Amgen Reports Second Quarter 2020 Financial Results

THOUSAND OAKS, Calif., July 28, 2020 /PRNewswire/ -- Amgen (NASDAQ:AMGN) today announced financial results for the second quarter of 2020.

Key results include:

    --  Despite the impact of the COVID-19 pandemic, total revenues increased 6%
        to $6.2 billion in comparison to the second quarter of 2019, driven by
        higher unit demand, offset partially by lower net selling prices.
        --  Product sales increased 6% globally, driven by 13% volume growth
            across a number of our newer products, including Otezla(®
            )(apremilast), MVASI(® )(bevacizumab-awwb), KANJINTI(®)
            (trastuzumab-anns), EVENITY(®) (romosozumab-aqqg) and Repatha(®)
            (evolocumab), offset partially by declines in select products from
            the impact of COVID-19 and biosimilar and generic competition.
    --  GAAP earnings per share (EPS) decreased 15% to $3.05 driven primarily by
        the amortization of costs associated with our November 2019 acquisition
        of Otezla, offset partially by increased revenues. Of note, this is the
        first period to include our share of BeiGene's net loss under the equity
        method of accounting.
        --  GAAP operating income decreased 13% to $2.3 billion and GAAP
            operating margin decreased 8.7 percentage points to 39.3%, driven
            primarily by the amortization of intangible assets from our Otezla
            acquisition.
    --  Non-GAAP EPS increased 7% to $4.25 driven by increased revenues and
        fewer weighted-average shares outstanding while also taking into account
        our share of BeiGene's net loss for the previous quarter as noted above.
        --  Non-GAAP operating income increased 9% to $3.2 billion and non-GAAP
            operating margin increased 1.7 percentage points to 55.0%.
    --  The Company generated $2.7 billion of free cash flow in the second
        quarter versus $1.3 billion in the second quarter of 2019, an increase
        driven primarily by the timing of tax payments.
    --  2020 total revenues guidance reaffirmed at $25.0-$25.6 billion; EPS
        guidance revised to $10.73-$11.43 on a GAAP basis and revised to
        $15.10-$15.75 on a non-GAAP basis.

"As our strong results demonstrate, we continue to reliably supply patients as we navigate the COVID-19 pandemic," said Robert A. Bradway, chairman and chief executive officer. "We look forward to several significant pipeline updates in the second half of the year."



       $Millions, except EPS, dividends paid per share and percentages Q2'20           Q2'19     YOY  



       Total Revenues                                                        $
      6,206       $
          5,871    6%



       GAAP Operating Income                                                 $
      2,323       $
          2,678 (13%)



       GAAP Net Income                                                       $
      1,803       $
          2,179 (17%)



       GAAP EPS                                                               $
      3.05        $
          3.57 (15%)



       Non-GAAP Operating Income                                             $
      3,247       $
          2,973    9%



       Non-GAAP Net Income                                                   $
      2,518       $
          2,423    4%



       Non-GAAP EPS                                                           $
      4.25        $
          3.97    7%



       Dividends Paid Per Share                                               $
      1.60        $
          1.45   10%

    ---

References in this release to "non-GAAP" measures, measures presented "on a non-GAAP basis" and to "free cash flow" (computed by subtracting capital expenditures from operating cash flow) refer to non-GAAP financial measures. Adjustments to the most directly comparable GAAP financial measures and other items are presented on the attached reconciliations.

