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Amgen, Inc. (NASDAQ:AMGN)

Q1 2007 Earnings Call

April 23, 2007 5:00 pm ET

Executives

Arvind Sood - VP of IR

Kevin Sharer - Chairman & CEO

Bob Bradway - CFO

George Morrow - Head of Global Commercial Operations

Roger Perlmutter - Head of R&D

Analysts

Jennifer Chao - Deutsche Bank

Eric Schmidt - Cowen & Co.

Jeff Meacham - J.P. Morgan

Eric Ende - Merrill Lynch

George Farmer - Wachovia Securities

Joel Sendek - Lazard Capital Markets

May Kin Ho - Goldman Sachs

Steve Harr - Morgan Stanley

Mark Schoenebaum - Bear Stearns

Geoffrey Porges - Sanford Bernstein

Maged Shenouda - UBS

Yaron Werber - Citigroup

Shiv Kapoor - Montgomery & Co.

Michael Aberman - Credit Suisse

Al Rauch - A.G. Edwards

William Sargent - Banc of America Securities

Presentation

Operator

Good afternoon. My name is Lamont, and I will be your conference facilitator today for Amgen’s First Quarter 2007 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.

In order to ensure that everyone has a chance to participate, we would like to request that you limit yourself to asking one question during the Q&A session. (Operator Instructions) I would now like to introduce Arvind Sood, Vice President of Invest Relations. Mr. Sood, you may now begin.

Arvind Sood

Okay. Thank you, Lamont. Good afternoon, everybody. I would like to welcome you to our Q1 results conference call. We have several topics to discuss with you today, and given the breadth of these topics, the duration of the call may exceed our customary one-hour.

Our Chairman and CEO, Kevin Sharer, is going to lead off with a recap of Q1 and then talk about our outlook for 2007. Following Kevin, our Chief Financial Officer, Bob Bradway, will then discuss our business results for Q1, followed by George Morrow, who is our Head of Global Commercial Operations. George is going to review our product performance in Q1.

Following George will be Roger Perlmutter; our Head of R&D. Roger will spend some time discussing results of the recently completed study 145 with Aranesp, as well as provide updates on key pipeline products including denosumab.

As we have done in the past, we will use slides for presentation. The slides have been posted on our website and a link was also sent separately by email. So, before we start, I would like to mention that through the course of our presentation today, we'll make certain forward-looking statements, and of course, actual results can vary materially.

So with that, I would like to turn the call over to Kevin.

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Kevin Sharer

Thanks, Arvind. Good afternoon, everybody. Again, I want to reiterate what Arvind said, we had an event filled and busy couple of months here and I know we all want to talk about it. So, we'll have plenty of time to answer your questions and give you our perspective. My assumption is that you've had a chance to look at the press release, but if you haven't, that's fine too.

First of all, let's talk about the first quarter. It was a really strong quarter for us. Revenue was up 15% and adjusted EPS grew 19%, performance we feel really good about. There is a couple of highlights for that performance financially. One is that, international was particularly strong with our product sales up there 22% or 15% if you exclude Fx comparisons.

The other thing is while we'll focus a lot today on the ESA products in the United States, that is Aranesp and EPOGEN. And all of our key products had a good performance in the first quarter with every product at or exceeding our expectations with obviously the exception toward the end of the quarter of Aranesp.

So, I don't want to for a minute today as we talk about the future takeaway from the underlying strength of the business as evidenced in the first quarter. And I know there are lot of Amgen staff that are listening to this call too, and I want to thank and congratulate them for their efforts in delivering these results and serving patients.

We also made good pipeline progress in the first quarter. Roger will talk about that. Denosumab is becoming clear, and AMG 531 had some positive results too, and we have got some new molecules a bit earlier in the pipeline, Roger will talk about.

We're referring to slides, by the way, they are on the web, and I suspect most of you are looking at them. I am now going to move to slide six, and that slide has the headline, The 145 Results Strengthen Our Conviction That Our ESA Products Are Safe When Used "On-Label." I'd like to comment for a few minutes here on my own personal view of our ESA products and their safety and use.

Before I do that though, as we've said in the press and in every forum, the mission of Amgen is to serve patients. And the number one aspect of that mission is that we want to make sure that our products are safe, and so that is our top priority.

Aranesp and EPOGEN have been on the market, EPOGEN certainly for many, many, many years and have helped over 4 million patients improve their lives. And we have many studies that support that observation, and we recently got four new studies added to our label that caused some discussion.

I'd like to say that those four studies DAHANCA acquired creating our own 103 study examined off-label hemoglobin targets and indications. They are new scientific data. We have to pay attention to that. We have to put them in the overall body of evidence.

Roger will talk much more extensively about this, but I would like to say that we have data on over 9,000 patients. The overwhelming conclusion that I reached and others have reached in looking at all that data is that on-label our drugs are certainly safe and on-label on indication.

In the 145 study, which we designed some years ago, and by the way, we designed that study when there was Phase II data to indicate that perhaps we could help cancer patient from a survival point of view is before the best study, the DAHANCA study, was a good scientific experiment to run.

I of course wish that the primary end point of survival benefit had been attained, but I must say in today's environment the fact that it was a solidly survival neutral study. It was good news for patients, and I think good news for shareholders.

At the ODAC meeting in some weeks there will be a much more complete discussion about all of the data, and I am hopeful and optimistic that good judgments will be made there. And so when I look at the overall body of evidence, the length of time we've used these drugs, again, the aggregate of the results demonstrates a solid benefit risk profile when they are used on-label.

One other thing about our R&D program that some of you have asked me about is the PACCE study. Again, Roger is going to talk about Vectibix. We bought Abigenix some time ago in the strength of the Vectibix Phase III trial. I am glad we did that. The market in third line indication has been receptive to Vectibix, and we're running a whole battery, if you will of clinical trials around Vectibix.

PACCE was a study that was designed to combine Avastin and chemotherapy with Vectibix to see if that would help patients. I wish that we had proven that it did, but on the other hand when we run scientific experiments, sometimes you get answers that you hope for and sometimes you don't.

It doesn't reduce my commitment to exploring Vectibix and continuing to pursue a variety of trials to advance its use in patients. And again, George will talk about the commercial situation with Vectibix, and Roger will talk more about the clinical program. But I am fully convinced that both these trials, the 103 and in the PACCE trial were well-designed trials we should have done, and we'll move on with continued significant investment in R&D.

Let's take a look at our outlook for 2007. As you can appreciate right now it's not easy to predict exactly what the revenue is going to be for 2007 for Aranesp and EPOGEN. The other products as I've said are performing as expected or better.

And we have a few data points on Aranesp and EPOGEN since the label change, but not enough yet to have full confidence we can predict exactly what they'll turn out to be. But by the second quarter earnings call, we're optimistic, we'll be able to do that and give you a 2007 view of revenue then.

I will say though, we have enough sense of what the situation is that we're adjusting expense growth to make sure that we can deliver at the low-end of the EPS guidance range and still be able to invest heavily in the future of the company. I think we're doing the prudent things here to deliver value to shareholders and also invest in the future in a period of some uncertainty.

And again George will communicate there. We've been out doing everything that we can in terms of talking to doctors, payers, looking at the data, applying our own judgment. So, we've got, I think as good a view as you can have right now and are taking the right steps given that.

And I'd like to now introduce our new Chief Financial Officer. Bob has been with the company about a year, and he's been working in an operating part of the business and before he was at Amgen, he was in the financial services world and had a lot of experience working in our industry.

So, he both has a lot of knowledge after year at Amgen, of kind of, how we work and who we are, and based on his prior background he's got a very, very strong familiarity with our industry. And I must say in these past, has it only been a couple of weeks Bob has really gotten a chance to integrate on the team and we're all delighted that he is here.

