Press Release Details

THOUSAND OAKS, Calif., July 26, 2012 /PRNewswire/ -- Amgen (NASDAQ:AMGN) today announced financial results for the second quarter of 2012.  Key results for the quarter include:

• Total revenues increased 13 percent to $4,477 million, with 8 percent product sales growth driven by strong performance across the portfolio.
• Amgen modified its agreement with Takeda to grant exclusive worldwide development rights for motesanib, recognizing income of $206 million in other revenues.
• Adjusted EPS grew 34 percent to $1.83 due to 23 percent adjusted operating income growth and lower shares outstanding.  Adjusted net income increased 12 percent to $1,433 million.
• GAAP EPS increased 29 percent to $1.61 and GAAP net income increased 8 percent to $1,266 million.
• Amgen generated approximately $2.2 billion of free cash flow.
• Four AMG 145 Phase 2 studies have successfully completed and the Company plans to initiate Phase 3 development in early 2013.

"I am very pleased with the performance of the business in the first half," said Bob Bradway, CEO at Amgen. "I am excited about the growth opportunities in our research and development pipeline, particularly our biologic AMG 145 for hypercholesterolemia."

Adjusted EPS, adjusted operating income, adjusted net income, and free cash flow are non-GAAP financial measures.  These adjustments and other items are presented on the attached reconciliations.  

Product Sales Performance

• Total product sales increased 8 percent driven by strong commercial execution across the portfolio.
• Combined Neulasta^® (pegfilgrastim) and NEUPOGEN^® (Filgrastim) sales grew 2 percent driven mainly by an increase in the U.S. average net sales price.
  • Combined U.S. Neulasta and NEUPOGEN sales increased 6 percent driven by increases in the average net sales price and unit demand, offset partially by a decrease in wholesaler inventories.
  • Combined Neulasta and NEUPOGEN sales in the rest of the world (ROW) declined 13 percent due to a decrease in NEUPOGEN unit demand from loss of share to biosimilars and a decrease in the average net sales price of Neulasta and NEUPOGEN.
• Enbrel^®(etanercept) sales increased 11 percent driven primarily by an increase in the average net sales price, as well as increases in unit demand and wholesaler inventories.
• Aranesp^® (darbepoetin alfa) sales decreased 8 percent driven primarily by a decline in unit demand. 
  • U.S. sales decreased 11 percent driven primarily by a decline in unit demand, offset partially by a change in accounting estimates and an increase in the average net sales price.
  • ROW sales decreased 7 percent driven primarily by a decrease in the average net sales price.
• EPOGEN^® (epoetin alfa) sales decreased 3 percent driven by a reduction in dose utilization, offset largely by reductions in customer discounts and a change in accounting estimates.
  • On a sequential basis, EPOGEN sales increased 18 percent driven by customer and wholesaler buying patterns.  There was a low single-digit percentage point growth in underlying unit demand.
• Growth-phase products: Sensipar^®/Mimpara^®(cinacalcet), Vectibix^®(panitumumab), and Nplate^®(romiplostim) increased 15 percent driven by higher unit demand.
• Momentum for both XGEVA^® (denosumab) and Prolia^® (denosumab) continued in the second quarter with solid sequential growth.
  • XGEVA sales increased 17 percent on a sequential basis, reflecting increased segment share as well as growth in the overall skeletal-related events segment.
  • Prolia sales increased 36 percent on a sequential basis, reflecting continued unit growth globally.

Other Revenues

• Other revenues increased to $277 million in the second quarter of 2012 versus $66 million in the second quarter of 2011, driven by changes to the Company's motesanib collaboration with Takeda Pharmaceutical Company Limited.  As part of efforts to focus its research and development (R&D) activities, in the second quarter, the Company replaced the global co-development and profit share agreement with an exclusive license for Takeda to develop, manufacture and commercialize motesanib.  This resulted in revenue recognition of $206 million from an upfront payment received from Takeda when the collaboration was originally formed in 2008.

