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AMGEN INC Annual Report, Year Ended Dec 31, 1994

Filing Date
Filed March 30, 1995
Period End
December 31, 1994
Security
AMGN
In the record · 2016–202610-K1210-Q328-K125

AMGN filed 12 annual reports (10-K), 32 quarterly reports (10-Q) and 125 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Jul ’18Jul ’18
  2. Deal closed8-K · Apr ’21Apr ’21
  3. Material agreement8-K · Jan ’23Jan ’23
  4. FY2024 annual report10-K · Feb ’25Feb ’25

01—Abstract

Summary

Summary of the 10-K filed March 30, 1995. Cited figures are marked; the original filing is the authoritative source.

Amgen's 10-K for fiscal 1994 shows a biotechnology company still driven almost entirely by two products: NEUPOGEN (filgrastim, roughly 50%a of revenues) and EPOGEN (epoetin alfa, roughly 44%).

Total revenues rose 20% to $1,647.9 millionb, and product sales grew 19% to $1,549.6 million. Operating cash flow was strong at $531.9 million, and cash plus marketable securities totaled $696.7 million at year-end. Stockholders' equity reached $1,274.3 million, and the company carries modest long-term debt of $183.4 million.

Reported net income fell 17% to $319.7 millionc, or $2.29 per primary share, but this decline is largely due to a non-deductible $116.4 million write-off of in-process technology tied to the December 1994 acquisition of Synergen for $254.5 million. Excluding that charge, earnings would have grown meaningfully. Management guided to double-digit growth in 1995 for both NEUPOGEN and EPOGEN, though at rates below 1994's, and expects R&D spending to grow faster than sales.

The Synergen deal also brings lawsuits from former Synergen shareholders and warrant holders, and the company is involved in an arbitration with Johnson & Johnson over EPOGEN sales accounting, with a trial set for October 1995. Key risks for investors include concentration in two products, U.S. healthcare reform and reimbursement changes (EPOGEN is largely reimbursed through Medicare's ESRD program), dependence on two wholesale distributors (22% and 16% of revenue), the unresolved Johnson & Johnson arbitration, and patent litigation including a Biogen suit over NEUPOGEN. Amgen has no dividend and intends to retain earnings and continue repurchasing stock, with $331.2 milliond of authorization remaining.

02—Key points

Key Highlights

  1. Total revenues grew 20% to $1,647.9 million in 1994, with product sales up 19% to $1,549.6 million.
  2. NEUPOGEN sales reached $828.9 million (up 15%) and EPOGEN sales reached $720.6 million (up 23%).
  3. Net income declined 17% to $319.7 million ($2.29 per primary share), mainly because of a $116.4 million non-deductible in-process R&D write-off from the Synergen acquisition.
  4. The Synergen acquisition for $254.5 million expanded research into neurobiology and inflammation, adding programs such as GDNF, TNFbp and IL-1ra.
  5. Operating cash flow was $531.9 million, and cash and marketable securities totaled $696.7 million at year-end 1994.
  6. Two wholesale distributors accounted for 22% and 16% of 1994 revenues, creating customer concentration risk.
  7. Management expects double-digit growth in 1995 for both key products, though slower than 1994, and plans to repurchase stock with $331.2 million of remaining authorization.

03—Questions

Frequently Asked Questions

  1. Why did net income fall in 1994 if revenues grew 20%?

    The decline was driven by a one-time $116.4 million write-off of in-process technology acquired with Synergen in December 1994. The charge is not tax-deductible, which also pushed the effective tax rate up to 45.7%. Net income excluding the write-off would have been meaningfully higher than the reported $319.7 million.

  2. How dependent is Amgen on its products NEUPOGEN and EPOGEN?

    Highly dependent. NEUPOGEN produced about 50% of 1994 revenues and EPOGEN about 44%, so together they represent nearly all revenue. Any competitive threat, reimbursement change, or pricing pressure on either product would have a major impact on results.

  3. What are the main legal risks facing Amgen?

    The most significant is the arbitration with Johnson & Johnson over how EPOGEN sales are allocated between their markets; Amgen may owe additional compensation for prior periods, and a trial is set for October 2, 1995. Amgen also faces lawsuits from former Synergen stockholders and warrant holders, and patent disputes including a Biogen suit over NEUPOGEN. Management believes none will have a material adverse effect, but outcomes are uncertain.

  4. What does healthcare reform mean for Amgen's outlook?

    The filing identifies U.S. healthcare reform as a significant uncertainty. EPOGEN is largely reimbursed through Medicare's End Stage Renal Disease Program, and reimbursement was already cut from $11 to $10 per thousand units in January 1994. Future reimbursement changes, managed care influence, and voluntary limits on drug price increases could affect sales growth.

  5. Does Amgen pay dividends, and how is it returning capital to shareholders?

    Amgen pays no cash dividends and intends to retain earnings for business development and share repurchases. It has repurchased 12.9 million shares since 1992 for $593.8 million total, and $331.2 million remained authorized through December 31, 1995.

04—Continue

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