Press Release Details

THOUSAND OAKS, Calif., Oct. 30, 2018 /PRNewswire/ -- Amgen (NASDAQ:AMGN) today announced financial results for the third quarter of 2018. Key results include:

• Total revenues increased 2 percent versus the third quarter of 2017 to $5.9 billion.
• Product sales grew 1 percent globally. New and recently launched products including Repatha^® (evolocumab), Prolia^® (denosumab), KYPROLIS^® (carfilzomib) and XGEVA^® (denosumab) showed double-digit growth.
• GAAP earnings per share (EPS) increased 4 percent to $2.86 driven by higher total revenues, a lower tax rate and lower weighted-average shares outstanding.
• GAAP operating income decreased 5 percent to $2.3 billion and GAAP operating margin decreased 2.5 percentage points to 42.2 percent.
• Non-GAAP EPS increased 13 percent to $3.69 driven by higher total revenues, a lower tax rate and lower weighted-average shares outstanding.
• Non-GAAP operating income decreased 2 percent to $3.0 billion and non-GAAP operating margin decreased 1.7 percentage points to 53.9 percent.
• 2018 EPS guidance revised to $12.23-$12.55 on a GAAP basis and $14.00-$14.25 on a non-GAAP basis; total revenues guidance revised to $23.2-$23.5 billion.
• The Company generated $3.1 billion of free cash flow in the third quarter of 2018 versus $3.3 billion in the third quarter of 2017.

"We are in the early stages of launching several new products that offer innovative solutions for patients suffering from serious diseases," said Robert A. Bradway, chairman and chief executive officer. "Our newer products continue to deliver strong growth in unit volumes."

Product Sales Performance

• Total product sales increased 1 percent for the third quarter of 2018 versus the third quarter of 2017.
• Repatha sales increased 35 percent driven primarily by higher unit demand, offset partially by lower net selling price.
• Prolia sales increased 15 percent driven by higher unit demand.
• KYPROLIS sales increased 12 percent driven by higher unit demand, offset partially by lower net selling price.
• XGEVA sales increased 12 percent driven by higher unit demand.
• BLINCYTO^®(blinatumomab) sales increased 12 percent driven by higher unit demand.
• Nplate^® (romiplostim) sales increased 11 percent driven by higher unit demand.
• Vectibix^® (panitumumab) sales increased 8 percent driven by higher unit demand, offset partially by lower net selling price.
• Parsabiv^® (etelcalcetide) was launched in the U.S. in the first quarter of 2018 and sales grew 40 percent sequentially in the third quarter.
• Aimovig^® (erenumab-aooe) was launched in the U.S. in the second quarter of 2018 and generated $22 million in sales in the third quarter.
• EPOGEN^® (epoetin alfa) sales decreased 5 percent driven by lower net selling price.
• Enbrel^®(etanercept) sales decreased 5 percent driven by lower unit demand and, to a lesser extent, lower net selling price, offset partially by favorable changes in accounting estimates.
• Neulasta^® (pegfilgrastim) sales decreased 6 percent driven by lower net selling price, lower unit demand and favorable prior-period changes in accounting estimates.
• Aranesp^®(darbepoetin alfa) sales decreased 8 percent driven primarily by the impact of competition on unit demand.
• Sensipar/Mimpara^®(cinacalcet) sales decreased 11 percent driven primarily by lower unit demand, which was due to continued adoption of Parsabiv in the U.S.
• NEUPOGEN^®(filgrastim) sales decreased 38 percent driven by lower unit demand and, to a lesser extent, lower net selling price, which the Company believes is a function of competition.