And I think you'll enjoy working with him and it is also from time-to-time a positive thing to have a new voice around the table with a new point of view and so we welcome Bob on that basis too and Bob, I'll just turnover to you now and you can give some more depth and color here on our financial results. Bob?

Bob Bradway

Right. Thank you, Kevin. And if I can direct your attention to slide number 9, the adjusted income statement, I will walk you through that now.

Starting with revenues. As you can see, revenues for the quarter increased by 15% over the prior year, and that growth was driven primarily by demand for Aranesp, ENBREL and the Neulasta, NEUPOGEN franchise.

Wholesaler inventories of our major products ended within normal ranges for the quarter, and indeed the majority of our growth was demand driven with foreign exchange and wholesaler inventories accounting for less than a quarter of the overall growth. George will give you a bit more detail on the products in a moment.

Let me focus in the meantime on U.S. sales, which were up for the quarter to $2.9 billion, which represents an increase of 12% over the prior year. International sales were $681 million for the quarter, which represents a 22% increase over the prior years, and these sales were positively impacted by foreign exchange to the tune of about $42 million on the quarter. Excluding foreign exchange, international product sales increased by a solid 15%.

If we turn to operating expenses, which as is our customer discussed on an adjusted basis, you will see that operating expenses grew for the quarter by 15%, and I'll take you through the line items there.

With respect to the cost of sales, you can see as costs of sales were up by 1%, and this reflects increased sales volumes being largely offset by our manufacturing efficiencies.

Expenses in R&D, and R&D grew 29% during the quarter, and this was primarily due to the increase number and expense of mega-trials to advance our late-stage pipeline as well as continued advancement of earlier stage compounds.

Turning to SG&A, expenses here grew by 15% during the quarter, and the bulk of that increase reflects higher Wyeth profit share expenses related to ENBREL sales growth and our continuing investment and infrastructure including our ERP program.

Shifting to the tax rate, as you can see, the tax rate was down 3.4 points on a quarter, and the adjusted rate for the quarter was 21.7%. This is driven largely by the expanded R&D tax credits together with greater foreign manufacturing from our Puerto Rico operations. Recall that the R&D tax credit was retroactively reinstated in late 2006 and therefore the first quarter 2006 financials don't reflect any benefit from that R&D credit.

Turning to earnings per share, earnings per share for the quarter were $1.08, which is an increase of 19% over the prior year. On a GAAP basis, first quarter earnings were $0.94, which is a 15% increase compared to the $0.82 we earned in the first quarter of 2006.

The GAAP results were negatively impacted on a pre-tax basis by $51 million from the write-off of deferred financing costs resulting from the repayment of $1.7 billion of convertible debt during the quarter.

First quarter adjusted EPS including stock option expense was $1.05. And this represents an increase of 21% as compared to the $0.87 we earned in the first quarter 2006.

Now turning to slide 10, a few highlights from our balance sheet and cash flows. As you can see in the first quarter 2007, our cash balance is lower than it was in the first quarter of 2006 by $2.3 billion, and this is primarily due to the repayment of our alliance security as well as acquisition related costs and share repurchases.

If you look at the debt at the end of the first quarter 2007, you can see the decrease reflects primarily the repayment of the $1.7 billion of convertible debt again during the first quarter of the year.

In terms of capital expenditures, capital expenditures were up over the prior year, and that reflects our manufacturing capacity and site expansions in Puerto Rico and other locations as well as our ongoing investment in our ERP system.

You'll also see that we purchased fewer shares during the quarter. We spent about $537 million repurchasing 8.8 million shares in the quarter, so considerably less than the same period in 2006 where as you may recall we had an accelerated share repurchase, which included $3 billion of that 3.4 number in 2006.

And I'd like to remind you that in December of 2006, the Board authorized the $5 billion share repurchase program, and we currently have a total of $6 billion remaining under this program and the previously authorized share buyback program.

Now turning to slide 11, I would like to give you a bit more color on our outlook for 2007. As you may recall from our previous conference call in January 25th, we suggested revenue guidance on that call in a range of $15.4 to $16 billion, and adjusted EPS guidance between 430 and 450. Our assumptions at that time included some impact from the negative AOC study, and some impact from an at-risk launch of Roche's peg-EPO.

And what has changed since then, well, since then we have lost AOC coverage for nearly all of our Medicare patients. Obviously the FDA has issued label revisions for all ESAs that will reduce usage compared to our expectations in January, and KDOQI has issued revised guidelines, as well going for more conservative dosing.

So, in light of those changes as Kevin, suggested a moment ago, I would like to have our revenue guidance be up for review, and to reiterate that we expect EPS to be at the low end of our previously stated range of 430 to 450.

We're taking actions to reduce the growth of our operating expenses in order to offset revenue impact. And an addition, a global review of our business plans resulted in our being able to push out the timeline for the planned construction of our manufacturing facility in Ireland, and therefore our capital expenditures in 2007, will be inline with capital expenditures from 2006.

Now I would like to turn it over to George, who will tell us a little more about the performance of the products during the quarter.

George Morrow

Okay, thanks Bob. Lets move right to the commercial highlights on slide 13. Product sales grew 40% year-over-year, largely driven by demand. So, while we had a good first quarter in terms of product sales growth, the main interest obviously is in our anemia franchise growth prospects going forward.

The bottom line is that we're in the midst of oncologist and nephrologist behavioral changes in response to recent study results, FDA label changes and of course reimbursement changes. Until the market totally absorbs and reacts to these changes, and we see it reflected in sales, we cannot accurately predict the longer-term impact.

Having said that, I will give you our best sense of what physicians are currently thinking and doing, as I get into the Aranesp and EPOGEN slides. The rest of our business is performing well with double-digit growth for ENBREL and the Filgrastim franchise. And finally, international had a record quarter driven by Aranesp.

So, if you go to the next slide, first quarter sales for Aranesp reflect both soft January sales resulting from modest and user buy-ins in December and an initial reaction to the various changes in March that I just described. Consequently, 14% worldwide quarter 1, growth does not necessarily tell us much about the Aranesp momentum going forward.

We go to the next slide. As Kevin mentioned, patient safety is our highest priority, so when the label change for our anemia products in early March, our sole focus in the field was on communicating those changes to all target physicians as quickly as possible. As the headlines states, the impact of the label changes will only become clearer as time passes.

From the most reliable trend data, here is our best sense of how oncologist in the U.S. are viewing their future views of ESAs and ESAs are erythropoiesis stimulating agents based on our frequent contact with customers and formal market research.

Overall, oncologists 15 years of experience using ESAs will be the strongest influence on future use. The vast majority appreciates the quality of life benefits provided by ESAs despite the fact that we don't promote it.

With regard to chemotherapy-induced anemia or CIA, they believe ESAs are safe and effective in CIA at the label dose. They will be more careful when patients exceed a hemoglobin of 12, and here we estimate that about 86% of ESA, CIA administrations were less than hemoglobin of 12, and that's 2006 data.

A certain percentage, and here we estimate about 25% of doctors are reassessing when to initiate therapy. And this remains one of the areas of most uncertainty going forward.

Right now, we estimate that 95% of administrations or less than 12 hemoglobin, 72% of CIA administrations less than 11. And again, that's 2006 data, and I should caution you as I have on some previous call that we're using electronic medical records data, and it's really not meant to be projected, so there is a fairly large arrow bar around these numbers. But it is the best we have right now.

We also know that the vast majority of oncologists do not believe that ESAs promote tumor growth, and overall usage will likely conform more strictly with expert guidelines, so that as to initiate hemoglobin below 10 or 11 probably depending on reimbursement. And target hemoglobin’s between 11 and 12 and reduce and stop the dose, reduce or stop the dose when above 12.

An early feedback is the 145 results are serving to go reinforce the current beliefs in the favorable benefit risk ratio in chemotherapy-induced anemia. I should also add there is a lot of interest in the ODAC meetings and the outcome of the national coverage analysis by the CMS.

