8-KMaterial Agreements

AMGEN INC 8-K Report, Material Agreement (Jan 9, 2017)

Filed January 9, 2017For Securities:AMGN

Summary

Amgen Inc. (AMGN) has filed an 8-K report on January 9, 2017, to announce a significant update to its supply agreement with DaVita Inc. The company has entered into a new six-year Sourcing and Supply Agreement, effective January 6, 2017, through December 31, 2022. This new agreement will govern the supply of Amgen's key erythropoiesis stimulating agents, EPOGEN® (Epoetin alfa) and Aranesp® (darbepoetin alfa), to DaVita for use in dialysis services in the United States and Puerto Rico. The new agreement replaces a prior agreement that would have expired in December 2018 and ensures that Amgen USA will supply at least 90% of DaVita's annual requirements for these products throughout the term. The agreement also includes provisions for a potential wind-down purchase period in 2023. Investors should note that the new agreement incorporates discount pricing and rebates, some of which are conditional on future pricing levels. This move solidifies a long-term relationship with a major customer in the dialysis sector and provides a predictable revenue stream for Amgen's EPOGEN and Aranesp franchises.

Key Highlights

  • 1Amgen USA entered into a new six-year Sourcing and Supply Agreement with DaVita Inc., effective January 6, 2017, through December 31, 2022.
  • 2The agreement mandates Amgen USA to supply at least 90% of DaVita's annual requirements for EPOGEN® (Epoetin alfa) and Aranesp® (darbepoetin alfa) in the US and Puerto Rico for dialysis services.
  • 3The new agreement replaces a prior agreement which was set to expire on December 31, 2018.
  • 4DaVita has the option to purchase EPOGEN and Aranesp during 2023 under a wind-down provision.
  • 5The new agreement includes provisions for discount pricing and rebates for EPOGEN and Aranesp.
  • 6Some rebates are contingent upon future pricing levels of the supplied products.
  • 7The agreement can be terminated by either party in case of specific breaches by the other.

Frequently Asked Questions

The primary purpose of this 8-K filing is to announce that Amgen Inc. has entered into a new, long-term Sourcing and Supply Agreement with DaVita Inc. for its key erythropoiesis stimulating agents, EPOGEN® and Aranesp®.

The new agreement is effective for six years, from January 6, 2017, through December 31, 2022. There is also a provision for DaVita to potentially purchase these products during 2023.

The agreement ensures a significant and consistent demand for EPOGEN and Aranesp, as Amgen USA is committed to supplying at least 90% of DaVita's annual requirements. While the agreement includes discount pricing and rebates, it secures a substantial portion of revenue from a major customer in the dialysis market over a six-year period.

Yes, the new agreement includes discount pricing and rebates for EPOGEN and Aranesp. Some of these rebates are subject to conditions based on future pricing levels of these products by Amgen USA.