Amgen's Second Quarter 2015 Revenues Increased 4 Percent To $5.4 Billion And Adjusted Earnings Per Share (EPS) Increased 8 Percent To $2.57

THOUSAND OAKS, Calif., July 30, 2015 /PRNewswire/ -- Amgen (NASDAQ:AMGN) today announced financial results for the second quarter of 2015. Key results include:

• Total revenues increased 4 percent versus the second quarter of 2014 to $5,370 million, with 6 percent product sales growth driven primarily by Enbrel^® (etanercept), Prolia^® (denosumab), Sensipar^® (cinacalcet), Kyprolis^® (carfilzomib) and XGEVA^® (denosumab). Unfavorable changes in foreign exchange rates impacted total revenue and product sales growth by approximately 2.5 percentage points.
• Adjusted EPS grew 8 percent versus the second quarter of 2014 to $2.57 driven by higher revenues and lower operating expenses. Adjusted operating income increased 10 percent to $2,551 million.
• Adjusted operating margin improved by approximately 2 percentage points to 49 percent.
• GAAP EPS were $2.15 compared to $2.01 and GAAP operating income was $2,076 million compared to $1,902 million.
• The Company generated $2.7 billion of free cash flow compared to $2.1 billion in the second quarter of 2014.

"Focused execution with our growth products drove record revenues in the second quarter, and expense discipline further leveraged earnings and our ability to invest in new and forthcoming launches," said Robert A. Bradway, chairman and chief executive officer. "Our pipeline continues to deliver, with Repatha approval in the European Union and Kyprolis approval for relapsed multiple myeloma in the United States. We are on track to deliver on our long-term objectives for patients and shareholders."

Second Quarter 2015 Product Sales Performance

• Total product sales increased 6 percent for the second quarter of 2015 versus the second quarter of 2014. The increase was driven primarily by ENBREL, Prolia, Sensipar, Kyprolis and XGEVA. Growth for the quarter was due to price and higher unit demand.
• Neulasta^® (pegfilgrastim) sales increased 2 percent year-over-year driven by price. NEUPOGEN^® (filgrastim) sales decreased 14 percent year-over-year driven primarily by the impact of competition in the United States (U.S.).
• ENBREL sales increased 8 percent year-over-year driven by price, offset partially by the impact of competition.
• Prolia sales increased 29 percent year-over-year driven by higher unit demand.
• XGEVA sales increased 11 percent year-over-year driven primarily by higher unit demand.
• EPOGEN^® (epoetin alfa) sales decreased 4 percent year-over-year driven primarily by a shift in dialysis customer purchases to Aranesp^® (darbepoetin alfa), as well as the impact of competition, offset partially by price.
• Aranesp sales decreased 7 percent year-over-year driven by unfavorable changes in foreign exchange rates and a prior year positive Medicaid rebate estimate adjustment, offset partially by higher unit demand, including the shift from EPOGEN.
• Sensipar/Mimpara^® sales increased 15 percent year-over-year driven by higher unit demand and price.
• Vectibix^® (panitumumab) sales increased 21 percent year-over-year driven by higher unit demand.
• Nplate^® (romiplostim) sales increased 6 percent year-over-year driven primarily by higher unit demand.
• Kyprolis sales increased 53 percent year-over-year driven by higher unit demand.

Product Sales Detail by Product and Geographic Region

Second Quarter Operating Expense, Operating Margin and Tax Rate Analysis, on an Adjusted Basis

• Operating Expenses decreased 1 percent, including a 3 percentage point benefit from foreign exchange rates.
• Cost of Sales margin improved 0.8 points driven by lower royalty expense and higher product sales.
• Research & Development (R&D) expenses decreased 6 percent driven by savings from transformation and process improvement efforts, offset partially by increased support for later-stage clinical programs.
• Selling, General & Administrative expenses increased 2 percent as increased commercial expenses for new product launches were enabled by savings from transformation and process improvement efforts.
• Operating Margin improved by approximately 2 percentage points to 49 percent.
• Tax Rate increased 3.8 percentage points to 20.0 percent primarily due to changes in the geographic mix of earnings.

