More of my notes and photos from attending the Council of Institutional Investors Fall 2015 Conference in Boston… this from the keynote speech by Robert Bradway of Amgen. Feel free to post corrections, counterpoints and additional relevant material on his speech or Amgen, using the site’s comment feature. Find more posts from the conference on this site or Twitter by searching #CIIFall2015.
Robert Bradway majored in biology and then moved into finance. He briefly mentioned that Third Point led an attack, seeking a breakup of Amgen ($AMGN). In thanking Meredith Miller for her introduction, Robert Bradway mentioned they had a long-standing relationship in establishing clawbacks and other policies, such as political disclosure.
He has an open door policy toward shareholders and mentioned the happy coincidence of his 25th class reunion in same building later that day.
Amgen concentrates on innovative therapies with large effects on serious illnesses with large unmet needs. The company is delivering returns across inherently long lifecycle business. It has to be successful in both short and medium terms to succeed in the long run. It takes 12 years to develop a drug, which usually holds patents fro about 12 years. Therefore, they are looking at a 24 year cycle and long-term investors.
They know demographics are in their favor. Americans are living longer, 70 is increasing to 80. The birthrate falling. Average citizen will be older… 20% over 65 by 2030. Cardio, cancer, neurodegenerative disease… these diseases will grow with the population. Rate of death due to cardo has dropped 30%. Cancer deaths since 1991; the rate os down 22%. However, for alzheimer’s we have seen an increase by 70%. By age 85, 32% will show signs.
A third of us in the room are on target to get it. We are dependent on the drug industry to develop the innovative medicines. It costs about $2.2 billion to get a treatment approved through the FDA. Recent advances in human genetics offer the potential to improve the odds of success. There has been a billionfold increase in our ability to look and make use of human genetics. Only since the spring of last year could we sequence DNA in a timely affordable manner.
Board evaluation? Robert Bradway says Amgen’s process is annual. using confidential surveys, with one on one interviews between lead and each director. We seek input on good governance measures and have moved away from stock options. 80% of pay is performance-based stock, much of it restricted. Must hold six times pay of stock, or something like that. Sharing data, transparency can help guide investors into knowing if investments in R&D are likely to pay off. Competitors are banging at the door to partner.
Robert Bradway of Amgen in the news.