Amgen Reports Third Quarter 2020 Financial Results
THOUSAND OAKS, Calif., Oct. 28, 2020 /PRNewswire/ -- Amgen (NASDAQ:AMGN) today announced financial results for the third quarter of 2020.
Key results include:
-- Total revenues increased 12% to $6.4 billion in comparison to the third
quarter of 2019 driven by higher volume growth, partially offset by
lower net selling prices and the effects of the COVID-19 pandemic.
-- Product sales increased 12% globally, driven by 18% volume growth
across a number of our newer products, including Otezla(®
)(apremilast), MVASI(® )(bevacizumab-awwb), KANJINTI(®)
(trastuzumab-anns), and Repatha(® )(evolocumab), partially offset
by declines in select products from the impact of COVID-19, and
biosimilar and generic competition.
-- GAAP earnings per share (EPS) increased 5% to $3.43 primarily driven by
increased revenues and lower weighted-average shares outstanding,
partially offset by the amortization of costs associated with our
November 2019 acquisition of Otezla.
-- GAAP operating income decreased 1% to $2.5 billion and GAAP
operating margin decreased 5.1 percentage points to 40.2%, primarily
driven by the amortization of intangible assets from our Otezla
acquisition.
-- Non-GAAP EPS increased 19% to $4.37 driven by increased revenues.
-- Non-GAAP operating income increased 14% to $3.2 billion and non-GAAP
operating margin increased 1.0 percentage point to 52.1%.
-- The Company generated $3.2 billion of free cash flow in the third
quarter versus $3.2 billion in the third quarter of 2019.
-- 2020 total revenues guidance narrowed to $25.1-$25.5 billion; EPS
guidance revised to $11.53-$11.93 on a GAAP basis and revised to
$15.80-$16.15 on a non-GAAP basis.
"Amgen continues to deliver strong, volume-driven growth in a challenging environment, while also advancing new medicines in our pipeline," said Robert A. Bradway, chairman and chief executive officer.
$Millions, except EPS, dividends paid per share and percentages Q3 '20 Q3 '19 YOY
Total Revenues $
6,423 $
5,737 12%
GAAP Operating
Income $
2,453 $
2,476 (1%)
GAAP Net Income $
2,021 $
1,968 3%
GAAP EPS $
3.43 $
3.27 5%
Non-GAAP
Operating Income $
3,183 $
2,793 14%
Non-GAAP Net
Income $
2,572 $
2,201 17%
Non-GAAP EPS $
4.37 $
3.66 19%
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
-- Total product sales increased 12% versus the third quarter of 2019
driven by 18% volume growth, partially offset by declines in net selling
prices.
-- COVID-19 update: During the third quarter, physician-patient
interactions and prescribing volumes continued to increase, but remained
modestly below pre-COVID-19 levels on a portfolio basis. While
prescription trends were more consistent throughout the third quarter
versus the second quarter, we continue to expect quarter-to-quarter
variability due to the pandemic.
-- Prolia(®) (denosumab) sales increased 11% year-over-year driven by 10%
volume growth as patients returned for treatment in the quarter, with
rates of osteoporosis diagnoses in the U.S. recovering to ~70% of
pre-COVID-19 levels. Our efforts remain focused on assisting patients
with continuity of care to improve product access from the initial
stages of the pandemic. Prior to the pandemic, the first and third
quarters of each year had lower sales than the second and fourth
quarters. Given the impact of the pandemic in the second quarter of 2020
and 6-month dosing regimen of Prolia, we expect year-over-year growth
rates in the fourth quarter to be lower than pre-COVID-19 growth trends.
-- EVENITY(® )(romosozumab-aqqg) generated $59 million of sales in the
third quarter of 2020. U.S. sales increased 35% quarter-over-quarter
driven by 30% volume growth. Japan sales declined quarter-over-quarter
driven by an inventory drawdown by our partner Astellas following large
purchases during the first half of 2020, as well as an unfavorable
change to estimated sales deductions.