Now turning to anemia of cancer or AOC. As expected the label change precipitated decisions by most Medicare contractors to drop coverage for AOC. Now virtually all Medicare license Bob mentioned are not covered. Our sense is that this action is driving most of the time softness we've experienced in Aranesp thus far.

Since AOC is such a heterogeneous category and is not uniformly defined or coded by carriers, it remains to be seen if Medicare contractors with input from oncologists and patient groups redefine codes to enable some AOC patients access to ESA treatment.

Time will tell, and it would not be surprising if the CMS commented on this issue through the national coverage analysis. In summary, we believe there is a substantial core of anemia business that is rock solid and barring any significant changes to reimbursement. We expect to have a much clearer idea of the Aranesp growth curve by the next quarterly conference call.

Next is EPOGEN on slide 16. Net of all the adjustments, EPOGEN grew roughly 3% during the first quarter, and patient growth is also estimated to be in the range of 3%. So, let's go to the next slide on 17.

I should first say that our strong belief is that a patient EPOGEN regimen is designed by his or her physician, who determines the appropriate level of care required for the patient and prescribes respected dose for each individual situation. In general, physicians pay more attention to KDOQI Clinical Practice Guidelines than any other source according to our market research.

To date label changes, which have been well communicated appear to have had minimal impact on ESA utilization as nephrologists generally target a hemoglobin of up to 12, and manage natural variability in accordance with erythropoietin monitoring policy for EMP.

The majority of nephrologists indicate they are not likely to change ESA use or patient monitoring at this time. We are, however hearing some isolated reports of physicians instituting a hard stop of 12, but this is the exception. In our view, direct KDOQI guidelines reflect the importance of maintaining patient's hemoglobin above level. This is consistent with current practice and CMS quality measures.

Looking forward, any changes to treatment protocols are more likely to be driven by potential reimbursement changes than by clinical motivations. While the timing of a potential EMP change is uncertain, our general assumption is that the process would track with the NCA timeline.

Turning to slide 18, NEUPOGEN and Neulasta combined grew 14% quarter one '07 versus quarter one '06. Inventories decreased slightly for both products quarter one '07 versus fourth quarter '06, while remaining within the normal range. Driving first cycle penetration in the roughly 50% of patients not treated, but indicated in both our label and in expert guidelines remains our focus.

Next slide is 19. Enbrel experienced solid growth of 11% quarter one '07 versus quarter one '06, driven by demand. The rheumatology market grew 21% during the same timeframe with the newer injectable products serving to expand the market.

As a consequence, our share is down two points from quarter one '06. The dermatology market grew 13% year-over-year and our share is also down two points from quarter one '06 in this segment. Much of the quarter-on-quarter decline is explained by a favorable discount adjustment in the fourth quarter of 2006, which I called out during the January conference.

There also appears to have been extra inventory build-up at the patient level prior to the 2007 new insurance plan year and this is commonly seen with prescription products. All in all, we believe we're on a solid double-digit growth curve for Enbrel.

The news on Sensipar shown on slide 20 continues to be all good. In particular, we continue to penetrate the patient population with PTH is greater than 300, but at less than 30% penetration, there is lots of room for continued growth.

Vectibix demand and share curves are shown on slide 21. The class grew 56% year-on-year and 6% quarter-on-quarter. Vectibix exited 2006 with a 26% share and quarter one '07 with a 35% share. The majority of Vectibix use is monotherapy in late stage metastatic colorectal cancer.

Turning to slide 22, we remained confident in both the growth potential of the EGFr class and the ability to grow market share for Vectibix. Over time, new data in metastatic colorectal cancer should increase the adoption of EGFr class in early lines of therapy, where the treatment duration is significantly longer.

And last but not least, our international performance is shown on slide 23. As I mentioned, we had a record sales quarter with share gains in all franchises. Any in-roads made by Dynepo to-date, look to be coming exclusive from the first generation EPOs and believe already for a peg-EPO if and when it comes. Roger?

Roger Perlmutter

Thanks, George. Well, as Kevin indicated, we had a very busy first quarter, and I will try and cover the important topics today.

Slide 25 shows an outline of those. I will give you an update on Aranesp safety and efficacy studies, talk for a few minutes about clinical trial progress for Vectibix, and then spend some time talking about AMG 531 and denosumab, and both of these areas we have important new data.

And lastly, I will give you an update on what to expect at this year’s American Society of Clinical Oncology meeting. So, if we can turn to the Aranesp safety and efficacy issue let me highlight the fact we've had data in the first quarter for two very recent study that address the safety of Aranesp has been two different settings.

And those are of course the 103 study, in anemia of cancer, which we talked about in January. And the 145 study about which we issued a press release just last week. These studies address different needs, and these studies were designed to address different questions.

The 103 study, is a study that looked at patients with anemia of cancer, and as George indicated, that's a fairly heterogeneous entity, but this particular study looked at patients with cancer that could not be attributed to anything other than their, anemia could not be attributed to anything other than their cancer. That is that these patients must have had active disease, they must not be on chemotherapy, and they must not be planned to receive any therapy, so it’s a narrow and very different segment of anemia of cancer from what is usually treated in the typical oncology community practice environment.

And all 989 patients were enrolled in that study; there were many different cancer types. No chemotherapy was permitted, and the hemoglobin target was 12 grams per deciliter. In the 145 study, this was a study that looks specifically at small cell carcinoma of the lung.

There were 600 patients in the study, and these patients all received chemotherapy either carboplatin or cisplatin plus etoposide, in addition to receiving either Aranesp for placebo. The hemoglobin target in this case was 13 grams per deciliter.

Now the two studies asked rather different questions. In the anemia of cancer study the primary end point was avoidance of transfusion, and there were secondary end points with respect to hematopoietic response and of course safety issues were followed. The 145 study had a composite primary endpoint or rather a sequential one.

The first question was whether there was a hematopoietic response and if that was the case then the fundamental primary endpoint was in fact survival. The driving force for the 145 study, as Kevin mentioned, was the fact in our Phase III studies we had seen evidence of the survival benefit in patients with lung cancer. And that evidence reached statistical significance in the subset with small-cell lung cancer.

As we’ve indicated, in both 103 and 145, Aranesp been induced to hematopoietic response. In fact hemoglobin level were higher in patients treated with Aranesp and those who received placebo. In the 103 study, as I told you in January, there was a negative mortality result, with a hazard ratio of 1.29 that was statistically significant.

In the 145 study the only study ever done with erythropoietic stimulating agents, that had survival as its primarily endpoint, the hazard ratio was 0.93, and the confidence intervals spend one. So the result of that study was neutrality.

Again the study was started, because we were trying to demonstrate or test the hypothesis, that treatment of anemia in this population would actually improve survival, but in fact we did not prove that endpoint. Instead, we found that the hazard ratio was point 93.

Now I should pointed out to you that these two studies were initiated quite some time ago. The initial study concept documents for both 103 and 145 were formulated in 2001, before the time that Aranesp was registered for chemotherapy-induced anemia, which occurred in July of 2002.

These studies then went through protocol review, approval by institutional review boards, and the first patients for 145 were enrolled in 2002. It is now 2007, and that gives you a rough idea of the timeframe of these studies and the questions that were being asked.

I should also point out that the 103 study in anemia of cancer was not the only study that had been performed in anemia of cancer. We ourselves had performed other studies, as had other groups, using other erythropoietic stimulating agents or ESAs.

And if you look at slide 27, you can see the results of other anemia of cancer studies, and this introduces a meta-analysis chart, which we'll use a couple of times here in which what is plotted is an odds ratio showing in sorted of a whisker diagram, whether mortality is favored in those who received Aranesp or those who received a controlled treatment or placebo treatment.

So this slide shows you the results from six other studies of various different sizes, that have been melded together in a meta-analysis format, asking the question of whether when we combine these studies, we can learn something about what the risk is of treating anemia of cancer with erythropoietic stimulating agents.

