Amgen Reports First Quarter 2017 Financial Results

THOUSAND OAKS, Calif., April 26, 2017 /PRNewswire/ -- Amgen (NASDAQ:AMGN) today announced financial results for the first quarter of 2017. Key results include:

• Total revenues decreased 1 percent versus the first quarter of 2016 to $5.5 billion.
• GAAP earnings per share (EPS) increased 12 percent to $2.79 driven by higher operating margins.
• GAAP operating income increased 8 percent to $2.6 billion and GAAP operating margin increased 4 percentage points to 49.8 percent.
• Non-GAAP EPS increased 9 percent to $3.15 driven by higher operating margins.
• Non-GAAP operating income increased 5 percent to $3.0 billion and non-GAAP operating margin increased 3 percentage points to 57.6 percent.
• 2017 EPS guidance increased to $10.64-$11.32 on a GAAP basis and $12.00-$12.60 on a non-GAAP basis; total revenues guidance unchanged at $22.3-$23.1 billion.
• The Company generated $2.2 billion of free cash flow in the first quarter versus $1.8 billion in the first quarter of 2016.

"We are well positioned for the long term with our newer products demonstrating volume growth around the world and our tight operational expense management of the Company," said Robert A. Bradway, chairman and chief executive officer. "With robust Repatha^® (evolocumab) outcomes data, we are working with payers to improve access to this important therapy for patients at risk for heart attacks and strokes."

Product Sales Performance

• Total product sales decreased 1 percent for the first quarter of 2017 versus the first quarter of 2016.
• Neulasta^® (pegfilgrastim) sales increased 2 percent as favorable changes in accounting estimates and net selling price were offset partially by lower unit demand.
• Enbrel^® (etanercept) sales decreased 15 percent due to the impact of competition as well as lower rheumatology and dermatology segment growth compared to prior quarters.
• Aranesp^® (darbepoetin alfa) sales decreased 4 percent as higher unit demand was more than offset by unfavorable changes in foreign exchange rates, inventory and net selling price.
• Prolia^® (denosumab) sales increased 21 percent driven by higher unit demand.
• Sensipar/Mimpara^® (cinacalcet) sales increased 15 percent driven primarily by net selling price.
• XGEVA^® (denosumab) sales increased 6 percent driven by higher unit demand.
• EPOGEN^® (epoetin alfa) sales decreased 10 percent driven by net selling price.
• KYPROLIS^® (carfilzomib) sales increased 23 percent driven by higher unit demand.
• Nplate^® (romiplostim) sales increased 9 percent driven by higher unit demand.
• NEUPOGEN^® (filgrastim) sales decreased 31 percent driven primarily by the impact of competition.
• Vectibix^® (panitumumab) sales increased 2 percent driven by higher unit demand, offset partially by unfavorable changes in foreign exchange rates.
• Repatha sales increased driven by higher unit demand.
• BLINCYTO^® (blinatumomab) sales increased 26 percent driven by higher unit demand.

Operating Expense, Operating Margin and Tax Rate Analysis

On a GAAP basis:

• Total Operating Expenses decreased 8 percent, with all expense categories reflecting savings from our transformation and process improvement efforts. Cost of Sales margin improved by 0.2 percentage points driven primarily by manufacturing efficiencies, offset partially by product mix. Research & Development (R&D) expenses decreased 12 percent driven by a payment in the first quarter of 2016 related to a third-party collaboration agreement, as well as lower spending required to support certain later-stage clinical programs. Selling, General & Administrative (SG&A) expenses decreased 12 percent due to the expiration of ENBREL residual royalty payments and an acquisition charge in the first quarter of 2016, offset partially by investments in product launches.
• Operating Margin improved by 4 percentage points to 49.8 percent.
• Tax Rate decreased 0.1 percentage points as changes in the geographic mix of earnings were offset partially by lower tax benefits from share-based compensation payments.

On a non-GAAP basis:

• Total Operating Expenses decreased 7 percent, with all expense categories reflecting savings from our transformation and process improvement efforts. Cost of Sales margin improved by 0.4 percentage points driven primarily by manufacturing efficiencies, offset partially by product mix. R&D expenses decreased 13 percent driven by a payment in the first quarter of 2016 related to a third-party collaboration agreement, as well as lower spending required to support certain later-stage clinical programs. SG&A expenses decreased 6 percent due to the expiration of ENBREL residual royalty payments, offset partially by investments in product launches.
• Operating Margin improved by 3 percentage points to 57.6 percent.
• Tax Rate decreased 0.4 percentage points as changes in the geographic mix of earnings were offset partially by lower tax benefits from share-based compensation payments.

Cash Flow and Balance Sheet

• The Company generated $2.2 billion of free cash flow in the first quarter of 2017 versus $1.8 billion in the first quarter of 2016 driven by the timing of tax payments and higher net income.
• The Company's second quarter 2017 dividend of $1.15 per share declared on March 7, 2017, will be paid on June 8, 2017, to all stockholders of record as of May 17, 2017.
• During the first quarter, the Company repurchased 3.4 million shares of common stock at a total cost of $555 million. At the end of the first quarter, the Company had $3.5 billion remaining under its stock repurchase authorization.

