false0000318154 0000318154 2019-10-29 2019-10-29 0000318154 exch:XNYS amgn:A2.00SeniorNotesDue2026Member 2019-10-29 2019-10-29 0000318154 exch:XNGS us-gaap:CommonStockMember 2019-10-29 2019-10-29 0000318154 exch:XNYS amgn:A1.250SeniorNotesDue2022Member 2019-10-29 2019-10-29

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

  

FORM 8-K

  

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)

October 29, 2019

  

Amgen Inc.

(Exact name of registrant as specified in its charter)

  

Delaware		001-37702		95-3540776
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)
One Amgen Center Drive
Thousand Oaks
California				91320-1799
(Address of principal executive offices)				(Zip Code)

Registrant’s telephone number, including area code

(805) 447-1000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.0001 par value	AMGN	The NASDAQ Global Select Market
1.250% Senior Notes Due 2022	AMGN22	New York Stock Exchange
2.000% Senior Notes Due 2026	AMGN26	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

---

Item 2.02 Results of Operations and Financial Condition.

On October 29, 2019, Amgen Inc. (the Company) issued a press release announcing its unaudited results of operations for the three and nine months ended September 30, 2019, and its unaudited financial position as of September 30, 2019. The full text of the press release is furnished as Exhibit 99.1 hereto.

In its press release the Company included certain non-U.S. Generally Accepted Accounting Principles (GAAP) financial measures as defined in Regulation G promulgated by the Securities and Exchange Commission. The non-GAAP financial measures included in the press release are non-GAAP earnings per share, non-GAAP operating income, non-GAAP operating margin, non-GAAP tax rate, non-GAAP net income, non-GAAP operating expenses and sub-components of non-GAAP operating expenses such as non-GAAP cost of sales, non-GAAP research and development (R&D) expenses and non-GAAP selling, general and administrative expenses. Reconciliations for such non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the press release. The Company also included Free Cash Flow (FCF), which is computed by subtracting capital expenditures from operating cash flow, each as determined in accordance with GAAP.

The Company believes that this 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 following is a summary of the costs and other items excluded from the most directly comparable GAAP financial measures to calculate non-GAAP financial measures:

•

Acquisition-related expenses: Acquisition-related charges are primarily associated with intangible assets acquired in connection with business acquisitions. Such charges include amortization of developed-product-technology rights, licensing rights, R&D technology rights, and marketing-related rights, as well as impairments of in-process R&D assets. The Company incurs charges related to these intangibles, and those charges are included in the Company’s Condensed Consolidated Financial Statements. Charges for purchased intangible assets are significantly impacted by the timing and magnitude of the Company’s acquisitions and potential product approvals as they relate to in-process R&D projects acquired. Accordingly, these charges may vary in amount from period to period. The Company excludes these charges for purposes of calculating the non-GAAP financial measures presented to facilitate a more meaningful evaluation of the Company’s current operating performance and comparisons to past operating performance. The Company believes that excluding the noncash charges related to those intangible assets acquired in business acquisitions treats those assets as if the Company had developed them internally in the past and, thus, provides a supplemental measure of profitability in which the Company’s acquired intellectual property is treated in a comparable manner to its internally-developed-intellectual property.

•

Net charges pursuant to the Company’s restructuring initiative: Restructuring costs are primarily related to facilities charges, including accelerated depreciation, and severance and benefits for employees terminated pursuant to the transformation and process improvement efforts. Restructuring costs are inconsistent in amount and are significantly impacted by the timing and nature of these events. Therefore, although the Company may incur these types of expenses in the future, it believes that eliminating these charges for purposes of calculating the non-GAAP financial measures provides a supplemental evaluation of the Company’s current operating performance and facilitates comparisons to past operating performance.

•

Other items: The Company adjusts GAAP financial results for certain expenses associated with judgments and/or settlements for legal proceedings discussed in our filings. The Company excludes these expenses for the purpose of calculating the non-GAAP financial measures presented because the Company believes these items are outside the ordinary course of business. The Company believes eliminating these expenses provides a supplemental evaluation of the Company’s current operating performance and facilitates comparisons to past operating performance.

•

The tax effect of the adjustments between GAAP and non-GAAP results take 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 expense, depends on whether the amounts are deductible in the respective tax jurisdictions and the applicable tax rate(s) in those jurisdictions.

The press release also contains a discussion of the additional purposes for which the Company’s management uses these non-GAAP financial measures.

This information and the information contained in the press release shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information in Item 2.02 of this Current Report is not incorporated by reference into any filings of the Company made under the Securities Act of 1933, as amended, whether made before or after the date of this Current Report, regardless of any general incorporation language in the filing unless specifically stated so therein.

---

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

99.1			Press Release dated October 29, 2019
104			Cover Page Interactive Data File (embedded within the Inline XBRL document).

---

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

		AMGEN INC.
Date: October 29, 2019		By:		/s/ David W. Meline
		Name:		David W. Meline
		Title:		Executive Vice President and Chief Financial Officer

•	Total revenues decreased 3% to $5.7 billion in comparison to the third quarter of 2018, reflecting the impact of biosimilar and generic competition against key products.