You can see that in aggregate the risk, the odds ratio is 1.012, which is to say that there is a 1% risk in that aggregate compared to placebo for darbepoetin alfa for Aranesp. On the other hand the confidence intervals for that comparison clearly span one, and so in this analysis we can't conclude that Aranesp when used to treat anemia of cancer has any effect beyond neutrality and mortality.

Now we will update the slide, of course, to include the results of the 103 study and its important to talk about the limits of the 103 study. These data were recently presented by Dr. John Glaspy at the American Association for Cancer Research meeting a couple of weeks ago. And I think he did a very good job of highlighting what we can conclude and what we can't conclude from the study.

What we would say is that in this narrow set of patient’s those whose anemia is due only to cancer, as near as we can determine. Who have active disease and who are not amenable to any other therapy in that specific subset of patients the benefit risk profile is at best neutral and perhaps averse.

On the other hand, there are many other patients with anemia of cancer and clearly additional studies are required to understand what the impact of epoetin is in this population.

In the 145 study on the other hand you can see very clearly as shown on slide 28, the effect of Aranesp versus placebo on overall survival. The slide shows you a Kaplan-Meier plot, in which study weeks are plotted on the abscissa versus the percent surviving, plotted on the ordinate.

And you can see that as time progresses fewer and fewer patients, despite being treated with best available chemotherapy remain alive, such that more than 50% of the patients unfortunately are lost before the end of the first study year.

The hazard ratio as I have indicated is 0.93, and importantly we can exclude in this analysis through the 95% confidence interval an adverse effect greater than 11% based on this study in small-cell lung cancer.

Now, there have been a number of questions that has been raised over time about whether epoetin stimulate tumor progression, primarily from studies that have looked at patients receiving some radiotherapy. Analysis of tumor progression was a specific aspect of the 145 study, and slide 29 shows you the results of the analysis.

This is a progression-free survival analysis, again, plotting study-week versus the percent who remained free of disease progression and still alive. As you can see the curves decline very steeply and are absolutely superimposable for Aranesp as compared with placebo.

Now, these are investigator-determined progression results. However, we did obtain blinded central reads on all of these patient and we will have an opportunity to look at those data, once the centralized reading group has managed to complete their analysis.

So, the conclusions with respect to the 145 study. Aranesp given by a loading dose formula, which was the way in which we were planning to use it at that time, 300 micrograms every week followed by every three weeks lessen reductions in hemoglobin concentrations relative to placebo.

Its important to emphasize is that these patients are all receiving myelotoxic chemotherapy, and their hemoglobin levels go down. However, Aranesp supported maintenance of appropriate hemoglobin level. There was no difference in survival observed between the Aranesp treated and placebo treated groups and the upper limit of the 95% confidence interval, excludes an increase in risk of greater than equal to 11% for subjects receiving Aranesp.

There was also no difference in progression free survival observed between the treatment groups. Aranesp significantly reduced the risk of red blood cell transfusion. I have not shown you those data, but it is quite significant.

And in addition, there was a 51% increase in subjects who are reported to have cardiovascular and thromboembolic events with Aranesp. As expected in this population it is known that if erythropoietic-stimulating agents increase the risk for thromboembolic events.

So, looking out across the totality of studies we can say that the 145 study adds substantially to our understanding of the benefit-risk ratio for erythropoietic agents. In chemotherapy-induced anemia, ESA's unquestionably stimulate myelopoietic response and reduce transfusions and indeed that's what's listed on our label, and that's how we originally obtained approval for Aranesp with this indication.

ESA's have no appreciable effect on mortality in chemotherapy-induced anemia. They do not appear to stimulate tumor progression. They do increase the risk of thromboembolic events and the totality of these data will be discussed at the ODAC meeting in May.

Now, its interesting to look at this set of studies, because I would emphasize to you that the data that exist in chemotherapy-induced anemia are really quite robust.

If we look at slide 32, once again this is a meta-analysis in which all those studies that have examined the effect of ESAs on chemotherapy-induced anemia are plotted according to the same sort of strategy that I’d showed you earlier.

So again, you can look down this list of studies and there are a lot of them, 35 studies involving 9,000, more than 9,000 patients, and you can have get a sense what has been seen in patients who have been treated with erythropoietic-stimulating agents in terms of mortality.

Across all of these studies there is one study, the Leyland Jones study that showed a significant adverse effect of an epoetin in treating chemotherapy-induced anemia. In contrast, there were three studies that are listed on this slide that showed a favorable effect of an erythropoietic-stimulating agent on mortality. In aggregate, something over all of these studies the odds ratio is 1.03, which includes 95% confidence intervals that clearly span unity.

And so we can say from this analysis, as from the analysis of individual randomize placebo control, double blind studies with Aranesp, and from the single patient combined analysis of such studies. So all of those three methods together yield the same results, which is that ESAs have no appreciable effect on mortality, when use to treat chemotherapy-induced anemia.

There is another point to make as well, and that is that in no study has there been a demonstration of any effect of erythropoiesis-stimulating agents on tumor progression, in none of these chemotherapy-induced anemia studies, not one.

And that’s probably not surprising because the erythropoietin receptor gene is not an Oncogene and there exist no preclinical data that would suggest that erythropoietin should stimulate tumor progression. The EPO receptor gene as shown on slide 33 is not amplified in tumor cells, something which one often sees in Oncogene.

EPO receptor gene transcripts do not accumulate in tumor cells versus non-tumor tissues. So there is nothing that suggests that expression of more EPO receptor would be beneficial to tumors in the normal course of things.

There is really no evidence of EPO receptor expression or signaling in human tumors, and I say this because as was discussed in some detail at the AACR meeting and as it been published by a number of groups, the existing antibodies that detect EPO receptor also detect even more powerfully other proteins most particularly Heat shock protein 70, which is known to be expressed at higher levels in tumors and the expression of which has been associated with adverse outcomes.

So we really have no information about EPO receptor expression in human tumors using faithful reagents nor has been possible to demonstrate any signaling of such systems.

Finally, I should say that ESAs do not promote tumor growth, when studied in human tumor xenograft models. One of the most studied molecule frankly in such systems with more than 23 examples that have been published. So we can say that there is no effect based on this of erythropoietins on tumor growth. And indeed there are other data that support this as well.

So we emerge from this with great comfort that in the setting of chemotherapy-induced anemia, Aranesp has no appreciable effect on mortality, and there is no reason to believe that such a molecule would actually stimulate tumor growth.

Lastly, I should point out a large body of evidence supports the view that increased oxygenisation actually improves tumor responses that has been shown repeatedly preclinically, that was the driving force behind the 145 study, and thus far we have not been able to validate that in human experiments.

So while one sees that preclinically, we do don't see that in a clinical setting. We do however know that Epoetin actually do improve hematopoietic response and do prevent blood transfusions. So those are positive attributes of that treatment.

One last point, and that is we began these studies conceptually in 2001, began enrolling the 145 study in 2002, and it is now 2007. So as we think about other studies that we would like to do to clarify the efficacy and potentially the safety profile of those molecules, we can expect a similar time line would be involved, and that it might require until the order of 2012 before we have that information.

On slide 34 I will update you to let you know we have two large outcome studies under way. The treat study which is a study that asks whether a composite end point of overall mortality and cardiovascular events is affected by treating anemia in patients who have chronic renal insufficiency but are not on dialysis.

And the RED-HF study, which is a study of patients with anemia who have heart failure that asks also whether a composite end point of overall mortality and cardiovascular event is reduced by treatment of anemia.

In both cases, the data safety and monitoring committees reviewed updated data from all of our recent studies, evaluated and unblinded fashion, not available to us, what's available from these two studies and recommended that the study should proceed without modification.

