Amgen Reports First Quarter 2018 Financial Results

THOUSAND OAKS, Calif., April 24, 2018 /PRNewswire/ -- Amgen (NASDAQ:AMGN) today announced financial results for the first quarter of 2018. Key results include:

• Total revenues increased 2 percent versus the first quarter of 2017 to $5.6 billion.
• Product sales grew 3 percent globally. All new and recently launched products including Repatha^® (evolocumab), KYPROLIS^® (carfilzomib), Prolia^® (denosumab) and XGEVA^® (denosumab) showed double-digit growth.
• GAAP earnings per share (EPS) increased 16 percent to $3.25 driven by higher product sales, a lower tax rate and lower weighted-average shares outstanding.
• GAAP operating income increased 5 percent to $2.7 billion and GAAP operating margin increased 1.2 percentage points to 51.0 percent.
• Non-GAAP EPS increased 10 percent to $3.47 driven by higher product sales, a lower tax rate and lower weighted-average shares outstanding.
• Non-GAAP operating income increased 1 percent to $3.0 billion and non-GAAP operating margin decreased 0.7 percentage points to 56.9 percent.
• 2018 EPS guidance revised to $11.30-$12.28 on a GAAP basis and $12.80-$13.70 on a non-GAAP basis; total revenues guidance revised to $21.9-$22.8 billion.
• The Company generated $2.6 billion of free cash flow in the first quarter versus $2.2 billion in the first quarter of 2017.

 "Amgen's strong first-quarter performance was driven by our new and recently launched products, all of which delivered double-digit, volume-driven growth," said Robert A. Bradway, chairman and chief executive officer. "We look forward to further expanding our new product portfolio with the expected U.S. launch of Aimovig ^TM (erenumab), our first-in-class migraine prevention therapy, in the second quarter and the European launch of AMGEVITA ^TM (biosimilar adalimumab) our first biosimilar, later this year."

Product Sales Performance

• Total product sales increased 3 percent for the first quarter of 2018 versus the first quarter of 2017.
• Repatha sales increased 151 percent driven primarily by higher unit demand.
• BLINCYTO^® (blinatumomab) sales increased 44 percent driven by higher unit demand.
• Sensipar/Mimpara^® (cinacalcet) sales increased 18 percent driven primarily by higher unit demand.
• KYPROLIS sales increased 17 percent driven primarily by higher unit demand.
• Prolia sales increased 16 percent driven primarily by higher unit demand.
• Nplate^® (romiplostim) sales increased 16 percent driven by higher unit demand.
• Vectibix^® (panitumumab) sales increased 15 percent driven primarily by higher unit demand.
• XGEVA sales increased 11 percent driven primarily by higher unit demand.
• Parsabiv^™ (etelcalcetide) sales increased driven by our U.S. launch.
• Neulasta^® (pegfilgrastim) sales decreased 5 percent driven by lower unit demand from continued declines in the use of myelosuppressive chemotherapy regimens and from favorable prior year changes in accounting estimates, offset partially by favorable changes in net selling price and inventory.
• Enbrel^® (etanercept) sales decreased 6 percent driven primarily by lower unit demand and, to a lesser extent, lower net selling price and favorable prior year changes in accounting estimates, offset partially by favorable changes in inventory.
• EPOGEN^® (epoetin alfa) sales decreased 10 percent driven primarily by unfavorable changes in net selling price and lower unit demand.
• Aranesp^® (darbepoetin alfa) sales decreased 11 percent driven primarily by the impact of competition on unit demand.
• NEUPOGEN^® (filgrastim) sales decreased 30 percent driven primarily by the impact of competition on unit demand.

Product Sales Detail by Product and Geographic Region

Operating Expense, Operating Margin and Tax Rate Analysis

On a GAAP basis:

• Total Operating Expenses decreased 2 percent, with all expense categories reflecting savings from our transformation and process improvement efforts. Cost of Sales margin improved by 1.5 percentage points driven primarily by lower royalties and a reduction in amortization of intangible assets, offset partially by increasing manufacturing costs. Research & Development (R&D) expenses were flat. Selling, General & Administrative (SG&A) expenses increased 6 percent due to investments in product launches and marketed product support.
• Operating Margin improved by 1.2 percentage points to 51.0 percent.
• Tax Rate decreased by 4.0 percentage points due to the impacts of U.S. corporate tax reform.