-- Repatha sales increased 22% year-over-year driven by 60% volume growth,
partially offset by lower net selling price and unfavorable changes to
estimated sales deductions. Despite a modest disruption in access in the
third quarter, Repatha remains the global segment leader in the
proprotein convertase subtilisin/kexin type 9 (PCSK9) class. Repatha's
year-over-year net selling price declined as a result of additional
contracting to improve Medicare Part D patient access and affordability.
At the end of the third quarter, more than 60% of Medicare patients had
access to affordable, fixed co-pays of $50 or less.
-- Aimovig(® )(erenumab-aooe) sales increased 59% year-over-year driven by
36% volume growth and the effect of unfavorable changes to estimated
sales deductions in the prior year. Net selling price declined minimally
year-over-year. Aimovig remains the segment leader within the preventive
calcitonin gene-related peptide (CGRP) class with 46% share of total
prescriptions (TRx) and 38% share of new-to-brand prescriptions (NBRx)
in the quarter. With five-year efficacy and safety data, Aimovig is well
positioned for the preventive segment which impacts more than 4 million
individuals in the U.S.
-- Parsabiv(® )(etelcalcetide) sales increased 17% year-over-year driven
by 24% volume growth, partially offset by lower net selling price. The
final rule from the Centers for Medicare & Medicaid Services (CMS) to
include calcimimetics in the end stage renal disease (ESRD) bundled
payment system is expected in November 2020, with implementation
projected for January 2021. In anticipation of this change, we believe
U.S. sales were negatively impacted late in the third quarter and we
expect this trend to continue in the fourth quarter.
-- Otezla generated $538 million of sales in the third quarter of 2020.
U.S. Otezla TRx volume growth remained strong with an 11% year-over-year
increase, and NBRx volumes continued to recover from the impacts of
COVID-19. Net selling price was flat year-over-year in the U.S. Third
quarter year-over-year Otezla sales* were negatively impacted by lower
inventory levels and unfavorable changes to estimated sales deductions.
Otezla continues to lead in biologic-naïve patient share in
moderate-to-severe psoriasis.
-- Enbrel(®) (etanercept) sales decreased 3% year-over-year driven by
lower volumes, partially offset by favorable changes to estimated sales
deductions. Enbrel continued to lose share in the third quarter, and
that dynamic was compounded with lower growth of the rheumatology
segment due to COVID-19. Net selling price was flat year-over-year.
-- AMGEVITA((TM)) (adalimumab) increased 31% year-over-year driven by 49%
volume growth, partially offset by lower net selling price. AMGEVITA
continues to be the most prescribed adalimumab biosimilar in Europe.
-- KYPROLIS(®) (carfilzomib) sales decreased 2% year-over-year driven by
volume declines, as fewer new patients began treatment due to COVID-19.
Early indications point to a strong launch of the new once-weekly
KYPROLIS and DARZALEX(®) (daratumumab) combination regimen that was
approved by the U.S. Food and Drug Administration (FDA) in August.
-- XGEVA(®) (denosumab) sales increased 1% year-over-year. Sales increased
11% quarter-over-quarter, reflecting a recovery in the number of
patients returning to treatment.
-- Vectibix(®) (panitumumab) sales declined 2% year-over-year driven by
volume declines.
-- Nplate(®) (romiplostim) sales increased 9% year-over-year driven by
volume growth.
-- BLINCYTO(®) (blinatumomab) sales increased 5% year-over-year driven by
volume growth as we continued to see broader adoption in the community
hospital setting.
-- MVASI( )generated $231 million of sales in the third quarter of 2020,
with 44% exit share of the bevacizumab segment in the U.S. Sales
increased 34% quarter-over-quarter driven by 36% volume growth,
partially offset by a decline in net selling price. Going forward, we
expect the launch of additional competing biosimilars in the U.S.
-- KANJINTI( )generated $167 million of sales in the third quarter of 2020,
with 34% exit share of the trastuzumab segment in the U.S. Sales
increased 36% quarter-over-quarter driven by 11% volume growth and
favorable changes to estimated sales deductions. Moving forward, we
expect volume growth will be offset by a decline in net selling price
due to increased competition.
