On January 30, 2020 Amgen (NASDAQ:AMGN) reported financial results for the fourth quarter and full year 2019 versus comparable periods in 2018 (Press release, Amgen, JAN 30, 2020, View Source [SID1234553694]). 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!
For the fourth quarter, total revenues decreased 1% to $6.2 billion in comparison to the fourth quarter of 2018, reflecting the impact of biosimilar and generic competition against select products.
Product sales declined 2% globally, while units grew double digits or better for Repatha (evolocumab), Parsabiv (etelcalcetide), BLINCYTO (blinatumomab), Aimovig (erenumab-aooe), Prolia (denosumab), Nplate (romiplostim) and Vectibix (panitumumab).
For the full year, total revenues decreased 2% to $23.4 billion, with product sales decreasing 1%.
GAAP earnings per share (EPS) decreased 5% to $2.85 in the fourth quarter driven by higher operating expenses, offset partially by lower weighted-average shares outstanding. GAAP EPS increased 2% to $12.88 for the full year driven by lower weighted-average shares outstanding, offset partially by lower operating income.
For the fourth quarter, GAAP operating income decreased 14% to $2.0 billion and GAAP operating margin decreased 4.9 percentage points to 34.8%. For the full year, GAAP operating income decreased 6% to $9.7 billion and GAAP operating margin decreased 1.9 percentage points to 43.6%.
Non-GAAP EPS increased 6% in the fourth quarter to $3.64 and 3% to $14.82 for the full year benefited by lower weighted-average shares outstanding. The increase for the full year was offset partially by lower operating income.
For the fourth quarter, non-GAAP operating income decreased 4% to $2.6 billion and non-GAAP operating margin decreased 0.7 percentage points to 44.6%. For the full year, non-GAAP operating income decreased 6% to $11.2 billion and non-GAAP operating margin decreased 2.4 percentage points to 50.2%.
The Company generated $8.5 billion of free cash flow for the full year versus $10.6 billion in 2018.
2020 total revenues guidance of $25.0-$25.6 billion; EPS guidance of $10.85-$11.65 on a GAAP basis and $14.85-$15.60 on a non-GAAP basis.
"We are entering a period of new product driven revenue growth," said Robert A. Bradway, chairman and chief executive officer. "Heading into 2020, our capital allocation priorities are clear, and we look forward to several important clinical data readouts from our innovative pipeline this year."
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 decreased 2% for the fourth quarter of 2019 versus the fourth quarter of 2018. Product sales decreased 1% for the full year driven by lower net selling price, offset partially by higher unit demand.
Prolia sales increased 15% for the fourth quarter and 17% for the full year driven by higher unit demand.
EVENITY (romosozumab-aqqg) launched in 2019, generating sales of $85 million in the fourth quarter and $189 million for the full year.
Repatha sales increased 26% for the fourth quarter and 20% for the full year driven primarily by higher unit demand, offset partially by net selling price.
Aimovig sales increased 3% for the fourth quarter driven by higher unit demand, offset partially by unfavorable changes in accounting estimates. Full year sales grew 157% driven primarily by unit demand.
Parsabiv sales increased 49% for the fourth quarter and 88% for the full year driven primarily by higher unit demand, offset partially by net selling price.
Otezla (apremilast) was acquired on Nov. 21, 2019, and generated $178 million in sales for the period.
Enbrel (etanercept) sales increased 2% for the fourth quarter and 4% for the full year driven primarily by favorable changes in accounting estimates and higher net selling price, offset partially by lower unit demand.
AMGEVITA (adalimumab) generated $71 million of sales in the fourth quarter and $215 million for the full year.
KYPROLIS (carfilzomib) sales increased 6% for the fourth quarter and 8% for the full year driven by higher unit demand.
XGEVA (denosumab) sales increased 7% for the fourth quarter and 8% for the full year driven primarily by higher unit demand and, to a lesser extent, higher net selling price.
Vectibix sales increased 8% for the fourth quarter and the full year driven by higher unit demand.
Nplate sales increased 15% for the fourth quarter and 11% for the full year driven primarily by higher unit demand.