Let me turn now to Vectibix on slide 35. As has already been indicated, we discontinued the PACCE study, which is the study of chemotherapy plus Avastin plus or minus Vectibix for use in the treatment of first line metastatic colorectal cancer after a preliminary review of data from a pre-planned interim efficacy analysis indicated that Vectibix was having an adverse effect.

Now, we are looking very carefully at those data. We had known that the combination of these many different antitumor agents would potentially have adverse effects, and of course, that stimulated a variety of different responses and oncologist who were managing these regiments.

I think with time we're beginning to get some understanding of why it was an adverse effect was seen and we're looking forward to having the opportunity to discuss those data in various scientific meetings. We are engaged in discussions with the FDA aimed at updating the Vectibix label as result of PACCE to ensure that patients are not put at risk.

Our Phase III studies and first and second line treatment of metastatic colorectal cancer are enrolling well, and I think those program continues, and in addition we are continuing our ongoing program in head and neck cancer as previously described. Of course, we're also evaluating treatment of other tumors with Vectibix and using Vectibix in other settings.

Let me turn now to AMG 531, which you will remember is a peptibody, our first peptibody and the first such molecule introduced into practice we believe, which is designed to treat immune thrombocytopenic purpura as a first indication.

During the first quarter we obtained data from the second of two Phase III studies in the ITP indication, the first one I described in our January conference call, and that was a study in patients who had already undergone splenectomy. This is a study in patients who have not received splenectomy but were being managed with conventional therapy.

The study was very successful it met its primary and all secondary end points with respect to the reflective response. AMG 531 was well tolerated with a favorable benefit risk profile. As I have indicated fast track designation from the FDA was already received, and we have positive Phase II data in myelodysplastic syndromes, a separate indication which will be presented at the upcoming ASCO meeting.

We're still on track to complete our filing in the second half of '07 in the U.S. and EU for the ITP indication. Let me turn now on slide 37 to denosumab and remind you of the mechanism of action of this agent. Denosumab is a fully human antibody directed against RANK Ligand and RANK Ligand as we and others have shown is the pivotal regulator of bone resorption.

RANK Ligand acts on already formed osteoclast to stimulate resorption of bone and it also promote the differentiation of osteoclast from immature bone marrow derived progenitors. The slide shows denosumab shown as the black Y interdicting the action of RANK Ligand on its receptor to prevent the activation of osteoclasts and to prevent their differentiation.

As a result, treatment in people with denosumab results in very potent, sustained and yet reversible suppression of bone resorption, and indeed denosumab is the most potent antiresorptive that is ever been studied in clinical trials.

During the first quarter, we obtained our first Phase III results for denosumab shown on slide 38. This was the 132 study in women with postmenopausal osteopenia and it yielded a quite successful outcome.

332 women with low bone mass were randomized 1:1 to receive either denosumab, which is administered as 60-milligram injection subcutaneously every six months for two years or placebo. The study met its primary and all secondary bone mineral density end points across all skeletal sites.

In addition, we were able to confirm a unique effect of denosumab compared with other agents in increasing cortical bone density in the distal radius in particular. And this was done using a technique of quantitative CT scanning and is quite an impressive result.

The safety profile on the study was comparable to that seen in prior studies, and we're very enthusiastic about denosumab going forward. I should tell that you the tempo of data release is increasing not surprisingly as we advance to our Phase III program.

Phase III bone mineral density data in women undergoing hormone ablation therapy, these are women with breast cancer metastatic to bone undergoing hormone ablation therapy will also become available in the third quarter of '07 and the Phase II postmenopausal osteoporosis data for the four year treatment period will become available also in 3Q '07.

We have previously described data from one and two year treatment periods. These are four year treatment period. All of our studies in cancer patients including three independent studies inpatients with metastatic bone disease, one in patients with breast cancer, another in patients with prostate cancer and the third in patients with other solid tumors are enrolling very rapidly.

And of course, we're at the time point now where some patients very soon will be completing three years of study in our postmenopausal osteoporosis fracture prevention study, so we're beginning to have the follow-on study to that as well as those patients complete their therapy window.

Finally, on slide 40, let me turn to new molecules that will be describing and in particular what's going to happen at the ASCO meeting in June. In all six potential new therapeutic oncology products will be discussed at ASCO and actually a seventh as well because we'll be discussing AMG 531 at ASCO.

The slide shows you a typical kind diagram of ways that one can approach the treatment of cancer, and this is derived from a widely cited article from Bob Weinberg from some years ago.

In principle, one can treat tumors by killing highly proliferative cells as is done in conventional chemotherapy, by blocking growth control and cell survival signals as shown on the left or by treating host factors, for example, that provide nutrient supplies to permit the tumors to grow.

If we start there, in the ASCO meeting we will be presenting a data from motesanib diphosphate. We as you know had encouraging results in our treatment of refractory thyroid cancer. We didn't have opportunity to discuss those data with the FDA, and we are continuing to speak with them. They're anxious to see the longer-term follow-up of those data.

But After our discussions with the agency we have decided not to file for approval for motesanib diphosphate in that indication until there is more clarity on what a regulatory filing package would constitute for that indication.

We are, however, proceeding with our other studies, our two Phase II studies, breast cancer and non small-cell lung cancer, and we will be initiating a Phase III study in non-small-cell lung cancer very shortly as I previously described.

We also are going to provide some data about AMG 386, which is a novel angiopoietin antagonist and we'll have the opportunity to present some clinical data for that molecule, which are really quite interesting.

From the perspective, moving to the left of interdicting growth control and cell survival signals, we have two antibodies, AMG 102, which is directed against parasite growth factor and AMG 479, which is an IGF-1 receptor antagonist and clinical data are available for both of these molecules and we'll have a chance to say something about those at ASCO.

And finally, we have data from our studies of the TRAIL and TRAIL receptor axis. This includes the Apo2 ligand/TRAIL molecule itself, which we call internally AMG 951 and also AMG 655, which is an agonist antibody directed at against the TR2 receptor. From these two molecules as well we have extremely encouraging initial data derived from Phase I clinical studies.

Now, all of these molecules either are in or will be proceeding into Phase II studies in 2007 if things continue to move forward as they are right now. And in addition to these six molecules we have a six additional molecules in non-oncology area, which we expect will be entering Phase II or have already entered Phase II within our underlying pipeline.

So progress continues to be robust, and we're extremely encouraged about the future of all of these molecules. Kevin?

Kevin Sharer

Okay. Thank you very much. We'd be happy to take your questions now, and Arvind, do you have got any comments before we get into this phase, it is just one question each, and we'll try to move through them. Okay? Thank you. Who'd like to be first?

Question-and-Answer-Session

Operator

(Operator Instructions) Your first question comes from the line of Jennifer Chao with Deutsche Bank.

Jennifer Chao - Deutsche Bank

Thanks for taking the question. I think I am going to hop directly to denosumab. Roger, definitely sort of a couple of provocative lines in a press release, but I am wondering if you can give us a little more color vis-à-vis FOSAMAX, anything that can be garnered from the data?

And then specifically, with respect to the bone mass density, was it greater or equal than the two standard deviations below the mean peak BMD, which I think its one of the end points on the treatment at Phase III? Thanks.

Roger Perlmutter

Yes, Jennifer, of course there are no head-to-head studies. We've enrolled the head-to-head study versus FOSAMAX, but there are no head-to-head data that provide us with a very comprehensive look. We did do a head-to-head in Phase II that you're aware of, that shows that denosumab builds bone as judged by bone mineral density in a way that's comparable to alendronate.

The interesting effect of course of denosumab is on cortical bone. In Phase II, we saw effects that were different from what one sees with the alendronate where the effect of the bisphosphonates is typically quite dramatic in trabecular bone, and we saw those same data now strengthen substantially and particularly strengthen by this QCT approach in our Phase III study in osteopenic population. So, I’d just say that the data are extremely strong. They look really good.

And in terms of the endpoints required to meet ultimately registration, the issue in postmenopausal osteoprosis is simply fracture reduction. That's what, we're waiting for and that's what we'll have to see and we won't have those data until next year.