Product Sales Performance

    --  Notwithstanding the effects of the pandemic, total product sales
        increased 6% for the second quarter of 2020 versus the second quarter of
        2019 driven by 13% volume growth.
    --  COVID-19 impacts: The pandemic interrupted many physician-patient
        interactions, which led to delays in diagnosis and treatment with
        varying degrees of impact across our portfolio. Sales of negatively
        affected products fell most early in the second quarter with sales
        beginning to recover in the latter weeks of the quarter. As the quarter
        progressed, our teams increasingly responded to customer needs via
        remote interactions and also identified innovative solutions to support
        the delivery of patient care. Our medicines were reliably supplied to
        patients throughout the quarter.
    --  Prolia(®) (denosumab) sales decreased 6% year-over-year driven by lower
        unit demand as a result of fewer office visits by osteoporosis patients,
        a population that is generally older and more vulnerable to COVID-19.
        Our historical pattern of higher sales in the second quarter was
        accordingly disrupted, resulting in relatively flat quarter-over-quarter
        sales. During the month of April, 60% fewer patients in the U.S. were
        diagnosed with osteoporosis compared to a pre-COVID-19 baseline. In
        response to the concerns of patients and providers, we worked to
        identify alternate sites for Prolia administration and have since seen
        improved sales with many patients returning for therapy as well as
        increased new patient diagnoses.
    --  EVENITY generated $101 million of sales in the second quarter of 2020.
        Although COVID-19 impacted new patient starts in the U.S. this quarter,
        we saw a continuous increase in new prescribers. We remain focused on
        increasing the number of patients and ensuring they receive their full
        12 months of therapy. While patient uptake remains strong, we anticipate
        a slowdown in reported sales in the third quarter as the first half of
        2020 benefited from larger shipments to Astellas, our partner in Japan,
        to ensure they had appropriate inventory.
    --  Repatha sales increased 32% year-over-year driven by 69% volume growth,
        offset partially by lower net selling price. Sales declined 13%
        quarter-over-quarter driven by unfavorable changes to estimated sales
        deductions. Although new-to-brand prescriptions (NBRx) in the U.S. for
        the proprotein convertase subtilisin/kexin type 9 (PCSK9) segment were
        negatively impacted by COVID-19, Repatha maintained share leadership
        among new patients, exiting the quarter with approximately 80% share.
        Repatha's year-over-year net selling price declined as a result of
        additional contracting to improve Medicare Part D patient access and
        patient affordability. We expect net selling price to be relatively
        stable for the remainder of the year.
    --  Aimovig(® )(erenumab-aooe) sales increased 18% year-over-year driven by
        45% volume growth, offset partially by lower net selling price as a
        result of additional contracting to expand patient access. Aimovig
        remains the segment leader within the preventative calcitonin
        gene-related peptide (CGRP) class with 48% share of total prescriptions
        (TRx) in the quarter. Although NBRx for the total CGRP segment were
        negatively impacted by COVID-19, Aimovig regained NBRx share leadership
        exiting the quarter with 41% share. We continue to see improvement in
        our conversion from free to paid prescriptions and expect net selling
        price to be relatively stable for the remainder of the year.
    --  Parsabiv(® )(etelcalcetide) sales increased 11% year-over-year driven
        by higher unit demand, offset partially by lower net selling price. As
        expected, on July 6, 2020, the Centers for Medicare & Medicaid Services
        (CMS) proposed a methodology to modify the end-stage renal disease
        (ESRD) Prospective Payment System (PPS) base rate to include
        calcimimetics in the ESRD PPS bundled payment in 2021. This proposal is
        subject to a public comment period and the Final Rule is expected in
        November 2020.
    --  Otezla was acquired in November 2019 and generated $561 million of sales
        in the second quarter of 2020, reflecting 14% growth year-over-year
        driven primarily by volume. U.S. Otezla TRx growth remained strong in
        the quarter. Although NBRx volumes were negatively impacted by COVID-19
        early in the quarter, trends have improved since then. From a
        competitive standpoint, Otezla's NBRx share of the psoriasis segment
        grew slightly in the quarter. Otezla provides a convenient oral option
        with an established safety profile and does not require lab monitoring,
        making it an attractive option during this COVID-19 period and for
        physicians practicing telemedicine.
    --  Enbrel(®) (etanercept) sales decreased 9% year-over-year driven by
        lower unit demand. Consistent with prior periods, Enbrel continued to
        lose share and the effects of such share loss were compounded by lower
        growth of the rheumatology segment due to COVID-19. Consistent with
        other agents within the class, Enbrel experienced a decline in new
        patients. Of note, earlier this month, the U.S. Court of Appeals for the
        Federal Circuit affirmed the judgment of the New Jersey District Court
        upholding the validity of the two patents that describe and claim Enbrel
        and methods for making it.
    --  AMGEVITA((TM)) (adalimumab) generated $62 million of sales in the second
        quarter of 2020 and is the most prescribed adalimumab biosimilar in
        Europe for the fourth consecutive quarter. AMGEVITA sales declined 28%
        quarter-over-quarter driven by lower net selling prices and reductions
        in customer inventories following COVID-19-related stocking in the first
        quarter.
    --  KYPROLIS(®) (carfilzomib) sales decreased 5% year-over-year driven by
        lower unit demand. This decline was driven by reduced multiple myeloma
        patient visits to providers due to COVID-19.
    --  XGEVA(®) (denosumab) sales decreased 13% year-over-year driven by lower
        unit demand. This decline was driven by the impact of COVID-19,
        including a decrease in patient visits and recently revised treatment
        recommendations from the National Comprehensive Cancer Network (NCCN) in
        response to COVID-19 to prioritize primary cancer treatments over bone
        targeting agents.
    --  Vectibix(®) (panitumumab) sales were relatively flat year-over-year.
    --  Nplate(®) (romiplostim) sales decreased 4% year-over-year driven by
        unfavorable changes to estimated sales deductions. Volume growth slowed
        primarily as a result of fewer physician office visits due to COVID-19,
        and a loss of new patient starts to oral alternatives.
    --  BLINCYTO(®) (blinatumomab) sales increased 19% year-over-year driven by
        higher unit demand as we continue to see broader adoption in the
        community hospital setting.
    --  MVASI generated $172 million of sales in the second quarter of 2020,
        with a 39% exit share of the bevacizumab segment in the U.S. Going
        forward, we expect increased competition in the U.S. given the launch of
        a competing biosimilar earlier this year.
    --  KANJINTI generated $123 million of sales in the second quarter of 2020,
        with a 32% exit share of the trastuzumab segment in the U.S. The
        trastuzumab market has become increasingly competitive with the launches
        of four additional biosimilar products in the U.S. earlier this year.
    --  Neulasta(®) (pegfilgrastim) sales decreased 28% year-over-year driven
        by the impact of biosimilar competition on net selling price and unit
        demand. Unit volumes for the overall long-acting granulocyte
        colony-stimulating factors (G-CSFs) segment grew, supported by the NCCN
        guidelines, recently revised in response to COVID-19 recommending
        increased use of long-acting G-CSFs in intermediate risk febrile
        neutropenia cancer patients. Within the long-acting G-CSF segment,
        Neulasta Onpro(®) continues to be the preferred choice for physicians
        and patients and share increased to 58% this quarter. Onpro provides a
        unique value proposition during the pandemic as it allows patients to
        receive their G-CSF treatment without having to return to their doctor's
        office or other site of care for administration.
    --  NEUPOGEN(®) (filgrastim) sales decreased 35% year-over-year driven by
        the impact of competition on unit demand and unfavorable changes to
        estimated sales deductions.
    --  EPOGEN(®) (epoetin alfa) sales decreased 28% year-over-year driven by
        lower unit demand and lower net selling price from our existing
        contractual commitment with DaVita.
    --  Aranesp(®) (darbepoetin alfa) sales decreased 11% year-over-year driven
        by lower net selling price and the impact of competition on unit demand.
    --  Sensipar/Mimpara(® )(cinacalcet) sales decreased 34% year-over-year
        driven by the impact of generic competition on unit demand. Supplemental
        patent protection certificates for cinacalcet have now expired in major
        European markets and generic launches have begun. We expect ex-U.S.
        sales to continue to decline in the second half of 2020.