BLINCYTO sales increased 27% for the fourth quarter and 36% for the full year driven by higher unit demand.
KANJINTI* (trastuzumab-anns) generated $103 million of sales in the fourth quarter and $226 million for the full year.
MVASI* (bevacizumab-awwb) generated $84 million of sales in the fourth quarter and $127 million for the full year.
Neulasta (pegfilgrastim) sales decreased 43% for the fourth quarter and 28% for the full year driven by the impact of biosimilar competition on unit demand and lower net selling price.
NEUPOGEN (filgrastim) sales decreased 17% for the fourth quarter driven by the impact of competition on unit demand. Sales decreased 28% for the full year driven by the impact of competition on unit demand and lower net selling price.
EPOGEN (epoetin alfa) sales decreased 20% for the fourth quarter driven by lower net selling price and unit demand. Sales decreased 14% for the full year driven primarily by lower net selling price.
Aranesp (darbepoetin alfa) sales decreased 10% for the fourth quarter driven by the impact of competition on unit demand and lower net selling price as well as unfavorable changes in inventory. Sales decreased 8% for the full year driven primarily by the impact of competition of unit demand.
Sensipar/Mimpara (cinacalcet) sales decreased 76% for the fourth quarter and 69% for the full year driven by the impact of generic competition on unit demand.
* Registered in the United States.
** Other includes GENSENTA, Bergamo, IMLYGIC and Corlanor.
Operating Expense, Operating Margin and Tax Rate Analysis
On a GAAP basis:
Total Operating Expenses increased 8% in the fourth quarter and 2% for the full year. Cost of Sales margin increased 3 percentage points in the fourth quarter driven primarily by amortization of intangible assets acquired in the Otezla acquisition. For the full year, Cost of Sales margin increased 1.4 percentage points driven primarily by unfavorable product mix and amortization of intangible assets acquired in the Otezla acquisition, offset partially by lower royalties and lower manufacturing costs. Research & Development (R&D) expenses increased 11% in the fourth quarter and 10% for the full year driven by higher spending in research and early pipeline in support of our oncology programs. The full year was offset partially by lower spend in support of marketed programs. Selling, General & Administrative (SG&A) expenses decreased 3% in the fourth quarter driven by lower spend for launched and marketed products and lower general and administrative expenses, offset partially by Otezla commercial-related expenses. For the full year, SG&A expenses decreased 3% driven by lower general and administrative expenses, the end of certain amortization of intangible assets in 2018 and lower spend for launched and marketed products, offset partially by Otezla commercial-related expenses. Other expenses increased in the fourth quarter driven primarily by restructuring costs in 2019. For the full year, other operating expenses decreased driven primarily by an impairment charge in 2018 of an intangible asset.
Operating Margin decreased 4.9 percentage points in the fourth quarter to 34.8% driven primarily by the Otezla acquisition, and decreased 1.9 percentage points for the full year to 43.6%.
Tax Rate increased 2.3 percentage points in the fourth quarter and 2.1 percentage points for the full year due primarily to a prior-year tax benefit associated with intercompany sales under U.S. corporate tax reform.
On a non-GAAP basis:
Total Operating Expenses increased 2% in the fourth quarter and 3% for the full year. Cost of Sales margin decreased 0.2 percentage points in the fourth quarter. For the full year, Cost of Sales margin increased 0.5 percentage points driven primarily by unfavorable product mix, offset partially by lower royalties and lower manufacturing costs. R&D expenses increased 11% for the fourth quarter and 10% for the full year driven by higher spending in research and early pipeline in support of our oncology programs. The full year was offset partially by lower spend in support of marketed programs. SG&A expenses decreased 2% in the fourth quarter driven by lower spend for launched and marketed products and lower general and administrative expenses, offset partially by Otezla commercial-related expenses. For the full year, SG&A expenses decreased 2% driven by lower general and administrative expenses and lower spend for launched and marketed products, offset partially by Otezla commercial-related expenses.
Operating Margin decreased 0.7 percentage points to 44.6% in the fourth quarter, and decreased 2.4 percentage points to 50.2% for the full year.