Operating Expense and Tax Rate Analysis, on an Adjusted Basis

• Cost of Sales, excluding the impact of the Puerto Rico excise tax, increased 0.4 points to 13.9 percent of sales driven primarily by product mix, offset partially by higher average net sales prices and lower royalties.
• R&D expenses were flat.  Expenses in support of our later-stage clinical programs increased, driven by AMG 145 and AMG 785.  This increase was offset by reduced expenses associated with marketed product support and Discovery Research and Translational Sciences.
• Selling, General & Administrative (SG&A) expenses increased 8 percent driven primarily by international expansion as well as higher ENBREL profit share expenses.
  • ENBREL profit share expenses increased 11 percent to $371 million in the second quarter.  

• Tax Rate increased by 0.8 points to 16.0 percent due primarily to the expiry of the U.S. federal R&D tax credit at the end of 2011.  As of June 30, 2012, the R&D tax credit had not been extended. 

Cash Flow and Balance Sheet Discussion

• The Company generated $2.2 billion of free cash flow in the quarter versus $1.4 billion in the second quarter of 2011. The increase was primarily driven by the termination of fixed to floating interest rate swap agreements that resulted in receipt of $0.4 billion in cash, and by the collection of $0.2 billion of outstanding trade receivables in Spain. The termination of the swap agreements will be recognized as a reduction of interest expense over the remaining term of the underlying contracts and did not materially impact income in the quarter. 
• During the quarter, Amgen repurchased approximately 17 million shares of common stock at a total cost of $1.2 billion at an average price of $69.31.  This brings the total shares repurchased under its $10 billion authorized stock repurchase program to 122 million at a total cost of $7.6 billion at an average price of $62.75.
• During the quarter, the Company raised an additional $3 billion in U.S. bonds with an average maturity of 15 years and an average pre-tax coupon of 3.6 percent, and now has adequate funding to complete its $10 billion share repurchase program.
• The Company previously announced that its Board of Directors declared a $0.36 per share dividend for the third quarter of 2012. The dividend will be paid on Sept. 7, 2012, to all stockholders of record as of the close of business on Aug. 16, 2012.

2012 Guidance

For the full year 2012, the Company now expects:

• Total revenues to be in the range of $16.9 billion to $17.2 billion and adjusted EPS to be in the range of $6.20 to $6.35.

The Company continues to expect:

• Adjusted tax rate to be in the range of 14 percent to 15 percent.  Excluding the Puerto Rico excise tax, Amgen still expects the adjusted tax rate for 2012 to be in the range of 19 percent to 20 percent.
• Capital expenditures to be approximately $700 million.

Second Quarter Pipeline Update

The Company provided the following information on selected clinical programs:

• AMG 145: The Company announced that in four Phase 2 studies (evaluating AMG 145 as monotherapy, in combination with statin therapy, in heterozygous familial hypercholesterolemia, and in statin-intolerant subjects), treatment with AMG 145 resulted in a statistically significant reduction in low-density lipoprotein (LDL) cholesterol. Based on the Phase 2 efficacy and safety data, the Company plans to initiate Phase 3 development in early 2013.
• Rilotumumab (AMG 102): The Company discussed Phase 2 data showing that the addition of rilotumumab to chemotherapy improved median overall survival in subjects with gastric tumors with high expression of the hepatocyte growth factor receptor, MET. Phase 3 planning is underway.
• AMG 785: The Company stated that it was enrolling a second Phase 3 study (alendronate-controlled) to evaluate safety and efficacy of AMG 785 in women with postmenopausal osteoporosis.
• KAI Pharmaceuticals: The Company discussed the completion of the acquisition of KAI Pharmaceuticals on July 5, 2012. Phase 3 planning is underway for the lead molecule, KAI-4169.

