10-QPeriod: Q2 FY2022

AMGEN INC Quarterly Report for Q2 Ended Jun 30, 2022

Filed August 5, 2022For Securities:AMGN

Summary

Amgen Inc. reported solid financial results for the second quarter and first half of 2022. Total revenues grew modestly, driven by a 3% increase in product sales for both the quarter and the six-month period. This growth was primarily fueled by strong performance in key products like Prolia, Otezla, XGEVA, Repatha, and KYPROLIS, which experienced double-digit percentage increases in sales. Operating income saw a substantial increase of 58% for the six months ended June 30, 2022, largely due to the absence of a significant acquired in-process research and development (IPR&D) charge recorded in the prior year from the Five Prime acquisition. Diluted Earnings Per Share (EPS) also showed significant improvement, rising 41% for the six months. The company's balance sheet remains robust, though cash and cash equivalents decreased compared to the prior year-end, partly due to significant share repurchases. Amgen continued its commitment to returning capital to shareholders, repurchasing approximately $6.4 billion in stock and paying dividends during the first six months of the year. The company also announced a proposed acquisition of ChemoCentryx for approximately $4.0 billion, indicating a continued strategy of growth through business development. Despite positive operational performance, investors should note the ongoing significant U.S. Tax Court litigation concerning tax years 2010-2015, which could result in substantial additional tax liabilities if the IRS's position prevails. While Amgen believes its tax accruals are appropriate, this remains a notable risk factor.

Financial Statements
Beta
Revenue$6.59B
Cost of Revenue$1.51B
Gross Profit$5.08B
SG&A Expenses$1.33B
Operating Expenses$4.42B
Operating Income$2.18B
Interest Expense$328.00M
Net Income$1.32B
EPS (Basic)$2.46
EPS (Diluted)$2.45
Shares Outstanding (Basic)535.00M
Shares Outstanding (Diluted)537.00M

Key Highlights

  • 1Total revenues increased by 1% to $6.594 billion for the three months ended June 30, 2022, and by 3% to $12.832 billion for the six months ended June 30, 2022, compared to the prior year periods.
  • 2Product sales grew by 3% to $6.281 billion for the three months and $12.012 billion for the six months ended June 30, 2022, driven by strong performances in key drugs like Prolia, Otezla, XGEVA, Repatha, and KYPROLIS.
  • 3Operating income significantly increased by 58% to $4.676 billion for the six months ended June 30, 2022, primarily due to the absence of a $1.5 billion acquired IPR&D expense from the prior year.
  • 4Diluted EPS rose by 41% to $5.13 for the six months ended June 30, 2022, reflecting improved profitability.
  • 5Amgen repurchased $6.4 billion of its common stock and paid $2.1 billion in dividends during the first six months of 2022, demonstrating a strong commitment to returning capital to shareholders.
  • 6The company announced a proposed acquisition of ChemoCentryx for approximately $4.0 billion, signaling continued investment in strategic growth opportunities.
  • 7Significant ongoing U.S. Tax Court litigation related to tax years 2010-2015 presents a material risk, with potential for substantial additional tax liabilities.

Frequently Asked Questions

Amgen reported a 1% increase in total revenues to $6.594 billion for the three months ended June 30, 2022, compared to $6.526 billion in the same period of 2021. Product sales specifically increased by 3% to $6.281 billion.

Several key products demonstrated robust growth. Prolia sales increased by 13%, Otezla by 11%, XGEVA by 9%, Repatha by 14%, and KYPROLIS by 13% for the three months ended June 30, 2022, compared to the prior year. Neulasta sales continued to decline significantly due to biosimilar competition.

Amgen is contesting IRS claims related to profit allocations for tax years 2010-2012 and 2013-2015, which could result in substantial additional federal taxes and penalties. The company has filed petitions in U.S. Tax Court and believes the IRS positions are without merit, but the ultimate outcome remains uncertain and could materially impact financial statements.

Amgen is actively returning capital through share repurchases and dividends. During the first six months of 2022, the company repurchased approximately $6.4 billion of its common stock, including under Accelerated Share Repurchase (ASR) agreements, and paid $2.1 billion in dividends. The Board also declared a quarterly dividend of $1.94 per share.

Amgen announced a proposed acquisition of ChemoCentryx for approximately $4.0 billion. ChemoCentryx develops therapeutics for autoimmune diseases, inflammatory disorders, and cancer, and markets TAVNEOS® for ANCA-associated vasculitis. This acquisition is expected to close in the fourth quarter of 2022 and represents a strategic move to expand Amgen's portfolio in key therapeutic areas.