-- Neulasta(®) (pegfilgrastim) sales decreased 22% year-over-year driven
by declines in volumes and net selling price due to increased biosimilar
competition, partially offset by favorable changes to estimated sales
deductions. Within the long-acting granulocyte colony-stimulating factor
(G-CSF) segment, Neulasta Onpro(®) continues to be the preferred choice
for physicians and patients, with volume share of 55% in the quarter.
CMS's most recently published average selling price for Neulasta in the
U.S. declined 19% year-over-year and declined 6% quarter-over-quarter.
Going forward, we expect the pricing and volume trends to continue.
-- NEUPOGEN(®) (filgrastim) sales increased 20% year-over-year driven by
favorable changes to estimated sales deductions, partially offset by 19%
volume decline due to competition.
-- EPOGEN(®) (epoetin alfa) sales decreased 31% year-over-year driven by
volume declines as well as lower net selling price resulting from our
existing contractual commitment with DaVita.
-- Aranesp(®) (darbepoetin alfa) sales decreased 15% year-over-year driven
by lower net selling price and volume declines due to competition.
-- Sensipar/Mimpara(® )(cinacalcet) sales decreased 64% year-over-year
driven by declines in volume and net selling price due to generic
competition.
*Third quarter 2019 Sales information derived from Celgene Corporation's reporting for that period.
Product Sales Detail by Product and Geographic Region
$Millions, except percentages
Q3 '20 Q3 '19 YOY
---
US ROW TOTAL TOTAL TOTAL
---
Prolia(R) $
478 $
223 $
701 $
630 11%
EVENITY(R) 54 5 59 59
Repatha(R) 92 113 205 168 22%
Aimovig(R) 105 105 66 59%
Parsabiv(R) 156 27 183 157 17%
Otezla(R) 439 99 538
NM
Enbrel(R) 1,289 36 1,325 1,366 (3%)
AMGEVITA(TM) - 80 80 61 31%
KYPROLIS(R) 173 87 260 266 (2%)
XGEVA(R) 363 118 481 476 1%
Vectibix(R) 90 103 193 196 (2%)
Nplate(R) 118 94 212 195 9%
BLINCYTO(R) 54 35 89 85 5%
MVASI(R) 185 46 231 43
*
KANJINTI(R) 149 18 167 69
*
Neulasta(R) 484 71 555 711 (22%)
NEUPOGEN(R) 44 21 65 54 20%
EPOGEN(R) 149 149 215 (31%)
Aranesp(R) 158 226 384 452 (15%)
Sensipar(R)/Mimpara(R) 7 32 39 109 (64%)
Other** 31 52 83 85 (2%)
---
Total product sales $
4,618 $
1,486 $
6,104 $
5,463 12%
===
NM = not meaningful
* Change in excess of 100%
** Other includes GENSENTA, IMLYGIC(R), Corlanor(R), Bergamo and AVSOLA(R)
---
Operating Expense, Operating Margin and Tax Rate Analysis
On a GAAP basis:
-- Total Operating Expenses increased 22%. Cost of Sales margin increased
6.6 percentage points driven by amortization expense related to the
Otezla acquisition. Research & Development (R&D) expenses increased 6%
driven by higher spend in support of our late-stage development
programs, primarily sotorasib, our biosimilar programs and Otezla,
partially offset by recoveries from our collaboration with BeiGene.
Selling, General & Administrative (SG&A) expenses increased 10%
primarily due to Otezla commercial related expenses.
-- Operating Margin decreased 5.1 percentage points to 40.2% primarily
driven by the amortization of intangible assets from our Otezla
acquisition.
-- Tax Rate decreased 5.2 percentage points primarily driven by favorable
items in the quarter, including effective settlement of certain federal
income tax matters and adjustments to prior year tax liabilities,
partially offset by changes in jurisdictional mix of earnings.
On a non-GAAP basis:
-- Total Operating Expenses increased 10%. Cost of Sales margin increased
0.4 percentage points primarily driven by an increase in royalties,
partially offset by favorable product mix. R&D expenses increased 6%
driven by higher spend in support of our late-stage development
programs, primarily sotorasib, our biosimilar programs and Otezla,
partially offset by recoveries from our collaboration with BeiGene. SG&A
expenses increased 10% primarily due to Otezla commercial related
expenses.
