On April 30, 2020 Amgen (NASDAQ:AMGN) reported financial results for the first quarter of 2020 and discussed the company’s response to the COVID-19 pandemic (Press release, Amgen, APR 30, 2020, View Source [SID1234556837]).
First Quarter Performance
Key results include:
Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:
Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing
Schedule Your 30 min Free Demo!
Total revenues increased 11% to $6.2 billion in comparison to the first quarter of 2019, driven by higher unit demand, offset partially by lower net selling prices.
Product sales increased 12% globally, driven by volume growth across a number of our newer products, including Otezla (apremilast), Repatha (evolocumab), MVASI (bevacizumab-awwb), KANJINTI (trastuzumab-anns) and Evenity (romosozumab-aqqg), offset partially by declines in select products from the impact of biosimilar and generic competition.
GAAP earnings per share (EPS) decreased 3% to $3.07 driven by the amortization of costs associated with our Nov. 21, 2019 acquisition of Otezla, offset partially by increased revenues.
GAAP operating income decreased 5% to $2.4 billion and GAAP operating margin decreased 6.8 percentage points to 40.0% driven by the amortization of intangible assets from our Otezla acquisition.
Non-GAAP EPS increased 17% to $4.17 driven by increased revenues and fewer weighted-average shares outstanding.
Non-GAAP operating income increased 15% to $3.2 billion and non-GAAP operating margin increased 1.5 percentage points to 53.9%.
The Company generated $2.0 billion of free cash flow in the first quarter versus $1.7 billion in the first quarter of 2019.
2020 total revenues guidance reaffirmed at $25.0-$25.6 billion; EPS guidance revised to $10.65-$11.45 on a GAAP basis and reaffirmed at $14.85-$15.60 on a non-GAAP basis.
"I am inspired by the many ways my colleagues at Amgen and others across the industry are stepping up to meet the greatest public health challenge of our lifetime," said Robert A. Bradway, chairman and chief executive officer. "We are committed to an uninterrupted supply of our medicines to patients; advancing potential new medicines to treat serious diseases, including COVID-19; making a difference in the communities where we live and work; and creating long-term value for shareholders."
AMGEN REPORTS FIRST QUARTER 2020 FINANCIAL RESULTS
References in this release to "non-GAAP" measures, measures presented "on a non-GAAP basis" and to "free cash flow" (computed by subtracting capital expenditures from operating cash flow) refer to non-GAAP financial measures. Adjustments to the most directly comparable GAAP financial measures and other items are presented on the attached reconciliations.
Product Sales Performance
Total product sales increased 12% for the first quarter of 2020 versus the first quarter of 2019 driven by 15% volume growth.
Prolia (denosumab) sales increased 10% driven by higher unit demand.
EVENITY launched in the U.S. and Japan in the first half of 2019, generating $100 million of sales in the first quarter of 2020.
Repatha sales increased 62% driven by 98% volume growth, offset partially by lower net selling price. Repatha’s net selling price was impacted by the removal of our original list price option to improve patient affordability, especially for Medicare patients.
Aimovig (erenumab-aooe) sales increased 20% driven by 46% volume growth, offset partially by lower net selling price as we expanded patient access.
Parsabiv (etelcalcetide) sales increased 39% driven by higher unit demand, offset partially by lower net selling price.
Otezla was acquired on Nov. 21, 2019 and generated $479 million of sales in the first quarter of 2020.
Enbrel (etanercept) sales were flat as favorable changes to estimated sales deductions and inventory were offset by lower unit demand and lower net selling price.
AMGEVITA (adalimumab) generated $86 million of sales in the first quarter of 2020 and is the most prescribed adalimumab biosimilar in Europe.
KYPROLIS (carfilzomib) sales increased 14% driven by higher unit demand and to a lesser extent, higher net selling price.
XGEVA (denosumab) sales increased 2% driven by higher unit demand.
Vectibix (panitumumab) sales increased 19% driven by higher unit demand.
Nplate (romiplostim) sales increased 15% driven by higher unit demand.
AMGEN REPORTS FIRST QUARTER 2020 FINANCIAL RESULTS
BLINCYTO (blinatumomab) sales increased 36% driven by higher unit demand.
KANJINTI generated $119 million of sales in the first quarter of 2020.
MVASI generated $115 million of sales in the first quarter of 2020.
Neulasta (pegfilgrastim) sales decreased 40% driven by the impact of competition on unit demand and net selling price.