Product Sales Detail by Product and Geographic Region 

Operating Expense, Operating Margin and Tax Rate Analysis

On a GAAP basis:

• Total Operating Expenses increased 7 percent. All expense categories reflect savings from our transformation and process improvement efforts. Cost of Sales margin increased by 0.6 points due to higher manufacturing costs and higher acquisition-related intangibles amortization, offset partially by lower royalty cost and the favorable comparison to Hurricane Maria-related charges in Q3 2017. Research & Development (R&D) increased 6 percent driven by spending in late and early-stage programs, offset partially by decreased spending to support marketed products. Selling, General & Administrative (SG&A) expenses increased 11 percent due to investments in product launches and marketed product support. Other operating expenses increased primarily due to higher impairment-related charges associated with intangible assets acquired in business combinations.
• Operating Margin decreased by 2.5 percentage points to 42.2 percent.
• Tax Rate decreased by 3.9 percentage points due to the impacts of U.S. corporate tax reform.

On a non-GAAP basis:

• Total Operating Expenses increased 7 percent. All expense categories reflect savings from our transformation and process improvement efforts. Cost of Sales margin increased by 0.3 points due to higher manufacturing cost, offset partially by lower royalty cost and the favorable comparison to Hurricane Maria-related charges in Q3 2017. R&D increased 6 percent driven by spending in late and early-stage programs, offset partially by decreased spending to support marketed products. SG&A expenses increased 11 percent due to investments in product launches and marketed product support.
• Operating Margin decreased by 1.7 percentage points to 53.9 percent.
• Tax Rate decreased by 6.4 percentage points due to the impacts of U.S. corporate tax reform.

 

Cash Flow and Balance Sheet

• The Company generated $3.1 billion of free cash flow in the third quarter of 2018 versus $3.3 billion in the third quarter of 2017 with the decrease driven by timing of tax payments.
• The Company's third quarter 2018 dividend of $1.32 per share was declared on July 31, 2018, was paid on Sept. 7, 2018, to all stockholders of record as of Aug. 17, 2018.
• During the third quarter, the Company repurchased 8.7 million shares of common stock at a total cost of $1.7 billion. At the end of the third quarter, the Company had $3.7 billion remaining under its stock repurchase authorization.

 

2018 Guidance

For the full year 2018, the Company now expects:

• Total revenues in the range of $23.2 billion to $23.5 billion.
• Previously, the Company expected total revenues in the range of $22.5 billion to $23.2 billion.
• On a GAAP basis, EPS in the range of $12.23 to $12.55 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 $11.83 to $12.62. Tax rate guidance is unchanged.
• On a non-GAAP basis, EPS in the range of $14.00 to $14.25 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 $13.30 to $14.00. Tax rate guidance is unchanged.
• Capital expenditures to be approximately $700 million.

Third Quarter Product and Pipeline Update

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

KYPROLIS

• In October, the U.S. Food and Drug Administration (FDA) approved the supplemental New Drug Application to expand the Prescribing Information to include a once-weekly dosing option for KYPROLIS (20/70 mg/m²) in combination with dexamethasone for patients with relapsed or refractory multiple myeloma.

BLINCYTO

• In September, the Japanese Ministry of Health, Labour and Welfare granted marketing approval for the treatment of relapsed or refractory B-cell acute lymphoblastic leukemia (ALL).
• In August, the European Commission (EC) approved an expanded indication for BLINCYTO as monotherapy for the treatment of pediatric patients aged one year or older with Philadelphia chromosome-negative CD19 positive B-cell precursor ALL, which is refractory or in relapse after receiving at least two prior therapies or in relapse after receiving prior allogeneic hematopoietic stem cell transplantation.

Aimovig

• In July, the EC approved Aimovig for the prevention of migraine in adults experiencing four or more migraine days per month.

Repatha

• In July, the National Drug Administration of China approved Repatha for the treatment of adults and adolescents over 12 years old with homozygous familial hypercholesterolemia.

Tezepelumab

• In September, the FDA granted Breakthrough Therapy Designation for tezepelumab in patients with severe asthma without an eosinophilic phenotype.

Aimovig is developed in collaboration with Novartis.
Tezepelumab is developed in collaboration with AstraZeneca.

Non-GAAP Financial Measures
In this news release, management has presented its operating results for the third 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 third 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 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. 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. 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 new indications for existing products 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 may be 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)

 

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SOURCE Amgen