Jennifer Chao - Deutsche Bank

So, Roger, just to make sure I understand. You don't have anything yet on the greater than two standard deviation on the BMDs at 24 months that you can share with us?

Roger Perlmutter

I don't want to share any data beyond what I told you against specific data because we are anxious to present these in scientific forums. And so, we'll have a chance to go through all of the chapter and verse, but I will tell you it is very encouraging.

Jennifer Chao - Deutsche Bank

Okay. Thank you.

Operator

Your next question comes from the line of Eric Schmidt of Cowen & Co.

Eric Schmidt - Cowen & Co.

Good afternoon. A question for Roger on potential quality of life benefits associated with ESAs and cancer. I guess the FDA’s asserted that it doesn't see any such benefit, and it only believe these drugs are useful in reducing transfusion risks. I wonder if one is, Amgen agrees with that statement?

And, two, I think in the 145 study there was a fatigue secondary endpoint analysis. Could you comment on whether that was positive?

Roger Perlmutter

Yeah. So first of all, I think that the whole issue of transfusions and reduction of transfusions, we have to be careful in thinking about this because physicians after all transfuse for a reason.

And all of these studies were done at clinical discretion whether physicians could decide whether or not a patient needed a transfusion and typically a physician decides that based on their clinical assessment of a whole variety of things that include fatigue.

There is a large body of data that supports the view that Aranesp when administered to patients with chemotherapy-induced anemia have improved outcomes are using a patient reported outcomes measure.

And where, I think the agency, we and the agency have discussions has to do with the strength of those data and in general what is acceptable from the standpoint of patient reported outcome data and it certainly will be something that will be discussed at the May 10th, ODAC Meeting.

With respect specifically to the 145 study, this was actually an anemia prevention study. So, patients were enrolled with hemoglobin of 12, and the goal was to prevent anemia from progressing in its population. The fatigue, specific fatigue score was not statistically significantly different between the two populations.

Eric Schmidt - Cowen & Co.

Thank you.

Operator

Your next question comes from the line of Jeff Meacham of J.P. Morgan.

Jeff Meacham - J.P. Morgan

Hi, guys, strategic question on Aranesp. Can you tell us how many DSMB looks we've had so far on TREAT and Red-HF? And then another question really, how do you balance a higher than label target with a risk of a potentially negative trial with the opportunity in these two indications?

Roger Perlmutter

I won't give you the exact number of Data Safety and Monitoring Board Meetings, because we’ve called special ones in light of these data. So I don't want to miss speak, but they've been looking at it very carefully because of concerns particularly those that were raised by the CHOIR study for both TREAT and Red-HF.

And these studies were designed at a time when we had a pretty clear understanding of what we were likely to achieve in terms of benefit risk based on that the hemoglobin targets of 13.

New information has become available, and both the Executive Committees and the Data Safety Monitoring Board’s of these two studies have looked at this and decided that, based on everything that we know about the new studies, that the studies should continue as they were originally designed, and that that's the best way to test the question.

I think it is important to note, and likely some of these data will emerge at the ODAC Meeting in the oncology context, but certainly it was discussed by Dr. Glaspy at the AACR presentation, and it is also been discussed in other forums, in nephrology forums, that in fact if you look at hemoglobin response, the hemoglobin responders always have a more favorable outcome.

So, its not hemoglobin level, but rather if there is an adverse effect, it would be hemoglobin target. Non-responders tend to have poor outcomes. And I think one question that’s worth thinking about addressing; though, its not easy to address, is whether we can identify individuals?

For example on the nephrology population, who would be at increased risk probably because of the thromboembolic risk that’s associated with the ESA treatment?

Kevin Sharer

And this is Kevin. I want to give you a kind of a little bit different in reinforcing perspective. We have certainly thought really carefully and hard about TREAT and RED-HF. We've examined every aspect of those trials.

And in our research and development efforts, we attempt to experiments clinical trials that provide definitive answers to very important medical and scientific questions. Those answers are not always the ones that we would wish, but we want them to be definitive answers to important questions.

In the heart failure trial, we're asking an important question in a population that's very, very sick. In fact, if not, the number two cause of mortality in the U.S. and that's an important question.

We're going to try to see if we can get that trial enrolled and get the right answer. TREAT is similar. So, while it might at first blush seem tactically sort of expeditious to just say, gosh, I don't want the answer, let's stop the trial. I think that goes against what we're trying to do here in research and development.

I know that the recent news and events around the ESAs make people concerned about that, but I do want to convey to investors that we thought very, very carefully about that, and we think it is the right thing to do for our patients and ultimately for our business. But, it was not a decision that was casually or quickly reached. We had a team around the table and gave our very, very best set of thinking.

Jeff Meacham - J.P. Morgan

Thanks, that's really helpful.

Operator

Your next question comes from the line of Eric Ende with Merrill Lynch.

Eric Ende - Merrill Lynch

Question on the 145 study, first of all, was there any baseline imbalances favoring either the control or the Aranesp R, with respect to prognostic factors? And then can you just share with us the severity of the cardiovascular and thromboembolic events?

Roger Perlmutter

Yeah Eric. There were no imbalances. They were very well balanced. We also had a variety of different ways of cutting the data to try and look based on pre-specified analysis, and no matter how you look at it; the effect was exactly as we saw it, that it was neutral and the confidence intervals across the unity.

With respect to the thromboembolic events, they're really very much like the thromboembolic events that have been seen in all the other trials, and typically of mild to moderate severity. There were some that were more severe, but they didn't come up very strongly in our adverse experience reporting.

Interestingly, the adverse experience reporting, the only adverse experience that was called out that was statistically different between the treated population and the untreated population was that there was, placebo treated population, was that there was the adverse event of anemia was called out in the placebo treated population, which I think again is a reflection of the fact that physicians are diagnosing anemia, and in many cases they've diagnosed symptomatic anemia, which is just interesting in terms of thinking about what the effect of ESAs is in these populations.

Eric Ende - Merrill Lynch

Thanks.

Operator

Your next question comes from the line of George Farmer with Wachovia Securities.

George Farmer - Wachovia Securities

Hi, thanks for taking my question. I would imagine at the ODAC panel there seem to be a lot of discussion about the various pharmacovigilance studies in premier and context with all the other trials that's been done.

Given that TTP was the same in both arms of the 145 trial. How do you reconcile these results with the DAHANCA trial and the GOS study that you guys reported on, that was reported on at ASH last December? And do you think it's really just a function of using radiation in combination with ESAs that's the issue?

Roger Perlmutter

Well, it's a complicated question, and you really have to for one thing have the data in hand, so for the DAHANCA study first of all there are no data that anyone has had the opportunity to review. So, all we have is a posting from the DAHANCA group saying that their study was stopped for futility and we'll have to wait until we see the data from that.

And we've received in fact an e-mail from and so in regard to leads that group, telling us not to over interpret their results, that their posting on the website was exactly what they meant to say, that it was stopped for futility, and that's all they want to say about the study at this point.

With respect to the other studies, again I think where you've seen within issue with respect to progression is in the context of head and neck cancer. It is challenging of course to evaluate tumor progression and local control in that kind of setting.

So that's the place where the people have reported an outcome, but frankly as I indicated, there have been no data in chemotherapy induced anemia in any tumor setting in which there was a change many progression, for example if you look at the best study, which was a study very much like our '145 study' but in breast cancer subjects in which there was an adverse effect on Mortality, there was no effect on progression free survival.

That's an interesting result, and it is one of the reasons why the study has been examined critically by so many. So we'll have a chance to dig into all that far at the ODAC meeting.

George Farmer - Wachovia Securities

Great. Thanks.

Operator

Your next question comes from the line of Joel Sendek with Lazard Capital Market.