-- Operating Margin increased 1.0 percentage point to 52.1%.
-- Tax Rate decreased 1.7 percentage points primarily driven by favorable
items in the quarter, including adjustments to prior year tax
liabilities, partially offset by changes in jurisdictional mix of
earnings.
$Millions, except percentages
GAAP
Non-GAAP
Q3 '20 Q3 '19 YOY Q3 '20 Q3 '19 YOY
Cost of Sales $
1,561 $
1,036 51% $
874 $
760 15%
% of product sales 25.6% 19.0%
6.6 pts 14.3% 13.9%
0.4 pts
Research & Development $
1,062 $
1,001 6% $
1,037 $
977 6%
% of product sales 17.4% 18.3%
(0.9) pts 17.0% 17.9%
(0.9) pts
Selling, General &
Administrative $
1,346 $
1,223 10% $
1,329 $
1,207 10%
% of product sales 22.1% 22.4%
(0.3) pts 21.8% 22.1%
(0.3) pts
Other $
1 $
1
$
$ -%
Total Operating Expenses $
3,970 $
3,261 22% $
3,240 $
2,944 10%
Operating Margin
operating income as % of product
sales 40.2% 45.3%
(5.1) pts 52.1% 51.1%
1.0 pts
Tax Rate 8.4% 13.6% (5.2) pts 13.5% 15.2% (1.7) pts
pts: percentage points
---
Cash Flow and Balance Sheet
-- The Company generated $3.2 billion of free cash flow in the third
quarter of 2020 versus $3.2 billion in the third quarter of 2019.
-- The Company's third quarter 2020 dividend of $1.60 per share was
declared on July 23, 2020, and was paid on September 8, 2020 to all
stockholders of record as of August 17, 2020, representing a 10%
increase from 2019.
-- During the third quarter, the Company repurchased 3.0 million shares of
common stock at a total cost of $752 million. At the end of the third
quarter, the Company had $4.2 billion remaining under its stock
repurchase authorization.
-- Cash and investments totaled $12.4 billion and debt outstanding totaled
$34.3 billion at the end of Q3 2020.
$Billions, except shares Q3 '20 Q3 '19 YOY
Operating
Cash
Flow $
3.4 $
3.4 $
0.0
Capital
Expenditures 0.1 0.2 0.0
Free
Cash
Flow 3.2 3.2 0.0
Dividends
Paid 0.9 0.9 0.1
Share
Repurchases 0.8 1.2 (0.4)
Average
Diluted
Shares
(millions) 589 602 (13)
9/30/20 12/31/19 YTD
Cash
and
Investments $
12.4 $
8.9 $
3.5
Debt
Outstanding 34.3 29.9 4.4
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 $25.1 billion to $25.5 billion.
-- Previously, the Company expected total revenues in the range of
$25.0 billion to $25.6 billion.
-- On a GAAP basis, EPS in the range of $11.53 to $11.93 and a tax rate in
the range of 9.5% to 10.5%.
-- Previously, the Company expected GAAP EPS in the range of $10.73 to
$11.43 and a tax rate in the range of 10.5% to 11.5%.
-- On a non-GAAP basis, EPS in the range of $15.80 to $16.15 and a tax rate
in the range of 13.0% to 14.0%.
-- Previously, the Company expected non-GAAP EPS in the range of $15.10
to $15.75 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 at the lower end of our previous guidance of $3
billion to $5 billion.
Third Quarter Product and Pipeline Update
The Company provided the following updates on selected product and pipeline programs:
Sotorasib
-- The Company discussed the previously announced Phase 1 data and positive
topline results from the Phase 2 monotherapy study of sotorasib in
patients with advanced non-small cell lung cancer (NSCLC).
-- Data from the Phase 2 monotherapy study in advanced colorectal cancer
patients are expected in H1 2021.
-- A Phase 3 study comparing sotorasib to docetaxel is enrolling patients
with advanced NSCLC.
-- 7 Phase 1b combination cohorts are now enrolling patients.