NEUPOGEN (filgrastim) sales decreased 11% driven by the impact of competition on unit demand.
EPOGEN (epoetin alfa) sales decreased 29% driven by lower net selling price and unfavorable changes to estimated sales deductions.
Aranesp (darbepoetin alfa) sales increased 2% driven by higher unit demand and favorable changes in inventory, offset by lower net selling price.
Sensipar/Mimpara (cinacalcet) sales decreased 42% driven by the impact of competition on unit demand, offset partially by favorable changes to estimated sales deductions and inventory.
AMGEN REPORTS FIRST QUARTER 2020 FINANCIAL RESULTS
** Other includes GENSENTA, IMLYGIC, Corlanor and Bergamo.
Operating Expense, Operating Margin and Tax Rate Analysis
On a GAAP basis:
Total Operating Expenses increased 23% driven by Otezla-related expenses, including the amortization of intangible assets. Cost of Sales margin increased 5.7 percentage points driven by amortization of intangible assets acquired in the Otezla acquisition and an increase in milestone payments, offset partially by lower manufacturing costs. Research & Development (R&D) expenses increased 8% driven by higher late-stage development program support of our oncology portfolio, primarily AMG 510 (sotorasib), along with the recently acquired Otezla, offset partially by recoveries from our collaboration with BeiGene. Selling, General & Administrative (SG&A) expenses increased 14% due to our first full quarter of Otezla commercial-related expenses.
Operating Margin decreased 6.8 percentage points to 40.0% driven by the amortization of intangible assets from our Otezla acquisition.
Tax Rate decreased 4.2 percentage points due primarily to amortization related to the Otezla acquisition, changes in jurisdictional mix of earnings and an increase in net discrete tax benefits.
AMGEN REPORTS FIRST QUARTER 2020 FINANCIAL RESULTS
Page 5
On a non-GAAP basis:
Total Operating Expenses increased 7% driven by Otezla-related expenses. Cost of Sales margin decreased 1.6 percentage points driven by lower manufacturing costs, offset partially by an increase in milestone payments. R&D expenses increased 8% driven by higher late-stage development program support of our oncology portfolio, primarily AMG 510 (sotorasib), along with the recently acquired Otezla, offset partially by recoveries from our collaboration with BeiGene. SG&A expenses increased 12% due to our first full quarter of Otezla commercial-related expenses.
Operating Margin increased 1.5 percentage points to 53.9%.
Tax Rate decreased 1.8 percentage points due primarily to changes in jurisdictional mix of earnings and an increase in net discrete tax benefits.
$Millions, except percentages
Cash Flow and Balance Sheet
The Company generated $2.0 billion of free cash flow in the first quarter of 2020 versus $1.7 billion in the first quarter of 2019.
The Company’s first quarter 2020 dividend of $1.60 per share was declared on Dec. 11, 2019, and was paid on March 6, 2020, to all stockholders of record as of Feb. 14, 2020, representing a 10% increase from the first quarter of 2019.
During the first quarter, the Company repurchased 4.3 million shares of common stock at a total cost of $933 million. At the end of the first quarter, the Company had $5.5 billion remaining under its stock repurchase authorization.
2020 Guidance
For the full year 2020, the Company reaffirmed total revenues and non-GAAP EPS guidance:
Total revenues in the range of $25.0 billion to $25.6 billion, unchanged from previous guidance.
On a GAAP basis, EPS in the range of $10.65 to $11.45 and a tax rate in the range of 10.5% to 11.5%.
On a non-GAAP basis, EPS in the range of $14.85 to $15.60 and a tax rate in the range of 13.5% to 14.5%, unchanged from previous guidance.
Capital expenditures to be approximately $600 million.
First Quarter Product and Pipeline Update
The Company provided the following updates on selected product and pipeline programs:
AMG 510 (sotorasib)
The Company will present the following clinical data as part of the ASCO (Free ASCO Whitepaper)20 Virtual Scientific Program, May 29-31:
Updated results from the Phase 1 dose escalation study in patients with advanced colorectal cancer.
Updated results from the Phase 1 dose escalation study in patients with advanced solid tumors other than non-small-cell lung cancer (NSCLC) and colorectal cancer.
The Company reiterated its expectation of initial data in 2020 from a potentially pivotal Phase 2 monotherapy study in patients with advanced NSCLC, including at least six months of response data.