Joel Sendek - Lazard Capital Markets

Hi, thanks. I have a question on the revenue guidance. And I am wondering as you review it, is it possible at all that the new guidance will overlap the old guidance or are you telling us that it would definitely be below the low end of the $15.4 billion?

Bob Bradway

We would rather just wait and see how the data comes out, Joel, and we just don't know right now. So, let's just wait until the second quarter and see.

Joel Sendek - Lazard Capital Markets

Could go either way?

Bob Bradway

We just don't know.

Joel Sendek - Lazard Capital Markets

Okay. Thank you.

Operator

Your next question comes from the line of May Kin Ho with Goldman Sachs.

May Kin Ho - Goldman Sachs

I have a question about the expenses. You indicated that you’re going to reduce expenses in order to offset the potential decrease in revenues. Can you discuss where are some of the areas that you might reduce expenses on? And also in terms of clinical trials do you still plan to have all of those mega studies for Vectibix?

Bob Bradway

Let me comment, May Kin. What we're actually doing here is reducing expense growth. In some of the functions, it actually is a bit of expense reduction compared to '06, but at the overall corporate level we're trying to reduce expense growth.

And our objectives here are to continue to fund strongly those parts of the business that make the product, are close to the customer, and are in the clinical development area, and try to cut back in areas in G&A and some other more discretionary things.

We certainly are going to make a modification or two, to some of the clinical trial, progress and programs, but not in a major way.

I can let Roger answer the specific Vectibix question, but I wanted to give you kind of an overall intent remark here before we get into the specifics. So Roger, maybe you can comment on the clinical development program.

Roger Perlmutter

Yeah, May Kin, the Vectibix program continues as before with the exception that in light of the PACCE results, we feel like we need to understand that much, much better before we would embark upon an adjuvant study.

So we will certainly be delaying adjuvant studies, any adjuvant studies. There was one that had been previously listed in our slide deck from Q4 '06, I think. But, in terms of the head and neck studies and other ongoing studies, we're not doing them.

We also will not proceed on the pancreatic cancer study pending the analysis of Erbitux that was not a mega trial. But the Erbitux data, which was negative in that study, we're certainly anxious to see that and understand it better.

May Kin Ho - Goldman Sachs

Thank you.

Operator

Your next question comes from the line of Steve Harr with Morgan Stanley.

Steve Harr - Morgan Stanley

In the past you guys have kind of talked about use of cash, your share buyback program, some maybe one acquisition a year, and some CapEx. So basically the share buyback program being, the primary use of cash. Where do we stand with that?

Or is it is a pretty limited share buyback program earlier -- the first part of this year. Did you expect that to accelerate through the rest of this year, and do you expect to be more aggressive on the M&A front now?

Bob Bradway

Steve, it is Bob. With respect to the buyback program, we'll continue to be opportunistic as I said in my remarks, the Board authorized $5 billion program in December of '06, and we still have some purchase authority from a previous authorization.

So we have in total $6 billion, and I think we'll be opportunistic. It was difficult for us in the first quarter as you might imagine given the -- all that was going on with the business. It was difficult for us to be in the market buying back stock.

So, going forward I think you should expect us to be opportunistic and follow a path similar to what you've seen in the past.

Kevin Sharer

And Steve, it’s Kevin. And there is kind of maybe a question inside the question there, which is, does Bob accession to CFO signal, because his background some different new view of our M&A strategy. It absolutely does not at all. We’ve used M&A here for the last few years.

Opportunistically, we’ve, I guess may depending on how you keep score here, three or four acquisitions, and they've all of been to try to reinforce our product generation capability with the exception of Immunex. They've been relatively modest in size, but we’re hungry to always increase the potential of our pipeline that won't stop, and so we're going to continue to do that.

Steve Harr - Morgan Stanley

Thanks.

Operator

Your next question comes from the line of Mark Schoenebaum with Bear Stearns.

Mark Schoenebaum - Bear Stearns

Hi. Thanks very much. Maybe a question for Roger or Kevin regarding the upcoming ODAC meeting, maybe you can just help us our expectations for the ultimate outcome of that. Is there a chance in your opinion that the FDA may actually modify the label based on some of the new data and some of the new interpretations of existing data that you may present?

I think this is the first time you’ve had a chance too really make your case. Or is that at this point unrealistic expectation and we really should be thinking that the label was not as a pretty unchangeable label at this point? I really thanks a lot for taking the question.

Kevin Sharer

Let me comment, Mark. I mean the label is the label, and we don't want to predict what the FDA may or may not do here. It’s certainly our very, very strong conviction that our products are very safe when used on label. The new 145 data is obviously reinforces that point of view.

I can also say that we're going to prepare as we always do a very completely and vigorously and present our best case for our view of the product. And so, predicting with the FDA is going to do would kind of not be productive here. They certainly have been moved just a lot of a lack pretty here and in expressing their views, and we'll look toward to the meeting so, Roger your thoughts?

Roger Perlmutter

Yeah again, I certainly, I echo Kevin's comments. I wouldn't predict the outcome here. It will depend, we haven't seen anything to indicate what exactly the FDA is going to present or what questions they will ask of the committee, but we're certainly looking forward to the discussion.

There is a lot of information here available on Aranesp, on the importance in general and we've been working with our colleagues in safety at Johnson & Johnson to make sure that we incorporate the entire view point from the American side anyway of how these products are used, should be used and what questions remain.

Mark Schoenebaum - Bear Stearns

Do you think the 145 data belong on a label?

Kevin Sharer

Well, you know, I think that there is a, until the agency has a chance to really look over it very carefully and decide what things they want to include, it’s just hard to say. I think what is always the case is that you don't want to clutter up your label with study after study after study after study. You want to try and indicate what the broad sense of all of the evidence is, and I am sure that the agency is going to want to do that.

Mark Schoenebaum - Bear Stearns

Thank you.

Operator

Your next question comes from the line of Geoffrey Porges of Sanford Bernstein.

Geoffrey Porges - Sanford Bernstein

Thanks very much for taking question. George, could you just give us a little more color about what's going on in the U.S. market for the EPOs, specifically what were the wholesaler inventory changes by product in day sales, and be helpful if you could give us the other products as well?

And then particularly what trend are you seeing in the EPO use data in the early weeks of April, some of the data has provided suggest that you could be seeing significantly down trends in the early part of April as the label takes effect? Thanks.

George Morrow

Well we're seeing a softening in sales, but we're not going to quantify second quarter results at this point. So we'll just have to stay tuned on that, Geoff. So with regard to inventories, do you want quarter-on-quarter or year-on-year?

Geoffrey Porges - Sanford Bernstein

Quarter-on-quarter is fine.

George Morrow

Okay. For Aranesp very flat, slight decrease in Neulasta, slight decrease in NEUPOGEN, slight increase for EPOGEN, slight decrease for Sensipar.

Geoffrey Porges - Sanford Bernstein

So, when you say slight does that mean a fraction of a day or…?

George Morrow

Yeah. Fraction of a day.

Geoffrey Porges - Sanford Bernstein

Okay. Thanks very much.

Operator

Your next question comes from the line of Maged Shenouda with UBS.

Maged Shenouda - UBS

Thanks for taking my question. In George's comments you mentioned that a substantial core of the anemia business is rock solid. Can you characterize or put some numbers on what that core is?

George Morrow

Not really that - not put numbers on it. But again, if you go back to what I said, we're really talking about chemotherapy induced to anemia. We think as Roger and Kevin and I said, everybody's feeling that is having a good benefit to risk ratio.

We're probably going to be some trimming back of patients who are exceeding twelve, and again probably the biggest area of uncertainty is when did they initiate therapy? Is it below 11, is it below ten, and I think that's going to be somewhat driven by the oncologist preference, somewhat driven by reimbursement as that evolves.

Kevin Sharer

Yeah. We wish we could be more specific, but I think you all can appreciate here it is very few data points and it is early. But certainly these products are very, very important to the patients who take them in chemotherapy-induced anemia and in nephrology market, and we're just going to have to wait and see what the new market looks like here.