Bispecific Programs
-- The Company expects initial data from Phase 1 dose escalation studies of
the following half-life extended (HLE) BiTE(®) constructs in Q4 2020:
-- AMG 701 targeting BCMA (B-cell maturation antigen) for relapsed or
refractory multiple myeloma
-- AMG 757 targeting DLL3 (delta-like ligand 3) for relapsed or
refractory small cell lung cancer, to be presented at the Society
for Immunotherapy of Cancer Annual Meeting, November 9-14, 2020
-- Phase 1 development of the HLE BiTE(®) construct, AMG 562, targeting
CD19 for non-Hodgkin's lymphoma has been stopped due to portfolio
prioritization.
BLINCYTO
-- The Company discussed encouraging results recently published in the New
England Journal of Medicine from an independent clinical study of an
investigational regimen of dasatinib induction therapy followed by
blinatumomab consolidation therapy in adults with Philadelphia
chromosome positive acute lymphoblastic leukemia.
Tezepelumab
-- Data are expected in Q4 from the pivotal Phase 3 NAVIGATOR study
evaluating tezepelumab in adults and adolescents with severe,
uncontrolled asthma.
-- Data are expected in Q4 from the Phase 3 SOURCE study evaluating
tezepelumab for the reduction of oral corticosteroid use in adults with
oral corticosteroid dependent asthma.
Efavaleukin alfa (AMG 592)
-- In October, the Company announced that the planned Phase 2 study of
efavaleukin alfa in patients with Systemic Lupus Erythematosus was
selected for participation in the FDA's Complex Innovative Trial Designs
(CID) Pilot Program. The CID Pilot Program aims to facilitate and
advance the use of novel clinical trial designs that support the
development and regulatory review of new therapeutics. The FDA considers
several eligibility factors when selecting qualifying programs,
including the level of innovation of the trial design, and the
therapeutic need.
ABP 654 (biosimilar ustekinumab)
-- The Company has advanced ABP 654, a biosimilar candidate to STELARA(®
)(ustekinumab), into Phase 3 development.
KYPROLIS
-- In August, the FDA approved the expansion of the KYPROLIS U.S.
prescribing information to include its use in combination with
DARZALEX(®) plus dexamethasone in two dosing regimens--once weekly and
twice weekly--for the treatment of patients with relapsed or refractory
multiple myeloma who have received one to three previous lines of
therapy.
MCL-1 Inhibitor Program
-- Phase 1 studies of MCL-1 inhibitors AMG 176 and AMG 397 are reinitiating
enrollment of patients with hematologic malignancies.
Nplate
-- The FDA has granted priority review for Nplate for the treatment of
Hematopoietic Syndrome of Acute Radiation Syndrome, with a Prescription
Drug User Fee Act target action date of January 28, 2021. Research was
conducted in collaboration with and support from both the National
Institute of Allergy and Infectious Diseases and the Biomedical Advanced
Research and Development Authority.
ABP 798 (biosimilar rituximab)
-- The FDA Biosimilar User Fee Act target action date for the Biologics
License Application for ABP 798, a biosimilar candidate to RITUXAN®
(rituximab), is December 19, 2020.
Omecamtiv mecarbil
-- The Company discussed the topline results from the Phase 3 GALACTIC-HF
trial of omecamtiv mecarbil in patients with heart failure with reduced
ejection fraction.
Olpasiran (AMG 890)
-- The FDA granted Fast Track designation for olpasiran, a lipoprotein(a)
small interfering RNA currently in Phase 2 development for the treatment
of atherosclerotic cardiovascular disease.
Otezla
-- Otezla is being investigated as a potential immunomodulatory treatment
in patients hospitalized with SARS-CoV-2 infections in multiple COVID-19
platform trials.
Aimovig
-- In September, a marketing authorization application was filed with the
Japan Pharmaceuticals and Medical Devices Agency for Aimovig for the
prevention of migraine.
-- In October, results from the five-year, open-label treatment period of a
Phase 2 study in episodic migraine prevention showed Aimovig helped
patients achieve sustained reductions in monthly migraine days and in
use of acute migraine-specific medication. The safety profile was
consistent with what was observed in the double-blind treatment phase of
the study, with no increases in adverse event rates over five years of
exposure.