◦	Although product sales declined 1% globally, units grew double digits or better for Prolia® (denosumab), Repatha® (evolocumab), Aimovig® (erenumab-aooe), Parsabiv® (etelcalcetide), KYPROLIS® (carfilzomib) and BLINCYTO® (blinatumomab).

•	GAAP earnings per share (EPS) increased 14% to $3.27 benefited by lower weighted-average shares outstanding and higher operating income.

◦	GAAP operating income increased 7% to $2.5 billion and GAAP operating margin increased 3.1 percentage points to 45.3%.

•	Non-GAAP EPS decreased 1% to $3.66 as a result of lower revenue, offset partially by lower weighted-average shares outstanding.

◦	Non-GAAP operating income decreased 6% to $2.8 billion and non-GAAP operating margin decreased 2.8 percentage points to 51.1%.

•	The Company generated $3.2 billion of free cash flow in the third quarter of 2019 versus $3.1 billion in the third quarter of 2018.

•	2019 total revenues guidance revised to $22.8-$23.0 billion; EPS guidance to $12.50-$12.80 on a GAAP basis and $14.20-$14.45 on a non-GAAP basis. This guidance excludes the impact of the Otezla® (apremilast) acquisition.

•	The Company expects the Otezla acquisition to close before the end of the fourth quarter.

---

---

•	Total product sales decreased 1% for the third quarter of 2019 versus the third quarter of 2018.

•	Prolia sales increased 18% driven by higher unit demand.

•	EVENITY® (romosozumab-aqqg) was launched in the first half of this year and generated $59 million of sales in the third quarter of 2019.

•	Repatha sales increased 40% driven by higher unit demand, offset partially by lower net selling price.

•	Aimovig generated $66 million in sales in the third quarter of 2019.

•	Parsabiv sales increased 54% driven by higher unit demand, offset partially by lower net selling price.

•	KYPROLIS sales increased 15% driven primarily by higher unit demand.

•	XGEVA® (denosumab) sales increased 10% driven primarily by higher unit demand.

•	Vectibix® (panitumumab) sales increased 8% driven primarily by higher unit demand.

•	Nplate® (romiplostim) sales increased 10% driven primarily by higher unit demand.

•	BLINCYTO sales increased 47% driven by higher unit demand.

•	Biosimilar sales generated $173 million in the third quarter of 2019.

•	Enbrel® (etanercept) sales increased 6% driven by higher net selling price and favorable changes in accounting estimates, offset partially by lower unit demand.

•	Neulasta® (pegfilgrastim) sales decreased 32% driven by the impact of biosimilar competition on unit demand and lower net selling price.

•	NEUPOGEN® (filgrastim) sales decreased 36% driven primarily by lower net selling price, unfavorable changes in accounting estimates and the impact of biosimilar competition on unit demand.

•	EPOGEN® (epoetin alfa) sales decreased 15% driven primarily by lower net selling price.

•	Aranesp® (darbepoetin alfa) sales decreased 5% driven primarily by the impact of competition on unit demand.

•	Sensipar/Mimpara® (cinacalcet) sales decreased 73% driven by the impact of generic competition on unit demand.

---

•

Total Operating Expenses decreased 9%. Cost of Sales margin increased 0.2 percentage points due primarily to unfavorable product mix, offset partially by lower manufacturing costs. Research & Development (R&D) expenses increased 8% driven primarily by increased spending in research and early pipeline in support of our oncology programs, offset partially by decreased spending in support of marketed products. Selling, General & Administrative (SG&A) expenses decreased 5% driven primarily by lower general and administrative expenses as well as the end of certain amortization of intangible assets in 2018. Other operating expenses decreased due primarily to an impairment charge in the prior period associated with a nonkey intangible asset acquired in a business combination.

•	Operating Margin increased 3.1 percentage points to 45.3%.

•	Tax Rate increased 2.4 percentage points due primarily to a prior-year tax benefit associated with intercompany sales under U.S. corporate tax reform.

---

•

Total Operating Expenses were flat. Cost of Sales margin increased 0.1 percentage points due primarily to unfavorable product mix, offset partially by lower manufacturing costs. R&D expenses increased 8% driven primarily by increased spending in research and early pipeline in support of our oncology programs, offset partially by decreased spending in support of marketed products. SG&A expenses decreased 5% driven primarily by lower general and administrative expenses.

•	Operating Margin decreased 2.8 percentage points to 51.1%.

•	Tax Rate increased 2.2 percentage points due primarily to a prior-year tax benefit associated with intercompany sales under U.S. corporate tax reform.

•	The Company generated $3.2 billion of free cash flow in the third quarter of 2019 versus $3.1 billion in the third quarter of 2018 driven primarily by favorable changes in working capital.

•	The Company’s third quarter 2019 dividend of $1.45 per share was declared on Aug. 2, 2019, and was paid on Sept. 6, 2019, to all stockholders of record as of Aug. 15, 2019, representing a 10% increase from 2018.