But we're planning here to be able to deliver the low end of the EPS guidance range and I think that’s probably the best place to leave it for today. Certainly next quarter we'll have a lot more data, and we'll be as again helpful as we can then.

Maged Shenouda - UBS

Okay. Thank you.

Operator

The next question comes from the line of Yaron Werber with Citigroup.

Yaron Werber - Citigroup

Yeah. Hi. Thanks for taking my question. George, I just want a follow up in your preferred remarks you mentioned that about 72% of patients are being treated when the hemoglobin level is under 11, but 95% is under 12. So it sounds like 18% of patients are between 11 and 12, which might be kind of beginning to get to that testing that upper limit border. Can you, is there anyway you can share with us what percentage of the Aranesp volume is in that area?

George Morrow

I don't know. In fact Yaron again, I want to caution you this is electronic medical records data. It is hard to project it, but I did want to share this information with you. And we don't have the volume. It is just impossible to get from that data from each of those segment. It is an interesting question, but don't have that. And I think thinner you cut the data, the more trouble you might get into in trying to project it.

Yaron Werber - Citigroup

Is there any way, maybe just as a quick follow-on? Are those patients typically how should we think of these people? Are they the hemoglobin and hyper-responsive who, their hemoglobin shoot up very quickly, are these people typically more the hemoglobin refractory patients who need more than above?

George Morrow

No. I will assume that they are have higher hemoglobin level, I see Roger nodding his head that you probably going to use less Aranesp for appropriate to move the hemoglobin.

Yaron Werber - Citigroup

Okay…

George Morrow

They're the good responders, the healthier patients typically.

Yaron Werber - Citigroup

Okay. Thanks.

Operator

Your next question comes from the line of Shiv Kapoor with Montgomery & Company.

Shiv Kapoor - Montgomery & Co.

Thanks for taking my question, guys. I have a question on Aranesp. I am trying to understand while I understand that you can't give any more revenue guidance, I am just trying to understand how I can model this going forward.

I am a little surprised by the magnitude of the effect on Aranesp sales given that only a portion of the quarter was affected by the label change and also given some of the metric that’s you have mentioned on the usage in AOC. Can you tell us what year-over-year sales growth you're seeing after since the label change? And can you also tell us if there are other factors that were contributing to the slower growth?

Kevin Sharer

You know, if we could help you model this better, believe me, with confidence we would. We are just kind of at a point right now where we said about all we can say, and so kind of more discussions about exactly how can we pars the data to get to a better understanding analytically I am afraid it just isn't possible.

I think we've given you basically everything we know, short of the four or five data points or three or four data points we've had since the end of the quarter. So, I just don't think it would be productive right now to try to pars this thing in ever-finer slices. I am sorry. I wish we could be more helpful. I know you have to think about this yourself as we do, but it is just kind of is where we are.

Shiv Kapoor - Montgomery & Co.

Thanks for trying.

Operator

Your next question comes from the line of Michael Aberman with Credit Suisse.

Michael Aberman - Credit Suisse

Thanks for taking the call. Can you just clarify on the safety comment you made on denosumab safety similar to previous trials? Trying to recall, is a variety of different trials, but was there any trend or anything in there in terms of URIs or infections?

And also, I know there is only one question, but just in terms of base case for EPO, should our base be first quarter '07 or fourth quarter '06 in terms of where we might consider the impact to taking place?

Roger Perlmutter

The only thing I will say to add to what Kevin said is that, the news preceded the label change and so there was some reaction to the news prior to the label change, but the label change probably precipitated more of an inflection point.

Michael Aberman - Credit Suisse

In terms of denosumab?

Kevin Sharer

And in terms of denosumab, Michael, the overall adverse effects for the two arms, denosumab versus placebo were the same, they were fully balanced. With respect to hospitalizations, there were more hospitalizations in the denosumab arm, and when you go through those narratives therefore a whole variety of reasons, none of this is statistically significant.

So, you think on the placebo arm there is more of one thing and the denosumab there’s more of another. Looking through the entire database, there is nothing that we see there that in anyway changes our sense about the benefit risk profile.

Michael Aberman - Credit Suisse

But infection, was there specifically infection?

Kevin Sharer

So, they were the same, they were balanced with respect to overall infections for the denosumab and the placebo arm. There were more hospitalizations in the denosumab one.

Michael Aberman - Credit Suisse

Okay. Thank you.

Kevin Sharer

I mean, I just point out that there was nothing suggested that you had an immunosuppressant effect, there were no…

Michael Aberman - Credit Suisse

Can you remind us how RANK Ligand works on or what other processes that RANK Ligand is involved in besides the osteoclasts?

Kevin Sharer

Not obvious. Now we would get really pretty far down into the data. If you look in terms of development in rodent models, RANK Ligand and RANK interactions are involved in the formation of components of immune architecture.

But in terms of what happens in an adult's animal when you interdict the RANK Ligand and RANK access, there is really nothing that has come out of our safety study.

Michael Aberman - Credit Suisse

Okay. So, hospitalization is probably noise?

Kevin Sharer

Everything looks like noise.

Arvind Sood

Let's move on to next question, please.

Operator

Your next question comes from the line of Al Rauch with A.G. Edwards.

Al Rauch - A.G. Edwards

Good afternoon. I have a question on 103 trial. It’s my understanding that there were about 75 patients that had hemoglobin’s below eight in that study, but they weren't transfused. Is this correct and how would that impact the results of the study?

Kevin Sharer

Yes. It is correct. We've posted these data on clinical trials.gov. I should say also that we will post a synopsis of the 145 study on clinical trials.gov, so you will have access to those data as well.

But there were patients, 75 patients who had hemoglobin’s below eight who were not transfused, keep in mind that we cannot mandate transfusion in a clinical trial. We can simply provide recommendations, but ultimately it is the judgment of the physician involved in caring for the patient, as to whether or not to transfuse the patient.

Had those patients been transfused, then there would have been a statistically significant difference between the Aranesp treated arm and the placebo arm with respect to avoidance of transfusions. But of course that wouldn't have changed by any measure that we know, the mortality difference, and so you’d still have to factor that in.

Arvind Sood

Operator, as we're about an hour and a half in the call. Let's take maybe one last question, please.

Operator

Your next question comes from the line of William Sargent with Banc of America Securities.

William Sargent - Banc of America Securities

Thank you very much for taking my question. Roger, I was wondering if you could clarify what the actual hemoglobin mean or median hemoglobin was in the 145 study and then also what the average dose was during the Q3 week period?

Roger Perlmutter

As I say, the data from the 145 study' will be posted, so you will have a chance to see all of that. These patients were treated with a loading dose of 300 micro grams Q week, and 300 micro grams a Q3 week basis which is of course a unit dosing kind of protocol.

And in terms of the actual hemoglobin values, you're looking for the hemoglobin values that were achieved in the study.

William Sargent - Banc of America Securities

That's correct.

Roger Perlmutter

In terms of the mean change in hemoglobin, and I am just sort of looking through here to find the right set because we have a looked at it in a whole variety of different ways. But the change in hemoglobin from baseline was 1.13-grams down in the Aranesp group and 2 grams, 1.98 grams down in the placebo group.

And again, that was the primary measure because these patients all started out with relatively normal, more normal hemoglobin’s, not quite normal, 12 versus 11.86 at baseline, and then there were those reductions.

William Sargent - Banc of America Securities

And were the investigators allowed to increase the Q3 week dosing?

Roger Perlmutter

They were allowed to respond under those circumstances where they made a diagnose, where there was an adverse event report, but in general not its 300 Q3 weeks.

Kevin Sharer

So, thank you, everybody, for your participation. If have any follow-on questions, our Investor Relations team of course will be available this afternoon. Thanks again.

Operator

This concludes today's conference call. You may now disconnect.

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