COVID-19 Therapeutics
-- In September, the Company announced a global antibody manufacturing
collaboration to significantly increase the supply capacity available
for Eli Lilly's potential COVID-19 therapies.
DARZALEX and STELARA are registered trademarks of Janssen Pharmaceutica NV
Omecamtiv mecarbil is being developed under a collaboration between Amgen and Cytokinetics, with funding and strategic support from Servier
Tezepelumab is being developed in collaboration with AstraZeneca
RITUXAN is a registered trademark of Biogen Inc.
Non-GAAP Financial Measures
In this news release, management has presented its operating results for the third 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 third 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 BeiGene, Ltd. or any collaboration or potential collaboration in pursuit of therapeutic antibodies against COVID-19 (including statements regarding such collaboration's, or our own, ability to discover and develop fully-human neutralizing antibodies targeting SARS-CoV-2 or antibodies against targets other than the SARS-CoV-2 receptor binding domain, and/or to produce any such antibodies to potentially prevent or treat COVID-19), 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 Rowland, 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 Nine months ended
September 30,
September 30,
---
2020 2019 2020 2019
---
Revenues:
Product sales $
6,104 $
5,463 $
17,906 $
16,323
Other revenues 319 274 884 842
Total revenues 6,423 5,737 18,790 17,165
Operating expenses:
Cost of sales 1,561 1,036 4,562 3,103
Research and
development 1,062 1,001 2,978 2,804
Selling, general and
administrative 1,346 1,223 3,957 3,637
Other 1 1 162 (5)
Total operating
expenses 3,970 3,261 11,659 9,539
Operating income 2,453 2,476 7,131 7,626
Interest expense, net 302 313 944 988
Interest and other
income, net 55 114 69 517
Income before income
taxes 2,206 2,277 6,256 7,155
Provision for income
taxes 185 309 607 1,016
Net income $
2,021 $
1,968 $
5,649 $
6,139
Earnings per share:
Basic $
3.45 $
3.29 $
9.61 $
10.08
Diluted $
3.43 $
3.27 $
9.54 $
10.01
Weighted-average shares used in
calculation of earnings per share:
Basic 585 599 588 609
Diluted 589 602 592 613
Amgen Inc.
Consolidated Balance Sheets - GAAP
(In millions)
September 30, December 31,
---
2020 2019
---
(Unaudited)
Assets
Current assets:
Cash, cash
equivalents and
marketable
securities $
12,360 $
8,911
Trade receivables,
net 4,094 4,057
Inventories 3,942 3,584
Other current assets 2,265 1,888
Total current assets 22,661 18,440
Property, plant and
equipment, net 4,816 4,928
Intangible assets,
net 17,254 19,413
Goodwill 14,674 14,703
Other assets 5,232 2,223
Total assets $
64,637 $
59,707
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and
accrued liabilities $
9,862 $
9,882
Current portion of
long-term debt 91 2,953
Total current
liabilities 9,953 12,835
Long-term debt 34,196 26,950
Long-term deferred
tax liabilities 210 606
Long-term tax
liabilities 7,560 8,037
Other noncurrent
liabilities 1,759 1,606
Total stockholders'
equity 10,959 9,673
Total liabilities
and stockholders'
equity $
64,637 $
59,707
Shares outstanding 584 591
Amgen Inc.