Product Sales Detail by Product and Geographic Region


                        
              $Millions, except percentages                            
       
     Q2'20                          Q2'19         YOY  


                                                                                  US                    ROW     TOTAL                  TOTAL         TOTAL



              Prolia(R)                                                               $
       441                         $
       218                  $
            659           $
        698 (6%)



              EVENITY(R)                                                         40                         61                            101                28  
             *



              Repatha(R)                                                        115                         85                            200               152    32%



              Aimovig(R)                                                         98                                                       98                83    18%



              Parsabiv(R)                                                       160                         26                            186               168    11%



              Otezla(R)                                                         464                         97                            561                   
             *



              Enbrel(R)                                                       1,213                         33                          1,246             1,363   (9%)



              AMGEVITA(TM)                                                                                 62                             62                52    19%



              KYPROLIS(R)                                                       167                         86                            253               267   (5%)



              XGEVA(R)                                                          318                        117                            435               499  (13%)



              Vectibix(R)                                                        79                        116                            195               196   (1%)



              Nplate(R)                                                         107                         86                            193               201   (4%)



              BLINCYTO(R)                                                        56                         37                             93                78    19%



              KANJINTI(R)                                                       101                         22                            123                30  
             *



              MVASI(R)                                                          149                         23                            172                   
             *



              Neulasta(R)                                                       520                         73                            593               824  (28%)



              NEUPOGEN(R)                                                        28                         21                             49                75  (35%)



              EPOGEN(R)                                                         161                                                      161               223  (28%)



              Aranesp(R)                                                        156                        231                            387               436  (11%)



              Sensipar(R)/Mimpara(R)                                             32                         49                             81               122  (34%)



              Other**                                                            23                         37                             60                79  (24%)



              Total product sales                                                   $
       4,428                       $
       1,480                $
            5,908         $
        5,574   6%




    * Change in excess of 100%



              ** Other includes GENSENTA, IMLYGIC(R), Corlanor(R) and Bergamo

    ---

Operating Expense, Operating Margin and Tax Rate Analysis

On a GAAP basis:

    --  Total Operating Expenses increased 22% primarily driven by
        Otezla-related expenses, including the amortization of intangible
        assets, offset partially by the reduction in certain expenses as a
        result of COVID-19. Cost of Sales margin increased 7 percentage points
        driven by amortization expense related to the Otezla acquisition and the
        benefit of Hurricane Maria insurance proceeds in 2019, offset partially
        by lower manufacturing costs. Research & Development (R&D) expenses
        increased 4% driven by higher spend in support of our late-stage
        development programs, primarily AMG 510 (sotorasib) and our biosimilar
        programs, along with Otezla, offset partially by recoveries from our
        collaboration with BeiGene. Selling, General & Administrative (SG&A)
        expenses increased 3% primarily due to Otezla commercial and
        acquisition-related expenses, offset partially by COVID-19-related
        deceleration of certain expenses. Other expenses increased due to a
        legal settlement.
    --  Operating Margin decreased 8.7 percentage points to 39.3% driven
        primarily by the amortization of intangible assets from our Otezla
        acquisition.
    --  Tax Rate decreased 3.8 percentage points due primarily to net favorable
        items in the quarter, amortization related to the Otezla acquisition and
        changes in jurisdictional mix of earnings.

On a non-GAAP basis:

    --  Total Operating Expenses increased 2% driven by Otezla-related expenses,
        offset partially by the reduction in certain expenses as a result of
        COVID-19. Cost of Sales margin decreased 0.4 percentage points driven
        primarily by lower manufacturing costs, offset partially by an increase
        in royalties and the benefit of Hurricane Maria insurance proceeds in
        2019. R&D expenses increased 3% driven by higher spend in support of our
        late-stage development programs, primarily AMG 510 (sotorasib) and our
        biosimilar programs, along with Otezla, offset partially by recoveries
        from our collaboration with BeiGene. SG&A expenses increased 1% due
        primarily to Otezla commercial related expenses, offset partially by
        COVID-19-related deceleration of certain expenses.
    --  Operating Margin increased 1.7 percentage points to 55.0%.
    --  Tax Rate decreased 1.6 percentage points due primarily to net favorable
        items in the quarter.


                                                      
     $Millions, except percentages          
           
           GAAP                              
       
         Non-GAAP


                                                                                      Q2'20                         Q2'19            YOY                           Q2'20       Q2'19                   YOY  



              Cost of Sales                                                                      $
         1,488                     $
          1,012                           47%                   $
       758                      $
             736        3%



              % of product sales                                                      25.2                               18.2                       
       7 pts                    12.8                       13.2
                                                                                          %                                 %                                                        %                         %         
            (0.4) pts



              Research & Development                                                               $
         964                       $
          924                            4%                   $
       936                      $
             906        3%



              % of product sales                                                      16.3                               16.6                     
       (0.3) pts                  15.8                       16.3
                                                                                          %                                 %                                                        %                         %         
            (0.5) pts



              Selling, General & Administrative                                                  $
         1,295                     $
          1,260                            3%                 $
       1,265                    $
             1,256        1%



              % of product sales                                                      21.9                               22.6                     
       (0.7) pts                  21.4                       22.5
                                                                                          %                                 %                                                        %                         %         
            (1.1) pts



              Other                                                                                $
         136                       $
          (3)                         
      *          
     $                        
     $                             -%



