10-QPeriod: Q2 FY2009

AMGEN INC Quarterly Report for Q2 Ended Jun 30, 2009

Filed August 10, 2009For Securities:AMGN

Summary

Amgen Inc. reported a solid financial performance for the second quarter of 2009, with net income of $1.269 billion, or $1.25 per diluted share, representing a significant increase from the prior year's $906 million, or $0.84 per diluted share. This growth was driven by a favorable resolution of certain tax matters, which provided a notable boost to the bottom line. Despite a slight year-over-year dip in total product sales, primarily due to challenges with Aranesp® in the supportive cancer care setting and unfavorable foreign currency exchange rates, the company demonstrated resilience. Key products like Enbrel showed revenue growth, and a focus on cost management, including a decrease in R&D expenses, contributed to improved profitability. The company also highlighted positive developments in its denosumab clinical trials, indicating future growth potential. Financially, Amgen maintained a strong liquidity position with over $11.9 billion in cash, cash equivalents, and marketable securities. The company continued its commitment to shareholder returns through share repurchases, demonstrating confidence in its financial health and future prospects. While facing ongoing regulatory scrutiny and competitive pressures, particularly in the erythropoiesis-stimulating agent (ESA) market, Amgen's diversified product portfolio and strategic R&D investments position it to navigate these challenges.

Financial Highlights

46 data points
Beta

Revenue

$3.71B

83.6% Gross Margin

Net Income

$1.27B

34.2% Net Margin

EPS (Diluted)

$1.25

Total Assets

$38.84B

Cash & Equivalents

$2.97B

Free Cash Flow

$1.54B

Financial Statements
Beta
Revenue$3.71B
Gross Profit$3.10B
SG&A Expenses$910.00M
Operating Expenses$2.26B
Operating Income$1.46B
Interest Expense$150.00M
Net Income$1.27B
EPS (Basic)$1.25
EPS (Diluted)$1.25
Shares Outstanding (Basic)1.01B
Shares Outstanding (Diluted)1.02B

Key Highlights

  • 1Net income increased by 40% to $1.269 billion for the three months ended June 30, 2009, compared to $906 million in the prior year.
  • 2Diluted earnings per share rose by 49% to $1.25 for the second quarter of 2009, compared to $0.84 in the second quarter of 2008.
  • 3Total revenues decreased slightly by 1.3% to $3.713 billion for the quarter, while cost of sales saw a modest increase.
  • 4Research and development expenses decreased by 14% to $693 million, reflecting cost management efforts.
  • 5Cash, cash equivalents, and marketable securities stood at $11.965 billion as of June 30, 2009, indicating a strong liquidity position.
  • 6The company repurchased $1.997 billion of its common stock during the first quarter of 2009.
  • 7Positive clinical trial updates for denosumab in breast cancer treatment were reported, signaling potential future revenue streams.

Frequently Asked Questions

The significant increase in net income and EPS was primarily driven by the favorable resolution of certain non-routine transfer pricing matters with the IRS for prior periods, which resulted in a substantial income tax benefit. This benefit significantly boosted the company's profitability for the period.

Total product sales saw a slight decrease of 2% to $3.634 billion for the quarter compared to $3.692 billion in the prior year. Aranesp® sales experienced a notable decline, particularly in the U.S. supportive cancer care setting, due to updated safety-related product labeling. Enbrel showed revenue growth of 7% for the quarter, demonstrating resilience.

Amgen maintained a strong liquidity position, with cash, cash equivalents, and marketable securities totaling $11.965 billion as of June 30, 2009. The company generated strong cash flow from operations and utilized this, along with existing sources of financing, to fund its operations, capital expenditures, and share repurchase programs, indicating robust financial health.

Amgen faces several ongoing risks and challenges, including increased regulatory scrutiny and potential label changes for its products, particularly for its Erythropoiesis-Stimulating Agents (ESAs) like Aranesp® and Epogen®. Increased competition from biosimilar products in Europe and potential new competitors in the U.S. also pose a significant risk. Additionally, the company is exposed to healthcare reform initiatives in the U.S., which could impact reimbursement and product utilization, as well as general economic conditions and potential disruptions in manufacturing or supply chains.