•	During the third quarter of 2019, the Company repurchased 6.2 million shares of common stock at a total cost of $1.2 billion. At the end of the third quarter, the Company had $3.6 billion remaining under its stock repurchase authorization.

---

•	Total revenues in the range of $22.8 billion to $23.0 billion.

◦	Previously, the Company expected total revenues in the range of $22.4 billion to $22.9 billion.

•	On a GAAP basis, EPS in the range of $12.50 to $12.80 and a tax rate in the range of 13% to 14%.

◦	Previously, the Company expected GAAP EPS in the range of $12.10 to $12.71 and a tax rate in the range of 13% to 14%.

•	On a non-GAAP basis, EPS in the range of $14.20 to $14.45 and a tax rate in the range of 14% to 15%.

◦	Previously, the Company expected non-GAAP EPS in the range of $13.75 to $14.30 and a tax rate in the range of 14% to 15%.

•	Capital expenditures to be approximately $650 million.

•	2019 Guidance does not include the Otezla acquisition which is expected to close by the end of the fourth quarter.

---

•	In September, the Company announced that it joined a consortium to perform the whole genome sequencing of approximately 500,000 participants in the UK Biobank. deCODE Genetics, a wholly-owned subsidiary of Amgen, will provide the whole genome sequencing for the project, along with the Wellcome Sanger Institute.

•	A Phase 3 Study evaluating the efficacy and safety of tezepelumab in adults and adolescents with severe uncontrolled asthma has completed enrollment, with the primary analysis expected in late 2020.

•	A Phase 2 study evaluating the efficacy and safety of tezepelumab in adults with moderate to very severe chronic obstructive pulmonary disease is enrolling patients.

•	A Phase 2 study of AMG 570, a bispecific inhibitor of ICOSL and BAFF, is enrolling patients with systemic lupus erythematosus.

•	In October, the Committee for Medicinal Products for Human Use of the European Medicines Agency adopted a positive opinion recommending Marketing Authorization for EVENITY for the treatment of severe osteoporosis in postmenopausal women at high risk of fracture, with a contraindication for patients with a history of myocardial infarction or stroke.

•

In September, the Phase 3 CANDOR study evaluating KYPROLIS in combination with dexamethasone and DARZALEX® (daratumumab) (KdD) compared to KYPROLIS and dexamethasone alone (Kd) met its primary endpoint of progression-free survival (PFS), demonstrating a 37% reduction in the risk of disease progression or death in patients with relapsed or refractory multiple myeloma treated with KdD. The median PFS for patients treated with Kd alone was 15.8 months, while the median PFS for patients treated with KdD had not been reached by the cut-off date.

•	In September, an open-label, randomized, controlled global multicenter Phase 3 trial evaluating BLINCYTO compared to conventional consolidation chemotherapy in pediatric patients with high-risk, B-cell acute lymphoblastic leukemia (ALL) at first relapse met its primary endpoint of event-free survival at a prespecified interim analysis.

•

In September, an open-label, randomized, controlled multicenter Phase 3 trial in Australia, Canada, New Zealand and the U.S. conducted by the Children's Oncology Group (COG) in pediatric B-cell ALL patients at first relapse closed to accrual for the high-risk and intermediate risk-arm based on the recommendation of the COG Data Monitoring Committee. The closure decision was based on a strong trend towards improved disease-free survival and improved overall survival, markedly lower toxicity and better minimal residual disease clearance for BLINCYTO compared to chemotherapy.

---

•

In October, the U.S. Food and Drug Administration approved a Supplemental Biologics License Application for Nplate to include new data in its U.S. prescribing information showing sustained platelet responses in adults with immune thrombocytopenia. The updated indication expands treatment to newly diagnosed and persistent adult ITP patients who have had an insufficient response to corticosteroids, immunoglobulins or splenectomy.

•	A Phase 3 trial evaluating Nplate for the treatment of chemotherapy-induced thrombocytopenia in patients receiving chemotherapy for the treatment of non-small cell lung cancer, ovarian cancer or breast cancer is enrolling patients.

•	The Company discussed clinical data from the first-in-human study that was presented at medical conferences in Q3.

•	The Phase 2 non-small cell lung cancer monotherapy study continues to enroll patients.

•	Initial cohort of colorectal cancer patients has been enrolled at the target dose in a Phase 2 monotherapy study, and as the data mature, the Company will determine the development path for colorectal cancer.

•	The next clinical data update for AMG 510 is expected in 2020.

•	In August, a Phase 3 study in patients with CD20-positive B-cell non-Hodgkin's lymphoma met its primary endpoint. The primary endpoint, as assessment of overall response rate by week 28, was within the prespecified margin for ABP 798 compared to Rituxan® (rituximab), showing clinical equivalence.

•	Submission of a Biologics License Application in the U.S. for ABP 798 is expected in Q1 2020.

---

---

---

---

---

---

---

---

---