              
                Total Operating Expenses                                        $
       
           3,883                 $
     
            3,193                           22%             $
     
         2,959             $
        
               2,898        2%





              Operating Margin



              operating income as % of product sales                                  39.3                               48.0                     
       (8.7) pts                  55.0                       53.3
                                                                                          %                                 %                                                        %                         %          
            1.7 pts





              
                Tax Rate                                                   11.2                               15.0                                (3.8) pts           13.7                       15.3

                                                                                          %                                 %                                                        %                         %                        (1.6) pts




    * Change in excess of 100%



              pts: percentage points

    ---

Cash Flow and Balance Sheet

    --  The Company generated $2.7 billion of free cash flow in the second
        quarter of 2020 versus $1.3 billion in the second quarter of 2019,
        driven primarily by the timing of tax payments.
    --  The Company's second quarter 2020 dividend of $1.60 per share was
        declared on March 4, 2020, and was paid on June 8, 2020, to all
        stockholders of record as of May 18, 2020, representing a 10% increase
        from 2019.
    --  During the second quarter, the Company repurchased 2.6 million shares of
        common stock at a total cost of $591 million. At the end of the second
        quarter, the Company had $4.9 billion remaining under its stock
        repurchase authorization.
    --  Cash and investments totaled $11.4 billion as of June 30, 2020, a
        decrease of $10.3 billion from the quarter ended June 30, 2019. This
        decrease was primarily due to the Otezla and BeiGene transactions, as
        well as cash returned to shareholders in the form of share repurchases
        and dividends, offset partially by free cash flow generated during the
        period and net proceeds from debt issuances.
    --  Additionally, the Company issued $4 billion of long-term debt in May for
        general corporate purposes, including enhancing our working capital
        position, given favorable market conditions. Debt outstanding at the end
        of the quarter totaled $34.2 billion with a weighted-average interest
        rate of 3.5% and an average maturity of 14 years.

                                            
         $Billions, except shares Q2'20        Q2'19      YOY  



       Operating Cash Flow                                                      $
     2.8                  $
     1.4        $
     1.4



       Capital Expenditures                                                 0.2               0.1                 0.0



       Free Cash Flow                                                       2.7               1.3                 1.4



       Dividends Paid                                                       0.9               0.9                 0.0



       Share Repurchases                                                    0.6               2.3               (1.8)



       Average Diluted Shares (millions)                                    592               610                (18)





       Cash and Investments                                                11.4              21.8              (10.3)



       Debt Outstanding                                                    34.2              30.6                 3.6



       Stockholders' Equity                                                10.7              10.8               (0.1)





       Note: Numbers may not add due to rounding

    ---

2020 Guidance

For the full year 2020, the Company now expects:

    --  Total revenues in the range of $25.0 billion to $25.6 billion, unchanged
        from previous guidance.
    --  On a GAAP basis, EPS in the range of $10.73 to $11.43 and a tax rate in
        the range of 10.5% to 11.5%.
        --  Previously, the Company expected GAAP EPS in the range of $10.65 to
            $11.45 and a tax rate in the range of 10.5% to 11.5%.
    --  On a non-GAAP basis, EPS in the range of $15.10 to $15.75 and a tax rate
        in the range of 13.5% to 14.5%.
        --  Previously, the Company expected non-GAAP EPS in the range of $14.85
            to $15.60 and a tax rate in the range of 13.5% to 14.5%.
    --  Capital expenditures to be approximately $600 million.
    --  Quarterly dividend maintained at $1.60 per share.
    --  Share repurchases will be executed opportunistically resulting in an
        amount at the lower end of our previous guidance of $3 billion to $5
        billion.

Second Quarter Product and Pipeline Update

The Company provided the following updates on selected product and pipeline programs:

AMG 510 (sotorasib)

    --  The Company continues to expect initial data from a potentially pivotal
        Phase 2 monotherapy study in patients with advanced non-small cell lung
        cancer (NSCLC) in H2 2020.
    --  The Phase 3 CodeBreaK 200 study comparing sotorasib to docetaxel is
        enrolling patients with advanced NSCLC.
    --  6 Phase 1 combination cohorts are enrolling patients.

Bispecific Programs

    --  The Company expects initial data from Phase 1 dose escalation studies of
        the following half-life extended BiTE(®) constructs in H2 2020:
        --  AMG 160 targeting PSMA (prostate specific membrane antigen) for
            prostate cancer
        --  AMG 701 targeting BCMA (B-cell maturation antigen) for multiple
            myeloma
        --  AMG 757 targeting DLL3 (delta-like ligand 3) for small cell lung
            cancer
    --  Phase 1 development of AMG 424, a CD38-CD3 XmAb(®) antibody has been
        stopped, with rights reverting to Xencor.

Otezla

    --  In May, the Phase 3 ADVANCE study in patients with mild to moderate
        psoriasis met its primary endpoint and all secondary endpoints at week
        16.
    --  Otezla is being investigated as a potential immunomodulatory treatment
        in patients hospitalized with SARS-CoV-2 infections in multiple COVID-19
        platform trials.

Tezepelumab

    --  The Company continues to expect data from the Phase 3 NAVIGATOR study in
        patients with severe uncontrolled asthma in late 2020.
    --  A Phase 2 atopic dermatitis study was stopped based on efficacy data
        that did not support continuation of the study. No new safety findings
        were observed and there is no impact to the ongoing studies in chronic
        obstructive pulmonary disease and asthma.

AMG 592

    --  Phase 1b/2 clinical studies in systemic lupus erythematosus and chronic
        graft versus host disease are enrolling patients.
    --  A Phase 1b study in rheumatoid arthritis (RA) was stopped due to
        insufficient benefit-risk for the use with standard of care therapy in
        active RA patients.

