10-QPeriod: Q2 FY2015

AMGEN INC Quarterly Report for Q2 Ended Jun 30, 2015

Filed August 5, 2015For Securities:AMGN

Summary

Amgen Inc.'s second-quarter 2015 report shows solid revenue growth, with total revenues reaching $5.37 billion, a 4% increase year-over-year, primarily driven by strong product sales, up 6% to $5.23 billion. This growth was fueled by key products like ENBREL, Prolia®, Sensipar®, and Kyprolis®. Net income also saw a healthy increase of 7% to $1.65 billion, translating to a diluted Earnings Per Share (EPS) of $2.15, up 7% from the prior year. The company continues to invest in its pipeline, with R&D expenses decreasing slightly for the quarter but still representing a significant portion of overall expenses. Financially, Amgen maintains a strong balance sheet with total assets of $71.2 billion and robust liquidity, evidenced by cash and cash equivalents and marketable securities totaling $30.0 billion. The company has also been actively returning capital to shareholders through dividends and share repurchases, with $2.9 billion remaining available under its stock repurchase program. While the company faces ongoing legal and regulatory challenges, including biosimilar competition and patent expirations for older drugs like Neulasta® and EPOGEN®, the diversified product portfolio and ongoing pipeline development for new therapies like Repatha™ appear to position Amgen for continued growth.

Financial Statements
Beta
Revenue$5.37B
Cost of Revenue$1.09B
Gross Profit$4.14B
SG&A Expenses$1.16B
Operating Expenses$3.29B
Operating Income$2.08B
Interest Expense$277.00M
Net Income$1.65B
EPS (Basic)$2.18
EPS (Diluted)$2.15
Shares Outstanding (Basic)760.00M
Shares Outstanding (Diluted)768.00M

Key Highlights

  • 1Total revenues increased by 4% to $5.37 billion for the three months ended June 30, 2015, compared to $5.18 billion in the prior year period.
  • 2Product sales increased by 6% to $5.23 billion, driven by strong performance from ENBREL, Prolia®, Sensipar®, and Kyprolis®.
  • 3Net income rose by 7% to $1.65 billion, resulting in a diluted EPS of $2.15, a 7% increase year-over-year.
  • 4The company has a strong liquidity position with $29.99 billion in cash, cash equivalents, and marketable securities as of June 30, 2015.
  • 5Amgen continued to return capital to shareholders, repurchasing $966 million of stock in the first six months of 2015.
  • 6Restructuring charges of $63 million were incurred in the quarter as part of a plan initiated in late 2014 to improve cost structure.
  • 7Regulatory progress was noted for Repatha™ (evolocumab) with a PDUFA target action date of August 27, 2015, in the U.S. and marketing authorization in the EU.

Frequently Asked Questions

Revenue growth was primarily driven by an increase in product sales, up 6% to $5.23 billion. Key products contributing to this growth included ENBREL, Prolia®, Sensipar®, and Kyprolis®. The average net sales price for several products also increased.

R&D expenses decreased by 5% to $964 million for the quarter, primarily due to reduced costs in Discovery Research and Translational Sciences. While there are ongoing investments in later-stage clinical programs and launch support, the company is also realizing savings from its restructuring plan.

Amgen maintains a strong financial position with total assets of $71.2 billion and total stockholders' equity of $27.5 billion. Liquidity is robust, with $29.99 billion in cash, cash equivalents, and marketable securities as of June 30, 2015. The company generates significant cash from operations and has access to various financing sources.

Key risks include ongoing and increasing competition from biosimilars (e.g., for Neulasta®/NEUPOGEN® and EPOGEN®), patent expirations, regulatory scrutiny and approval processes for new drugs (like Repatha™), potential safety issues with products and pipeline candidates, and operational risks associated with manufacturing facilities, particularly the Puerto Rico facility's exposure to local economic instability.