BiTE Programs
The Company expects initial data from Phase 1 dose escalation studies of the following half-life extended BiTE molecules in H2 2020:
AMG 160 targeting PSMA (prostate specific membrane antigen)
AMG 701 targeting BCMA (B-cell maturation antigen)
AMG 757 targeting DLL3 (Delta-like ligand 3)
Updated results from the Phase 1 dose escalation study of AMG 330, a bispecific T-cell engager molecule targeting CD33, in patients with relapsed/refractory acute myeloid leukemia will be presented as part of the ASCO (Free ASCO Whitepaper)20 Virtual Scientific Program, May 29-31.
AMGEN REPORTS FIRST QUARTER 2020 FINANCIAL RESULTS
Page 7
KYPROLIS
The FDA has set a Prescription Drug User Fee Act (PDUFA) target action date of Nov. 15, 2020 for the supplemental New Drug Application (sNDA) to expand the Prescribing Information to include KYPROLIS in combination with dexamethasone and DARZALEX (daratumumab) for patients with relapsed or refractory multiple myeloma based on data from the Phase 3 CANDOR study.
In February, a variation to the marketing authorization application was submitted to the European Medicines Agency to expand the indication for Kyprolis in relapsed multiple myeloma based on data from the Phase 3 CANDOR study.
XGEVA
In April, a marketing authorization for the treatment of skeletal related events was accepted for review by the Center for Drug Evaluation in China. XGEVA is included in our strategic collaboration with BeiGene.
ABP 798 (biosimilar rituximab)
The FDA has set a Biosimilar User Fee Act target action date of Dec. 19, 2020 for the Biologics License Application for ABP 798, a biosimilar candidate to Rituxan (rituximab).
Otezla
Data from the Phase 3 study in patients with mild-to-moderate psoriasis are expected in Q2 2020.
In April, the U.S. Food and Drug Administration (FDA) approved the sNDA to add scalp psoriasis data to the U.S. Prescribing Information.
In April, the European Commission (EC) approved an additional indication for the treatment of adult patients with oral ulcers associated with Behçet’s Disease who are candidates for systemic therapy.
Tezepelumab
The Company reiterated its expectation of data from the Phase 3 NAVIGATOR study in patients with severe uncontrolled asthma by the end of 2020.
Omecamtiv mecarbil
In February, the Data Monitoring Committee for the Phase 3 GALACTIC-HF study completed the second and final planned interim analysis for futility and superiority and recommended that the study continue without changes to its conduct.
The Company reiterated its expectation of data from GALACTIC-HF in Q4 2020.
Repatha
In March, the Company announced that Repatha significantly reduced low-density lipoprotein cholesterol (LDL-C) in patients who are human immunodeficiency virus-positive and have high LDL-C despite stable background lipid-lowering therapy.
AMG 890
A Phase 2 study is expected to begin in the second half of 2020 for AMG 890, a small interfering RNA molecule that lowers lipoprotein(a).
AMGEN REPORTS FIRST QUARTER 2020 FINANCIAL RESULTS
Page 8
COVID-19
The Company announced that Otezla, an oral treatment approved in more than 50 countries for inflammatory diseases such as psoriasis and psoriatic arthritis, will be investigated as a potential immunomodulatory treatment in adult patients with COVID-19 in upcoming platform trials.
In April, the Company announced a collaboration with Adaptive Biotechnologies to discover and develop fully human neutralizing antibodies targeting SARS-CoV-2 to potentially prevent or treat COVID-19.
The Company provided the following updates on aspects of its R&D activities
Study start-up activities are continuing where possible to allow rapid site activation and enrollment when that becomes feasible.
Study procedures are being implemented consistent with recent guidance from regulators to maintain patient safety and study data integrity.
Enrollment is paused in clinical trials where there is uncertainty around the ability of sites to ensure subject safety or data integrity.
Research activities are increasing in various geographies as the situation safely permits.
Medical conferences and journals are being engaged to ensure continued dissemination of important data in a timely manner.
KEYTRUDA is a registered trademark of Merck Sharp & Dohme Corp., a subsidiary of Merck & Co. Inc.
DARZALEX is a registered trademark of Janssen Biotech, Inc.
Rituxan is a registered trademark of Biogen Inc.
Tezepelumab is being developed in collaboration with AstraZeneca
Omecamtiv mecarbil is being developed under a collaboration between Amgen and Cytokinetics, with funding and strategic support from Servier