anthony C. Hooper

Thank you.

Jonathan M. Peacock

Thank you.