Tax Rate increased 1.6 percentage points in the fourth quarter and 1.5 percentage points for the full year due primarily to a prior-year tax benefit associated with intercompany sales under U.S. corporate tax reform.
$Millions, except percentages
Cash Flow and Balance Sheet
The Company generated $2.3 billion of free cash flow in the fourth quarter of 2019 versus $3.0 billion in the fourth quarter of 2018 due primarily to timing of tax payments. The Company generated $8.5 billion of free cash flow for the full year 2019 versus $10.6 billion in 2018 due primarily to unfavorable changes in working capital, an advanced tax deposit and lower net income.
The Company’s fourth quarter 2019 dividend of $1.45 per share was declared on Oct. 22, 2019, and was paid on Dec. 6, 2019, to all stockholders of record as of Nov. 15, 2019, representing a 10% increase from the fourth quarter of 2018. The Company’s first quarter 2020 dividend of $1.60 per share declared on Dec. 11, 2019, will be paid on March 6, 2020, to all stockholders of record as of Feb. 14, 2020, representing a 10% increase from that paid in each of the previous four quarters of 2019.
During the fourth quarter of 2019, the Company repurchased 5.1 million shares of common stock at a total cost of $1.1 billion. For the full year, the Company repurchased 40.2 million shares of common stock at a total cost of $7.6 billion. At the end of the fourth quarter, the Company had $6.5 billion remaining under its stock repurchase authorization.
$Billions, except shares
Note: Numbers may not add due to rounding
2020 Guidance
For the full year 2020, the Company expects:
Total revenues in the range of $25.0 billion to $25.6 billion.
On a GAAP basis, EPS in the range of $10.85 to $11.65 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%.
Capital expenditures to be approximately $700 million.
Fourth Quarter Product and Pipeline Update
The Company provided the following updates on selected product and pipeline programs:
Otezla
Data from the Phase 3 study in patients with mild-to-moderate psoriasis are expected by mid-year 2020.
A supplemental New Drug Application (sNDA) to expand the Prescribing Information to include data from the Phase 3 scalp psoriasis study is under review by the U.S. Food and Drug Administration (FDA) with a Prescription Drug User Fee Act target action date in April 2020.
EVENITY
In December 2019, the European Commission (EC) granted marketing authorization for EVENITY for the treatment of severe osteoporosis in postmenopausal women at high risk of fracture.
KYPROLIS
In January, an sNDA was submitted to the FDA 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 November, a marketing authorization application (MAA) was accepted by the China National Medical Products Administration (NMPA) for the use of KYPROLIS plus dexamethasone for the treatment of relapsed and refractory multiple myeloma.
BLINCYTO
In December, the China NMPA granted priority review for the MAA for the treatment of adults with relapsed or refractory B-cell acute lymphoblastic leukemia.
AMGEN REPORTS FOURTH QUARTER AND FULL YEAR 2019 FINANCIAL RESULTS
Page 9
AMG 510
A potentially pivotal Phase 2 monotherapy study in advanced non-small cell lung cancer (NSCLC) completed enrollment and data are expected in 2020.
A Phase 2 monotherapy study is enrolling advanced colorectal cancer patients.
A Phase 1b study in combination with MEK inhibition is enrolling advanced colorectal and non-small cell lung cancer patients.
The ongoing Phase 1 monotherapy study is also enrolling treatment naïve NSCLC patients.
In 2020, additional data are expected from the first-in-human monotherapy study in patients with multiple solid tumors, and initial data are expected from a Phase 1 study in combination with KEYTRUDA (pembrolizumab) in patients with advanced NSCLC.
In January, the Company announced strategic collaborations with leading diagnostic companies, Guardant Health, Inc. and QIAGEN N.V., to develop blood- and tissue-based companion diagnostics, respectively.
Omecamtiv mecarbil
Data from the event driven Phase 3 GALACTIC-HF cardiovascular outcomes study are expected in Q4 2020.
AVSOLA (infliximab-axxq)
In December, the FDA approved AVSOLA for all approved indications of the reference product, Remicade (infliximab).
ABP 798 (biosimilar rituximab)
In December, a Biologics License Application was submitted to the FDA for ABP 798, a biosimilar candidate to Rituxan (rituximab).