Cash Flow and Balance Sheet Discussion

• The Company generated $2.7 billion of free cash flow in the second quarter of 2015 versus $2.1 billion in the second quarter of 2014. The increase was driven by improved working capital and higher operating income, as well as the termination of foreign exchange forward contracts.
• The Company's third quarter 2015 dividend of $0.79 per share declared on July 28, 2015, will be paid on Sept. 8, 2015, to all stockholders of record as of the close of business on Aug. 17, 2015.
• During the second quarter, the Company repurchased 3.3 million shares of common stock at a total cost of $0.5 billion. At the end of the second quarter, the Company had $2.9 billion remaining under its stock repurchase authorization.

2015 Guidance

For the full year 2015, the Company now expects:

• Total revenues in the range of $21.1 billion to $21.4 billion and adjusted EPS in the range of $9.55 to $9.80. Previously, the Company expected total revenues in the range of $20.9 billion to $21.3 billion and adjusted EPS in the range of $9.35 to $9.65.
• Adjusted tax rate to be in the range of 18 percent to 19 percent. This excludes the benefit of the federal R&D tax credit, which has not yet been extended for 2015.
• Capital expenditures to be approximately $700 million.

Second Quarter Product and Pipeline Update
Anticipated key milestones:

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

Repatha

• In July, the European Commission approved Repatha for the treatment of high cholesterol, as an adjunct to diet:
  • In combination with statins or other lipid lowering therapies in patients unable to control their LDL cholesterol with maximum tolerated statin doses, or
  • Alone or in combination with other lipid lowering therapies in patients who are statin intolerant or for whom a statin is contraindicated.
• Repatha is also approved in the EU in combination with other lipid-lowering agents in patients with homozygous familial hypercholesterolemia (age 12 and over).
• Enrollment has completed in the Phase 3 cardiovascular outcomes study.

Kyprolis

• In July, the U.S. Food and Drug Administration expanded the indication of Kyprolis to include the treatment of patients who have received 1 to 3 prior lines of therapy, in combination with lenalidomide and dexamethasone.
• A Marketing Authorization Application (MAA) is currently under accelerated assessment in the EU for relapsed multiple myeloma.
• Supplemental New Drug Application submitted in the U.S. based on data from the phase 3 ENDEAVOR study.
• Enrollment recently completed in the Phase 3 CLARION study versus Velcade^® (bortezomib) in newly diagnosed multiple myeloma patients.
• A Phase 3 study initiated with weekly dosing in relapsed and refractory multiple myeloma.

AMG 416

• Submissions of a New Drug Application in the U.S. and a MAA in the EU are planned for the third quarter of 2015 for secondary hyperparathyroidism.

AMG 334

• Phase 3 studies initiated in episodic migraine.

Non-GAAP Financial Measures

In this news release, management has presented its operating results for the second quarters of 2015 and 2014 in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and on an adjusted (or non-GAAP) basis. In addition, management has presented its full year 2015 EPS and tax rate guidance in accordance with GAAP and on an adjusted (or 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. Management has also presented Free Cash Flow (FCF), which is a non-GAAP financial measure, for the second quarters of 2015 and 2014. FCF is computed by subtracting capital expenditures from operating cash flow, each as determined in accordance with GAAP. Reconciliations for these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the news release. 

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 core business activities by facilitating comparisons of results of core business operations among current, past and future periods. In addition, the Company believes that excluding the non-cash amortization of intangible assets, including developed product technology rights, acquired in business combinations 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. 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 press release in connection with its own budgeting and financial planning. 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 biologics manufacturing 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 involve significant risks and uncertainties, including those discussed below and others that can be found in our Form 10-K for the year ended Dec. 31, 2014, and in any subsequent periodic reports on Form 10-Q and Form 8-K. 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. The Company's results may be affected by our ability to successfully market both new and existing products domestically and internationally, clinical and regulatory developments (domestic or foreign) involving current and future products, sales growth of recently launched products, competition from other products (domestic or foreign), and difficulties or delays in manufacturing our products. In addition, sales of our products are affected by reimbursement policies imposed by third-party payors, 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 as well as U.S. legislation affecting pharmaceutical pricing and reimbursement. Government and others' regulations and reimbursement policies may affect the development, usage and pricing of our products. 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. 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.  We depend on third parties for a significant portion of our manufacturing capacity for the supply of certain of our current and future products 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 some 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. Our efforts to integrate the operations of companies we have acquired may not be successful. We may experience difficulties, delays or unexpected costs and not achieve anticipated benefits and savings from our ongoing restructuring plan. 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
Kristen Davis, 805-447-3008 (media)
Trish Hawkins, 805-447-5631 (media)
Arvind Sood, 805-447-1060 (investors)

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SOURCE Amgen