Omecamtiv mecarbil

    --  The Company continues to expect data from the Phase 3 GALACTIC-HF study
        in Q4 2020.
    --  In May, the U.S. Food and Drug Administration granted Fast Track
        designation for omecamtiv mecarbil for the treatment of chronic heart
        failure with reduced ejection fraction.

AMG 890

    --  A Phase 2 study in patients with cardiovascular disease has commenced
        for AMG 890, a small interfering RNA molecule that lowers
        lipoprotein(a).

COVID-19 Therapeutics

    --  The Company is pursuing the development of therapeutic antibodies that
        may be complementary with antibodies directed against the receptor
        binding domain of the SARS-CoV-2 spike protein. In addition, the Company
        has the option to review and potentially pursue antibody candidates
        identified by Adaptive Biotechnologies.

Tezepelumab is being developed in collaboration with AstraZeneca
Omecamtiv mecarbil is being developed under a collaboration between Amgen and Cytokinetics, with funding and strategic support from Servier

Non-GAAP Financial Measures

In this news release, management has presented its operating results for the second quarters of 2020 and 2019, in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and on a non-GAAP basis. In addition, management has presented its full year 2020 EPS and tax rate guidance in accordance with GAAP and on a non-GAAP basis. These non-GAAP financial measures are computed by excluding certain items related to acquisitions, restructuring and certain other items from the related GAAP financial measures. Reconciliations for these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the news release. Management has also presented Free Cash Flow (FCF), which is a non-GAAP financial measure, for the second quarters of 2020 and 2019. FCF is computed by subtracting capital expenditures from operating cash flow, each as determined in accordance with GAAP.

The Company believes that its presentation of non-GAAP financial measures provides useful supplementary information to and facilitates additional analysis by investors. The Company uses certain non-GAAP financial measures to enhance an investor's overall understanding of the financial performance and prospects for the future of the Company's ongoing business activities by facilitating comparisons of results of ongoing business operations among current, past and future periods. The Company believes that FCF provides a further measure of the Company's liquidity.

The Company uses the non-GAAP financial measures set forth in the news release in connection with its own budgeting and financial planning internally to evaluate the performance of the business, including to allocate resources and to evaluate results relative to incentive compensation targets. The non-GAAP financial measures are in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

About Amgen

Amgen is committed to unlocking the potential of biology for patients suffering from serious illnesses by discovering, developing, manufacturing and delivering innovative human therapeutics. This approach begins by using tools like advanced human genetics to unravel the complexities of disease and understand the fundamentals of human biology.

Amgen focuses on areas of high unmet medical need and leverages its expertise to strive for solutions that improve health outcomes and dramatically improve people's lives. A biotechnology pioneer since 1980, Amgen has grown to be one of the world's leading independent biotechnology companies, has reached millions of patients around the world and is developing a pipeline of medicines with breakaway potential.

For more information, visit www.amgen.com and follow us on www.twitter.com/amgen.

Forward-Looking Statements

This news release contains forward-looking statements that are based on the current expectations and beliefs of Amgen. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including any statements on the outcome, benefits and synergies of collaborations, or potential collaborations, with any other company, including Adaptive Biotechnologies (including statements regarding such collaboration's, or our own, ability to discover and develop fully-human neutralizing antibodies targeting SARS-CoV-2 to potentially prevent or treat COVID-19), BeiGene, Ltd., or the Otezla acquisition, including anticipated Otezla sales growth and the timing of non-GAAP EPS accretion, as well as estimates of revenues, operating margins, capital expenditures, cash, other financial metrics, expected legal, arbitration, political, regulatory or clinical results or practices, customer and prescriber patterns or practices, reimbursement activities and outcomes, effects of pandemics or other widespread health problems such as the ongoing COVID-19 pandemic on our business, outcomes, progress, or effects relating to studies of Otezla as a potential treatment for COVID-19, and other such estimates and results. Forward-looking statements involve significant risks and uncertainties, including those discussed below and more fully described in the Securities and Exchange Commission reports filed by Amgen, including our most recent annual report on Form 10-K and any subsequent periodic reports on Form 10-Q and current reports on Form 8-K. Unless otherwise noted, 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. Our results may be affected by our ability to successfully market both new and existing products domestically and internationally, clinical and regulatory developments involving current and future products, sales growth of recently launched products, competition from other products including biosimilars, difficulties or delays in manufacturing our products and global economic conditions. In addition, sales of our products are affected by pricing pressure, political and public scrutiny and 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 healthcare cost containment. 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, including our devices, after they are on the market. Our business may be impacted by government investigations, litigation and product liability claims. In addition, our business may be impacted by the adoption of new tax legislation or exposure to additional tax liabilities. If we fail to meet the compliance obligations in the corporate integrity agreement between us and the U.S. government, we could become subject to significant sanctions. 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, or we may fail to prevail in present and future intellectual property litigation. We perform a substantial amount of our commercial manufacturing activities at a few key facilities, including in Puerto Rico, and also depend on third parties for a portion of our manufacturing activities, and limits on supply may constrain sales of certain of our current products and product candidate development. An outbreak of disease or similar public health threat, such as COVID-19, and the public and governmental effort to mitigate against the spread of such disease, could have a significant adverse effect on the supply of materials for our manufacturing activities, the distribution of our products, the commercialization of our product candidates, and our clinical trial operations, and any such events may have a material adverse effect on our product development, product sales, business and results of operations. We rely on collaborations with third parties for the development of some of our product candidates and for the commercialization and sales of some of our commercial products. In addition, we compete with other companies with respect to many of our marketed products as well as for the discovery and development of new products. Discovery or identification of new product candidates or development of new indications for existing products cannot be guaranteed and movement from concept to product is uncertain; consequently, there can be no guarantee that any particular product candidate or development of a new indication for an existing product 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. Certain of our distributors, customers and payers have substantial purchasing leverage in their dealings with us. The discovery of significant problems with a product similar to one of our products that implicate an entire class of products could have a material adverse effect on sales of the affected products and on our business and results of operations. Our efforts to collaborate with or acquire other companies, products or technology, and to integrate the operations of companies or to support the products or technology we have acquired, may not be successful. A breakdown, cyberattack or information security breach could compromise the confidentiality, integrity and availability of our systems and our data. Our stock price is volatile and may be affected by a number of events. 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. We may not be able to access the capital and credit markets on terms that are favorable to us, or at all.