GAAP to Non-GAAP Reconciliations
(Dollars in millions)
(Unaudited)
Three months ended Nine months ended
September 30,
September 30,
2020 2019 2020 2019
---
GAAP cost of sales $
1,561 $
1,036 $
4,562 $
3,103
Adjustments to cost of sales:
Acquisition-related expenses
(a) (687) (276) (2,159) (828)
Non-GAAP cost of sales $
874 $
760 $
2,403 $
2,275
GAAP cost of sales as a 25.6 19.0 25.5 19.0
percentage of product sales % % % %
Acquisition-related expenses
(a) -11.3 -5.1 -12.1 -5.1
Non-GAAP cost of sales as a 14.3 13.9 13.4 13.9
percentage of product sales % % % %
===
GAAP research and development
expenses $
1,062 $
1,001 $
2,978 $
2,804
Adjustments to research and development expenses:
Acquisition-related expenses
(a) (24) (24) (77) (62)
Certain net charges pursuant to
our restructuring initiatives (1) (1)
Total adjustments to research
and development expenses (25) (24) (78) (62)
Non-GAAP research and
development expenses $
1,037 $
977 $
2,900 $
2,742
GAAP research and development
expenses as a percentage of % % % %
product sales 17.4 18.3 16.6 17.2
Acquisition-related expenses
(a) -0.4 -0.4 -0.4 -0.4
Certain net charges pursuant to
our restructuring initiatives 0.0 0.0 0.0 0.0
Non-GAAP research and
development expenses as a % % % %
percentage of product sales 17.0 17.9 16.2 16.8
===
GAAP selling, general and
administrative expenses $
1,346 $
1,223 $
3,957 $
3,637
Adjustments to selling, general and
administrative expenses:
Acquisition-related expenses
(a) (15) (17) (74) (26)
Certain net charges pursuant to
our restructuring initiatives - 1 1
Other (2) (2)
Total adjustments to selling,
general and administrative
expenses (17) (16) (76) (25)
Non-GAAP selling, general and
administrative expenses $
1,329 $
1,207 $
3,881 $
3,612
GAAP selling, general and
administrative expenses as a % % % %
percentage of product sales 22.1 22.4 22.1 22.3
Acquisition-related expenses
(a) -0.3 -0.3 -0.4 -0.2
Certain net charges pursuant to
our restructuring initiatives 0.0 0.0 0.0 0.0
Other 0.0 0.0 0.0 0.0
Non-GAAP selling, general and
administrative expenses as a % % % %
percentage of product sales 21.8 22.1 21.7 22.1
===
GAAP operating expenses $
3,970 $
3,261 $
11,659 $
9,539
Adjustments to operating expenses:
Adjustments to cost of sales (687) (276) (2,159) (828)
Adjustments to research and
development expenses (25) (24) (78) (62)
Adjustments to selling, general
and administrative expenses (17) (16) (76) (25)
Certain net charges pursuant to
our restructuring initiatives - 4 2
Certain other expenses (b) (1) (1) (166) 3
Total adjustments to operating
expenses (730) (317) (2,475) (910)
Non-GAAP operating expenses $
3,240 $
2,944 $
9,184 $
8,629
GAAP operating income $
2,453 $
2,476 $
7,131 $
7,626
Adjustments to operating
expenses 730 317 2,475 910
Non-GAAP operating income $
3,183 $
2,793 $
9,606 $
8,536
Three months ended Nine months ended
September 30,
September 30,
---
2020 2019 2020 2019
---
GAAP operating income as a 40.2 45.3 39.8 46.7
percentage of product sales % % % %
Adjustments to cost of sales 11.3 5.1 12.1 5.1
Adjustments to research and
development expenses 0.4 0.4 0.4 0.4
Adjustments to selling, general
and administrative expenses 0.3 0.3 0.4 0.2
Certain net charges pursuant to
our restructuring initiatives 0.0 0.0 0.0 0.0
Certain other expenses (b) 0.0 0.0 0.9 -0.1
Non-GAAP operating income as a 52.1 51.1 53.6 52.3
percentage of product sales % % % %
===
GAAP interest and other income,
net $
55 $
114 $
69 $
517
Adjustments to interest and
other income, net (c) 36
Non-GAAP interest and other
income, net $
91 $
114 $
69 $
517
GAAP income before income taxes $
2,206 $
2,277 $
6,256 $
7,155
Adjustments to operating
expenses 730 317 2,475 910
Adjustments to interest and
other income, net 36
Non-GAAP income before income
taxes $
2,972 $
2,594 $
8,731 $
8,065
GAAP provision for income taxes $
185 $
309 $
607 $
1,016
Adjustments to provision for income taxes:
Income tax effect of the above
adjustments (d) 160 92 495 230
Other income tax adjustments (e) 55 (8) 63 (35)
Total adjustments to provision
for income taxes 215 84 558 195
Non-GAAP provision for income
taxes $
400 $
393 $
1,165 $
1,211
GAAP tax as a percentage of 8.4 13.6 9.7 14.2
income before taxes % % % %
Adjustments to provision for income taxes:
Income tax effect of the above
adjustments (d) 3.2 1.9 2.9 1.2
Other income tax adjustments (e) 1.9 -0.3 0.7 -0.4
Total adjustments to provision
for income taxes 5.1 1.6 3.6 0.8
Non-GAAP tax as a percentage of 13.5 15.2 13.3 15.0
income before taxes % % % %
===
GAAP net income $
2,021 $
1,968 $
5,649 $
6,139
Adjustments to net income:
Adjustments to income before
income taxes, net of the income
tax effect 606 225 1,980 680
Other income tax adjustments (e) (55) 8 (63) 35
Total adjustments to net income 551 233 1,917 715
Non-GAAP net income $
2,572 $
2,201 $
7,566 $
6,854
Note: Numbers may not add due to rounding
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
September 30, 2020
September 30, 2019
---
GAAP Non-GAAP GAAP Non-GAAP
---
Net income $
2,021 $
2,572 $
1,968 $
2,201
Weighted-
average shares
for diluted EPS 589 589 602 602
Diluted EPS $
3.43 $
4.37 $
3.27 $
3.66
Nine months ended Nine months ended
September 30, 2020
September 30, 2019
---
GAAP Non-GAAP GAAP Non-GAAP
---
Net income $
5,649 $
7,566 $
6,139 $
6,854
Weighted-
average shares
for diluted EPS 592 592 613 613
Diluted EPS $
9.54 $
12.78 $
10.01 $
11.18
(a) The adjustments related primarily
to noncash amortization of
intangible assets from business
acquisitions.
(b) For the nine months ended September
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 three months ended
September 30, 2020, the adjustment
related to the amortization of the
basis difference from our BeiGene
equity method investment. For the
nine months ended September 30,
2020, the adjustment related
primarily to a gain from legal
judgment proceeds offset 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 nine months ended
September 30, 2020, were 20.9% and
20.0%, compared with 29.0% and
25.3% 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 Nine months ended
September 30,
September 30,
---
2020 2019 2020 2019
---
Net cash provided
by operating
activities $
3,368 $
3,377 $
8,344 $
6,636
Net cash (used
in) provided by
investing
activities (1,628) 5,372 (4,017) 11,672
Net cash used in
financing
activities (1,798) (2,859) (1,277) (13,838)
(Decrease)
increase in cash
and cash
equivalents (58) 5,890 3,050 4,470
Cash and cash
equivalents at
beginning of
period 9,145 5,525 6,037 6,945
Cash and cash
equivalents at
end of period $
9,087 $
11,415 $
9,087 $
11,415
Three months ended Nine months ended
September 30,
September 30,
---
2020 2019 2020 2019
---
Net cash provided
by operating
activities $
3,368 $
3,377 $
8,344 $
6,636
Capital
expenditures (135) (170) (435) (430)
Free cash flow $
3,233 $
3,207 $
7,909 $
6,206
Amgen Inc.
Reconciliation of GAAP EPS Guidance to Non-GAAP
EPS Guidance for the Year Ending December 31, 2020
(Unaudited)
GAAP diluted EPS
guidance $
11.53 $
11.93
Known adjustments
to arrive at non-
GAAP*:
Acquisition-
related expenses
(a) 4.24 4.29
Net legal
proceedings 0.09
Other tax
adjustments (b) (0.11)
Non-GAAP diluted
EPS guidance $
15.80 $
16.15
* The known adjustments are presented
net of their related tax impact,
which amount to approximately
$1.17 -$1.18 per share.
(a) The adjustments relate primarily to
noncash amortization of intangible
assets acquired in business
acquisitions.
(b) The adjustments related to certain
acquisition items and prior period
items excluded from GAAP earnings.
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 9.5 10.5
% %
Tax rate of known adjustments
discussed above 3.5%
Non-GAAP diluted EPS guidance 13.0 14.0
% %
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SOURCE Amgen