On a non-GAAP basis:

• Total Operating Expenses increased 2 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 lower royalties, offset partially by increasing manufacturing costs. R&D expenses were flat. SG&A expenses increased 6 percent due to investments in product launches and marketed product support.
• Operating Margin decreased by 0.7 percentage points to 56.9 percent.
• Tax Rate decreased by 4.8 percentage points due to the impacts of U.S. corporate tax reform.

Cash Flow and Balance Sheet

• The Company generated $2.6 billion of free cash flow in the first quarter of 2018 versus $2.2 billion in the first quarter of 2017 driven by higher net income.
• The Company's second quarter 2018 dividend of $1.32 per share declared on March 7, 2018, will be paid on June 8, 2018, to all stockholders of record as of May 17, 2018.
• During the first quarter, the Company repurchased 56.4 million shares of common stock at a total cost of $10.8 billion. 

2018 Guidance

For the full year 2018, the Company now expects:

• Total revenues in the range of $21.9 billion to $22.8 billion.
• Previously, the Company expected total revenues in the range of $21.8 billion to $22.8 billion.
• On a GAAP basis, EPS in the range of $11.30 to $12.28 and a tax rate in the range of 12.5 percent to 13.5 percent.
• Previously, the Company expected GAAP EPS in the range of $11.18 to $12.36, and a tax rate in the range of 13 percent to 14 percent.
• On a non-GAAP basis, EPS in the range of $12.80 to $13.70 and a tax rate in the range of 13.5 percent to 14.5 percent.
• Previously, the Company expected non-GAAP EPS in the range of $12.60 to $13.70, and a tax rate in the range of 14 percent to 15 percent.
• Capital expenditures to be approximately $750 million.

 First Quarter Product and Pipeline Update

Key development milestones:

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

Repatha 

• In March, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) adopted a positive opinion to include a new indication for adults with established atherosclerotic cardiovascular disease (myocardial infarction, stroke or peripheral arterial disease) to reduce cardiovascular risk by lowering LDL-C levels.

Neulasta

• In February, the CHMP adopted a positive opinion recommending a label variation for Neulasta to include the Neulasta Onpro^® Kit.

XGEVA

• In April, the European Commission approved an expanded indication for the prevention of skeletal-related events in adults with advanced malignancies involving bone. The indication now covers patients with bone metastases from solid tumors and those with multiple myeloma.

BLINCYTO

• In March, the U.S. Food and Drug Administration (FDA) approved BLINCYTO for the treatment of adults and children with B-cell precursor acute lymphoblastic leukemia in first or second complete remission with minimal residual disease (MRD) greater than or equal to 0.1 percent. This indication is approved under accelerated approval based on MRD response rate and hematological relapse-free survival.

KANJINTI (ABP 980)

• In March, the CHMP adopted a positive opinion for the marketing authorization of KANJINTI, a biosimilar to Herceptin^® (trastuzumab) for the treatment of the same three types of cancer as Herceptin is approved for in the European Union, including HER2-positive metastatic breast cancer, HER2-positive early breast cancer and HER2-positive metastatic adenocarcinoma of the stomach or gastroesophageal junction.

EVENITY, Aimovig and KANJINTI trade names provisionally approved by FDA
EVENITY is developed in collaboration with UCB globally, as well as our joint venture partner Astellas in Japan
Aimovig is developed in collaboration with Novartis
Herceptin is a registered trademark of Genentech

Non-GAAP Financial Measures
In this news release, management has presented its operating results for the first quarters of 2018 and 2017, in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and on a non-GAAP basis. In addition, management has presented its full year 2018 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 2018 and 2017. 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. 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)

SOURCE Amgen

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