CONTACT: Amgen, Thousand Oaks
Trish Hawkins, 805-447-5631 (media)
Arvind Sood, 805-447-1060 (investors)



     
                Amgen Inc.



     
                Consolidated Statements of Income - GAAP



     
                (In millions, except per-share data)



     
                (Unaudited)




                                                             Three months ended                       Six months ended
                                             
                June 30,                    
            June 30,


                                           2020                           2019        2020                             2019



     Revenues:


      Product sales                               $
              5,908                        $
           5,574                       $
       11,802  $
       10,860


      Other revenues                        298                                   297                            565                     568


      Total revenues                      6,206                                 5,871                         12,367                  11,428





     Operating expenses:


      Cost of sales                       1,488                                 1,012                          3,001                   2,067


      Research and
       development                          964                                   924                          1,916                   1,803


      Selling, general and
       administrative                     1,295                                 1,260                          2,611                   2,414



     Other                                 136                                   (3)                           161                     (6)


      Total operating
       expenses                           3,883                                 3,193                          7,689                   6,278




      Operating income                    2,323                                 2,678                          4,678                   5,150




      Interest expense, net                 296                                   332                            642                     675


      Interest and other
       income, net                            3                                   218                             14                     403




      Income before income
       taxes                              2,030                                 2,564                          4,050                   4,878




      Provision for income
       taxes                                227                                   385                            422                     707





     Net income                                  $
              1,803                        $
           2,179                        $
       3,628   $
       4,171





     Earnings per share:



     Basic                                        $
              3.07                         $
           3.59                         $
       6.16    $
       6.78



     Diluted                                      $
              3.05                         $
           3.57                         $
       6.12    $
       6.75




      Weighted-average shares used in
       calculation of earnings per share:



     Basic                                 588                            607                         589                  615



     Diluted                               592                            610                         593                  618



     
                Amgen Inc.



     
                Consolidated Balance Sheets - GAAP



     
                (In millions)




                                                          June 30,                   December 31,


                                                               2020           2019


                                                        (Unaudited)



     
                Assets



     Current assets:



     Cash, cash equivalents and marketable securities              $
     11,421                $
        8,911



     Trade receivables, net                                  5,366            4,057



     Inventories                                             3,840            3,584



     Other current assets                                    2,268            1,888



     Total current assets                                   22,895           18,440





     Property, plant and equipment, net                      4,843            4,928



     Intangible assets, net                                 17,948           19,413



     Goodwill                                               14,678           14,703



     Other assets                                            4,647            2,223



     Total assets                                                  $
     65,011               $
        59,707





     
                Liabilities and Stockholders' Equity



     Current liabilities:



     Accounts payable and accrued liabilities                      $
     10,432                $
        9,882



     Current portion of long-term debt                          91            2,953



     Total current liabilities                              10,523           12,835





     Long-term debt                                         34,133           26,950



     Long-term deferred tax liabilities                        259              606



     Long-term tax liabilities                               7,556            8,037



     Other noncurrent liabilities                            1,881            1,606



     Total stockholders' equity                             10,659            9,673



     Total liabilities and stockholders' equity                    $
     65,011               $
        59,707





     Shares outstanding                                        586              591



     
                Amgen Inc.



     
                GAAP to Non-GAAP Reconciliations



     
                (Dollars in millions)



     
                (Unaudited)




                                                                            Three months ended                          Six months ended
                                                               
              June 30,                      
              June 30,


                                                            2020                            2019          2020                             2019


                   GAAP cost of sales                              $
            1,488                             $
              1,012                $
          3,001  $
       2,067


                   Adjustments to cost of sales:


      Acquisition-related expenses
       (a)                                                 (730)                                 (276)                               (1,472)          (552)


                   Total adjustments to cost of
                    sales                                  (730)                                 (276)                               (1,472)          (552)


                   Non-GAAP cost of sales                            $
            758                               $
              736                $
          1,529  $
       1,515




                   GAAP cost of sales as a                  25.2                                   18.2                                   25.4            19.0
                    percentage of product sales                %                                     %                                     %              %


      Acquisition-related expenses
       (a)                                                 -12.4                                   -5.0                                  -12.4            -5.0


                   Non-GAAP cost of sales as a              12.8                                   13.2                                   13.0            14.0
                    percentage of product sales                %                                     %                                     %              %




                   GAAP research and development
                    expenses                                         $
            964                               $
              924                $
          1,916  $
       1,803


                   Adjustments to research and development expenses:


      Acquisition-related expenses
       (a)                                                  (28)                                  (18)                                  (53)           (38)


                   Total adjustments to research
                    and development expenses                (28)                                  (18)                                  (53)           (38)


                   Non-GAAP research and
                    development expenses                             $
            936                               $
              906                $
          1,863  $
       1,765




