The FINANCIAL — Amgen on July 25 announced financial results for the second quarter of 2017. Key results include:
Total revenues increased 2 percent versus the second quarter of 2016 to $5.8 billion.
Product sales grew 2 percent driven by Prolia (denosumab), Repatha (evolocumab) and KYPROLIS (carfilzomib).
GAAP earnings per share (EPS) increased 18 percent to $2.91 driven by higher operating margins.
GAAP operating income increased 13 percent to $2.7 billion and GAAP operating margin increased 4.9 percentage points to 48.4 percent.
Non-GAAP EPS increased 15 percent to $3.27 driven by higher operating margins.
Non-GAAP operating income increased 9 percent to $3.1 billion and non-GAAP operating margin increased 3.8 percentage points to 55.2 percent.
2017 EPS guidance increased to $10.79-$11.37 on a GAAP basis and $12.15-$12.65 on a non-GAAP basis; total revenues guidance revised to $22.5-$23.0 billion.
The Company generated $2.1 billion of free cash flow.
“Our continued solid performance this quarter is yet another indication that we are on track to deliver on our long-term growth objectives,” said Robert A. Bradway, chairman and chief executive officer. “Our newer products are registering strong volume-driven growth globally and we expect their contribution to continue to increase over time, offsetting declines in mature products.”
Product Sales Performance
Total product sales increased 2 percent for the second quarter of 2017 versus the second quarter of 2016.
Repatha sales increased driven by higher unit demand.
BLINCYTO (blinatumomab) sales increased 43 percent driven by higher unit demand.
KYPROLIS sales increased 23 percent driven by higher unit demand.
Prolia sales increased 15 percent driven primarily by higher unit demand.
Nplate (romiplostim) sales increased 15 percent driven primarily by higher unit demand.
Sensipar/Mimpara (cinacalcet) sales increased 10 percent driven primarily by net selling price.
Aranesp (darbepoetin alfa) sales increased 6 percent driven by higher unit demand.
Vectibix (panitumumab) sales increased 5 percent driven by higher unit demand.
XGEVA (denosumab) sales increased 4 percent driven primarily by higher unit demand.
Enbrel (etanercept) sales decreased 1 percent due to the impact of competition, offset partially by favorable changes in inventory and net selling price.
Neulasta (pegfilgrastim) sales decreased 5 percent driven by lower unit demand.
EPOGEN (epoetin alfa) sales decreased 12 percent driven primarily by net selling price.
NEUPOGEN (filgrastim) sales decreased 30 percent driven primarily by the impact of competition.
Operating Expense, Operating Margin and Tax Rate Analysis
On a GAAP basis:
Total Operating Expenses decreased 6 percent, with all expense categories reflecting savings from our transformation and process improvement efforts. Cost of Sales margin improved by 0.8 percentage points driven primarily by reduced royalties. Research & Development (R&D) expenses decreased 3 percent driven by lower spending required to support certain later-stage clinical programs. Selling, General & Administrative (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 4.9 percentage points to 48.4 percent.
Tax Rate increased 0.2 percentage points, according to Amgen.
On a non-GAAP basis:
Total Operating Expenses decreased 5 percent, with all expense categories reflecting savings from our transformation and process improvement efforts. Cost of Sales margin improved by 0.8 percentage points driven primarily by reduced royalties. R&D expenses decreased 3 percent driven by lower spending required to support certain later-stage clinical programs. SG&A expenses decreased 7 percent due to the expiration of ENBREL residual royalty payments, offset partially by investments in product launches.
Operating Margin improved by 3.8 percentage points to 55.2 percent.
Tax Rate decreased 1.2 percentage points, reflecting discrete benefits associated with the effective settlement of certain state and federal tax matters and favorable changes in the geographic mix of earnings, offset partially by a prior year benefit associated with tax incentives.
Cash Flow and Balance Sheet
The Company generated $2.1 billion of free cash flow in the second quarter of 2017 versus $2.5 billion in the second quarter of 2016, the difference driven by the timing of tax payments.
The Company’s second quarter 2017 dividend of $1.15 per share was paid on June 8, 2017, a 15 percent increase versus the second quarter of 2016.
During the second quarter, the Company repurchased 6.2 million shares of common stock at a total cost of $1.0 billion. At the end of the second quarter, the Company had $2.5 billion remaining under its stock repurchase authorization.
2017 Guidance
For the full year 2017, the Company now expects:
Total revenues in the range of $22.5 billion to $23.0 billion.
Previously, the Company expected total revenues in the range of $22.3 billion to $23.1 billion.
On a GAAP basis, EPS in the range of $10.79 to $11.37 and a tax rate in the range of 16 percent to 18 percent.
Previously, the Company expected GAAP EPS in the range of $10.64 to $11.32. Tax rate guidance is unchanged.
On a non-GAAP basis, EPS in the range of $12.15 to $12.65 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 $12.00 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 June, the Company announced the submission of a supplemental Biologics License Application (sBLA) to the U.S. Food and Drug Administration (FDA) and a variation to the marketing authorization to the European Medicines Agency (EMA) to include data from the 27,564-patient Phase 3 Repatha cardiovascular outcomes study.
KYPROLIS
In July, the Phase 3 ASPIRE study met the key secondary endpoint of OS, demonstrating that KYPROLIS, lenalidomide and dexamethasone reduced the risk of death by 21 percent over lenalidomide and dexamethasone alone.
In July, the Company announced the submission of a supplemental New Drug Application to the FDA and a variation to the marketing application to the EMA to include OS data from the Phase 3 head-to-head ENDEAVOR study.
In June, a Phase 3 study evaluating KYPROLIS in combination with DARZALEX® (daratumumab) and dexamethasone compared to KYPROLIS and dexamethasone alone in patients with relapsed or refractory multiple myeloma began enrollment.
XGEVA
In June, the FDA accepted the sBLA seeking to expand the currently approved indication to include the prevention of SREs in patients with multiple myeloma, assigning a Feb. 3, 2018, Prescription Drug User Fee Act (PDUFA) target action date.
Vectibix
In June, the FDA approved a label update for Vectibix to more precisely molecularly define patients with wild-type RAS metastatic colorectal cancer as first-line therapy in combination with FOLFOX and as monotherapy following disease progression after prior treatment with fluoropyrimidine, oxaliplatin, and irinotecan-containing chemotherapy.
BLINCYTO
In July, the FDA approved the sBLA for BLINCYTO to include OS data from the Phase 3 TOWER study, converting BLINCYTO’s accelerated approval to a full approval. The approval also expanded the indication to include patients with Ph+ relapsed or refractory B-cell precursor acute lymphoblastic leukemia.
EVENITY
In May, the Phase 3 active-comparator ARCH study in postmenopausal women with osteoporosis met the primary and the key secondary endpoints, and an imbalance in positively adjudicated cardiovascular serious adverse events was observed as a new safety signal.
In July, the FDA issued a Complete Response Letter for the Biologics License Application (BLA) for EVENITY as a treatment for postmenopausal women with osteoporosis. The resubmission will include data from the Phase 3 ARCH study and the Phase 3 BRIDGE study evaluating EVENITY in men with osteoporosis, in addition to the Phase 3 FRAME study.
Aimovig (erenumab)
In May, a BLA was submitted to FDA for the prevention of migraine based on data from pivotal studies in patients with episodic and chronic migraine. In July, FDA accepted the BLA and assigned a May 17, 2018, PDUFA target action date.
DARZALEX is a registered trademark of Janssen Biotech, Inc.
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
Aimovig trade name is provisionally approved by FDA
Aimovig is developed in collaboration with Novartis AG
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