2017 Guidance

For the full year 2017, the Company now expects:

• Total revenues in the range of $22.3 billion to $23.1 billion, unchanged from previous guidance.
• On a GAAP basis, EPS in the range of $10.64 to $11.32 and a tax rate in the range of 16 percent to 18 percent.
• Previously, the Company expected GAAP EPS in the range of $10.45 to $11.31. Tax rate guidance is unchanged.
• On a non-GAAP basis, EPS in the range of $12.00 to $12.60 and a tax rate in the range of 18.5 percent to 19.5 percent.
• Previously, the Company expected non-GAAP EPS in the range of $11.80 to $12.60. Tax rate guidance is unchanged.
• Capital expenditures to be approximately $700 million.

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

Repatha 

• In February, the European Commission (EC) approved a new 420 mg single-dose delivery option for Repatha.
• In March, positive Phase 3 data from a cardiovascular outcomes study and a cognitive function study were presented at the American College of Cardiology 66^th Annual Scientific Session.

KYPROLIS

• In February,  the Phase 3 ENDEAVOR study showed KYPROLIS and dexamethasone reduced the risk of death by 21 percent and extended overall survival by an additional 7.6 months compared to Velcade^® (bortezomib) and dexamethasone in relapsed or refractory multiple myeloma patients.

XGEVA

• In April, a supplemental Biologics License Application (sBLA) was submitted to the U.S. Food and Drug Administration (FDA) and an application for a variation to the marketing authorization was submitted to the European Medicines Agency (EMA) for the prevention of SREs in patients with multiple myeloma.

BLINCYTO

• In March, FDA accepted the sBLA for priority review for BLINCYTO to include overall survival data from the Phase 3 TOWER study. The application also included new data supporting the treatment of patients with Philadelphia chromosome-positive relapsed or refractory B-cell precursor acute lymphoblastic leukemia.

EVENITY

• Primary analysis of an event driven active controlled Phase 3 fracture study (ARCH) in postmenopausal women with osteoporosis is expected in Q2 2017.

Erenumab

• Regulatory submissions for migraine prevention are expected in Q2 2017.

CNP520

• In February, Phase 3 enrollment commenced for CNP520, a small molecule beta-site amyloid precursor protein-cleaving enzyme-1 (BACE) inhibitor for the potential treatment of Alzheimer's disease.

Parsabiv™ (etelcalcetide)

• In February, FDA approved Parsabiv for the treatment of secondary hyperparathyroidism (sHPT) in adult patients with chronic kidney disease (CKD) on hemodialysis.

AMG 157/MEDI9929 (tezepelumab)

• In February, tezepelumab demonstrated a significant reduction in the rate of asthma exacerbations compared to placebo over the 52-week treatment period in patients with severe asthma in a Phase 2b study.

AMGEVITA™ (biosimilar adalimumab)

• In March, EC granted marketing authorization for AMGEVITA™ (biosimilar adalimumab) in all available indications. AMGEVITA is authorized for the treatment of certain inflammatory diseases in adults, including moderate-to-severe rheumatoid arthritis; psoriatic arthritis; severe active ankylosing spondylitis (AS); severe axial spondyloarthritis without radiographic evidence of AS; moderate-to-severe chronic plaque psoriasis; moderate-to-severe hidradenitis suppurativa; non-infectious intermediate, posterior and panuveitis; moderate-to-severe Crohn's disease and moderate-to-severe ulcerative colitis. The EC also approved AMGEVITA for the treatment of certain pediatric inflammatory diseases, including moderate-to-severe Crohn's disease (ages six and older), severe chronic plaque psoriasis (ages four and older), enthesitis-related arthritis (ages six and older) and polyarticular juvenile idiopathic arthritis (ages two and older).

ABP 980 (biosimilar trastuzumab)

• In March, a Marketing Authorization Application was submitted to the EMA.

Erenumab and CNP520 are developed in collaboration with Novartis AG
EVENITY™ trade name is provisionally approved by FDA
EVENITY™ is developed in collaboration with UCB globally, as well as our joint venture partner Astellas in Japan
Tezepelumab is developed in collaboration with AstraZeneca
AMGEVITA™ is registered in the U.S. as AMJEVITA™
Velcade^® is a registered trademark of Millennium Pharmaceuticals, Inc.

Non-GAAP Financial Measures

In this news release, management has presented its operating results for the first quarters of 2017 and 2016, in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and on a non-GAAP basis. In addition, management has presented its full year 2017 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 first quarters of 2017 and 2016. 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 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 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 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 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 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. 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 cannot be guaranteed and movement from concept to product is uncertain; consequently, there can be no guarantee that any particular product candidate will be successful and become a commercial product. Further, some raw materials, medical devices and component parts for our products are supplied by sole third-party suppliers. 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 acquire other companies or products and to integrate the operations of companies we have acquired may not be successful. We may not be able to access the capital and credit markets on terms that are favorable to us, or at all. We are increasingly dependent on information technology systems, infrastructure and data security. 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.

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

SOURCE Amgen

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