                   GAAP research and development
                    expenses as a percentage of                %                                     %                                     %              %
                    product sales                           16.3                                   16.6                                   16.2            16.6


      Acquisition-related expenses
       (a)                                                  -0.5                                   -0.3                                   -0.4            -0.3


                   Non-GAAP research and
                    development expenses as a                  %                                     %                                     %              %
                    percentage of product sales             15.8                                   16.3                                   15.8            16.3




                   GAAP selling, general and
                    administrative expenses                        $
            1,295                             $
              1,260                $
          2,611  $
       2,414


                   Adjustments to selling, general and
                    administrative expenses:


      Acquisition-related expenses
       (a)                                                  (30)                                   (5)                                  (59)            (9)


      Certain net charges pursuant to
       our restructuring initiatives                           -                                     1


                   Total adjustments to selling,
                    general and administrative
                    expenses                                (30)                                   (4)                                  (59)            (9)


                   Non-GAAP selling, general and
                    administrative expenses                        $
            1,265                             $
              1,256                $
          2,552  $
       2,405




                   GAAP selling, general and
                    administrative expenses as a               %                                     %                                     %              %
                    percentage of product sales             21.9                                   22.6                                   22.1            22.2


      Acquisition-related expenses
       (a)                                                  -0.5                                   -0.1                                   -0.5            -0.1


      Certain net charges pursuant to
       our restructuring initiatives                         0.0                                    0.0                                    0.0             0.0


                   Non-GAAP selling, general and
                    administrative expenses as a               %                                     %                                     %              %
                    percentage of product sales             21.4                                   22.5                                   21.6            22.1




                   GAAP operating expenses                         $
            3,883                             $
              3,193                $
          7,689  $
       6,278


                   Adjustments to operating expenses:


      Adjustments to cost of sales                         (730)                                 (276)                               (1,472)          (552)


      Adjustments to research and
       development expenses                                 (28)                                  (18)                                  (53)           (38)


      Adjustments to selling, general
       and administrative expenses                          (30)                                   (4)                                  (59)            (9)


      Certain net charges pursuant to
       our restructuring initiatives                           2                                      1                                      4               2


      Certain other expenses (b)                           (138)                                     2                                  (165)              4


                   Total adjustments to operating
                    expenses                               (924)                                 (295)                               (1,745)          (593)


                   Non-GAAP operating expenses                     $
            2,959                             $
              2,898                $
          5,944  $
       5,685




                   GAAP operating income                           $
            2,323                             $
              2,678                $
          4,678  $
       5,150


      Adjustments to operating
       expenses                                              924                                    295                                  1,745             593


                   Non-GAAP operating income                       $
            3,247                             $
              2,973                $
          6,423  $
       5,743






                                                                            Three months ended                          Six months ended
                                                               
              June 30,                      
              June 30,


                                                            2020                            2019          2020                             2019


                   GAAP operating income as a               39.3                                   48.0                                   39.6            47.4
                    percentage of product sales                %                                     %                                     %              %


      Adjustments to cost of sales                          12.4                                    5.0                                   12.5             5.0


      Adjustments to research and
       development expenses                                  0.5                                    0.3                                    0.4             0.3


      Adjustments to selling, general
       and administrative expenses                           0.5                                    0.1                                    0.5             0.1


      Certain net charges pursuant to
       our restructuring initiatives                         0.0                                    0.0                                    0.0             0.0


      Certain other expenses (b)                             2.3                                   -0.1                                    1.4             0.1


                   Non-GAAP operating income as a           55.0                                   53.3                                   54.4            52.9
                    percentage of product sales                %                                     %                                     %              %




                   GAAP interest and other income,
                    net                                                $
            3                               $
              218                   $
          14    $
       403


      Adjustments to interest and
       other income, net (c)                                (36)                                                                        (36)


                   Non-GAAP interest and other
                    income, net                                     $
            (33)                              $
              218                 $
          (22)   $
       403




                   GAAP income before income taxes                 $
            2,030                             $
              2,564                $
          4,050  $
       4,878


      Adjustments to operating
       expenses                                              924                                    295                                  1,745             593


      Adjustments to other income                           (36)                                                                        (36)


                   Non-GAAP income before income
                    taxes                                          $
            2,918                             $
              2,859                $
          5,759  $
       5,471




                   GAAP provision for income taxes                   $
            227                               $
              385                  $
          422    $
       707


                   Adjustments to provision for income taxes:


      Income tax effect of the above
       adjustments (d)                                       164                                     70                                    335             138


      Other income tax adjustments (e)                         9                                   (19)                                     8            (27)


                   Total adjustments to provision
                    for income taxes                         173                                     51                                    343             111


                   Non-GAAP provision for income
                    taxes                                            $
            400                               $
              436                  $
          765    $
       818




                   GAAP tax as a percentage of              11.2                                   15.0                                   10.4            14.5
                    income before taxes                        %                                     %                                     %              %


                   Adjustments to provision for income taxes:


      Income tax effect of the above
       adjustments (d)                                       2.2                                    0.9                                    2.7             1.0


      Other income tax adjustments (e)                       0.3                                   -0.6                                    0.2            -0.5


                   Total adjustments to provision
                    for income taxes                         2.5                                    0.3                                    2.9             0.5


                   Non-GAAP tax as a percentage of          13.7                                   15.3                                   13.3            15.0
                    income before taxes                        %                                     %                                     %              %




                   GAAP net income                                 $
            1,803                             $
              2,179                $
          3,628  $
       4,171


                   Adjustments to net income:


      Adjustments to income before
       income taxes, net of the income
       tax effect                                            724                                    225                                  1,374             455


      Other income tax adjustments (e)                       (9)                                    19                                    (8)             27


                   Total adjustments to net income           715                                    244                                  1,366             482



                   Non-GAAP net income                             $
            2,518                             $
              2,423                $
          4,994  $
       4,653



     
                Amgen Inc.