Non-GAAP Financial Measures

The Adjusted non-GAAP (U.S. Generally Accepted Accounting Principles) financial measures included above for the second quarters of 2012 and 2011 exclude, for the applicable periods, certain expenses related to acquisitions and cost-savings initiatives, non-cash interest expense associated with our convertible notes and certain other adjustments, as applicable. These adjustments and other items are presented on the attached reconciliations.

Management has presented its operating results in accordance with GAAP and on an "adjusted" (or non-GAAP) basis for the second quarters of 2012 and 2011. In addition, management has presented its outstanding debt in accordance with GAAP and on an "adjusted" (or non-GAAP) basis as of June 30, 2012 and 2011.  The Company believes that the presentation of non-GAAP financial measures provides useful supplementary information to and facilitates additional analysis by investors.  The Company uses these non-GAAP financial measures in connection with its own budgeting and financial planning.  These non-GAAP financial measures are in addition to, not a substitute for, or superior to, measures of financial performance prepared in conformity with GAAP.

About Amgen

Amgen discovers, develops, manufactures and delivers innovative human therapeutics. A biotechnology pioneer since 1980, Amgen was one of the first companies to realize the new science's promise by bringing safe, effective medicines from lab to manufacturing plant to patient. Amgen therapeutics have changed the practice of medicine, helping millions of people around the world in the fight against cancer, kidney disease, rheumatoid arthritis, bone disease and other serious illnesses. With a deep and broad pipeline of potential new medicines, Amgen remains committed to advancing science to dramatically improve people's lives. To learn more about our pioneering science and vital medicines, visit http://www.amgen.com/.  Follow us on http://twitter.com/#!/amgen.

Forward-Looking Statements

This news release contains forward-looking statements that involve significant risks and uncertainties, including those discussed below and others that can be found in our Form 10-K for the year ended Dec. 31, 2011, and in our periodic reports on Form 10-Q and Form 8-K.  Amgen is providing this information as of the date of this news release and does not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise. 

No forward-looking statement can be guaranteed and actual results may differ materially from those we project.  The Company's results may be affected by our ability to successfully market both new and existing products domestically and internationally, clinical and regulatory developments (domestic or foreign) involving current and future products, sales growth of recently launched products, competition from other products (domestic or foreign) and difficulties or delays in manufacturing our products.  In addition, sales of our products are affected by reimbursement policies imposed by third-party payers, including governments, private insurance plans and managed care providers and may be affected by regulatory, clinical and guideline developments and domestic and international trends toward managed care and health care cost containment as well as U.S. legislation affecting pharmaceutical pricing and reimbursement.  Government and others' regulations and reimbursement policies may affect the development, usage and pricing of our products.  Furthermore, our research, testing, pricing, marketing and other operations are subject to extensive regulation by domestic and foreign government regulatory authorities.  We, or others, could identify safety, side effects or manufacturing problems with our products after they are on the market.  Our business may be impacted by government investigations, litigation and product liability claims.  Further, while we routinely obtain patents for our products and technology, the protection offered by our patents and patent applications may be challenged, invalidated or circumvented by our competitors.  We depend on third parties for a significant portion of our manufacturing capacity for the supply of certain of our current and future products and limits on supply may constrain sales of certain of our current products and product candidate development.  In addition, we compete with other companies with respect to some of our marketed products as well as for the discovery and development of new products.  Discovery or identification of new product candidates cannot be guaranteed and movement from concept to product is uncertain; consequently, there can be no guarantee that any particular product candidate will be successful and become a commercial product.  Further, some raw materials, medical devices and component parts for our products are supplied by sole third-party suppliers.  Our business performance could affect or limit the ability of our Board of Directors to declare a dividend or our ability to pay a dividend or repurchase our common stock.

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CONTACT: Amgen, Thousand Oaks
Christine Regan, 805-447-5476 (media)
Arvind Sood, 805-447-1060 (investors)

SOURCE Amgen