     
                GAAP to Non-GAAP Reconciliations



     
                (In millions, except per-share data)



     
                (Unaudited)





     The following table presents the computations for GAAP and non-GAAP diluted earnings per share:




                                                                                  Three months ended                           Three months ended
                                                                  
                June 30, 2020                          
         June 30, 2019


                                                                         GAAP                             Non-GAAP                       GAAP     Non-GAAP



     Net income                                                                $
              1,803                  $
       2,518                             $
      2,179  $
      2,423




      Weighted-average shares for
       diluted EPS                                                        592                         592                           610                          610





     Diluted EPS                                                                $
              3.05                   $
       4.25                              $
      3.57   $
      3.97







                                                                                   Six months ended                             Six months ended
                                                                  
                June 30, 2020                          
         June 30, 2019


                                                                         GAAP                             Non-GAAP                       GAAP     Non-GAAP



     Net income                                                                $
              3,628                  $
       4,994                             $
      4,171  $
      4,653




      Weighted-average shares for
       diluted EPS                                                        593                         593                           618                          618





     Diluted EPS                                                                $
              6.12                   $
       8.42                              $
      6.75   $
      7.53



     (a) The adjustments related primarily
          to noncash amortization of
          intangible assets from business
          acquisitions.




     (b) For the three months ended June 30,
          2020 the adjustment related
          primarily to legal settlement
          expenses. For the six months ended
          June 30, 2020 the adjustment
          related primarily to legal
          settlement expenses and an
          impairment charge associated with
          an in-process research and
          development asset.




     (c) For the six months ended June 30,
          2020 the adjustment related
          primarily to a gain from legal
          judgment proceeds offset partially
          by amortization of the basis
          difference from our BeiGene equity
          method investment.




     (d) The tax effect of the adjustments
          between our GAAP and non-GAAP
          results takes into account the tax
          treatment and related tax rate(s)
          that apply to each adjustment in
          the applicable tax
          jurisdiction(s). Generally, this
          results in a tax impact at the
          U.S. marginal tax rate for certain
          adjustments, including the
          majority of amortization of
          intangible assets, whereas the tax
          impact of other adjustments,
          including restructuring
          initiatives, depends on whether
          the amounts are deductible in the
          respective tax jurisdictions and
          the applicable tax rate(s) in
          those jurisdictions. Due to these
          factors, the effective tax rates
          for the adjustments to our GAAP
          income before income taxes, for
          the three and six months ended
          June 30, 2020, were 18.5% and
          19.6%, compared with 23.7% and
          23.3% for the corresponding
          periods of the prior year.




     (e) The adjustments related to certain
          acquisition items and prior period
          items excluded from GAAP earnings.



     
                Amgen Inc.



     
                Reconciliations of Cash Flows



     
                (In millions)



     
                (Unaudited)




                                                    Three months ended                            Six months ended
                                       
             June 30,                      
             June 30,


                                     2020                        2019            2020                          2019


      Net cash provided
       by operating
       activities                           $
           2,842                            $
              1,414             $
       4,976  $
     3,259


      Net cash (used
       in) provided by
       investing
       activities                 (2,159)                               2,745                             (2,389)        6,300


      Net cash provided
       by (used in)
       financing
       activities                     775                              (5,992)                                 521     (10,979)


      Increase
       (decrease) in
       cash and cash
       equivalents                  1,458                              (1,833)                               3,108      (1,420)


      Cash and cash
       equivalents at
       beginning of
       period                       7,687                                7,358                               6,037        6,945


      Cash and cash
       equivalents at
       end of period                        $
           9,145                            $
              5,525             $
       9,145  $
     5,525




                                                    Three months ended                            Six months ended
                                       
             June 30,                      
             June 30,


                                     2020                        2019            2020                          2019


      Net cash provided
       by operating
       activities                           $
           2,842                            $
              1,414             $
       4,976  $
     3,259


      Capital
       expenditures                 (158)                               (144)                              (300)       (260)


      Free cash flow                        $
           2,684                            $
              1,270             $
       4,676  $
     2,999



     
                Amgen Inc.



     
                Reconciliation of GAAP EPS Guidance to Non-GAAP



     
                EPS Guidance for the Year Ending December 31, 2020



     
                (Unaudited)





     
                GAAP diluted EPS guidance                               $
     10.73      $
     11.43



     
                Known adjustments to arrive at non-GAAP*:



     Acquisition-related expenses (a)                                4.24          4.29



     Net legal proceedings                                                    0.08



     
                Non-GAAP diluted EPS guidance                           $
     15.10      $
     15.75



               * The known adjustments are
                presented net of their related tax
                impact, which amount to
                approximately $1.07 -$1.08 per
                share.




               (a) The adjustments relate
                primarily to noncash amortization
                of intangible assets acquired in
                business acquisitions.




               Our GAAP diluted EPS guidance does
                not include the effect of GAAP
                adjustments triggered by events
                that may occur subsequent to this
                press release such as
                acquisitions, asset impairments,
                litigation and changes in the fair
                value or our contingent
                consideration.



     
                Reconciliation of GAAP Tax Rate Guidance to Non-GAAP



     
                Tax Rate Guidance for the Year Ending December 31, 2020



     
                (Unaudited)





     GAAP tax rate guidance                                               10.5      11.5

                                                                              %        %



     Tax rate of known adjustments discussed above                             3.0%



     Non-GAAP diluted EPS guidance                                        13.5      14.5

                                                                              %        %

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SOURCE Amgen