Amgen Reports Second Quarter 2020 Financial Results
THOUSAND OAKS, Calif., July 28, 2020 /PRNewswire/ -- Amgen (NASDAQ:AMGN) today announced financial results for the second quarter of 2020.
Key results include:
- Despite the impact of the COVID-19 pandemic, total revenues increased 6% to $6.2 billion in comparison to the second quarter of 2019, driven by higher unit demand, offset partially by lower net selling prices.
- Product sales increased 6% globally, driven by 13% volume growth across a number of our newer products, including Otezla® (apremilast), MVASI® (bevacizumab-awwb), KANJINTI® (trastuzumab-anns), EVENITY® (romosozumab-aqqg) and Repatha® (evolocumab), offset partially by declines in select products from the impact of COVID-19 and biosimilar and generic competition.
- GAAP earnings per share (EPS) decreased 15% to $3.05 driven primarily by the amortization of costs associated with our November 2019 acquisition of Otezla, offset partially by increased revenues. Of note, this is the first period to include our share of BeiGene's net loss under the equity method of accounting.
- GAAP operating income decreased 13% to $2.3 billion and GAAP operating margin decreased 8.7 percentage points to 39.3%, driven primarily by the amortization of intangible assets from our Otezla acquisition.
- Non-GAAP EPS increased 7% to $4.25 driven by increased revenues and fewer weighted-average shares outstanding while also taking into account our share of BeiGene's net loss for the previous quarter as noted above.
- Non-GAAP operating income increased 9% to $3.2 billion and non-GAAP operating margin increased 1.7 percentage points to 55.0%.
- The Company generated $2.7 billion of free cash flow in the second quarter versus $1.3 billion in the second quarter of 2019, an increase driven primarily by the timing of tax payments.
- 2020 total revenues guidance reaffirmed at $25.0-$25.6 billion; EPS guidance revised to $10.73-$11.43 on a GAAP basis and revised to $15.10-$15.75 on a non-GAAP basis.
"As our strong results demonstrate, we continue to reliably supply patients as we navigate the COVID-19 pandemic," said Robert A. Bradway, chairman and chief executive officer. "We look forward to several significant pipeline updates in the second half of the year."
$Millions, except EPS, dividends paid per share and percentages | Q2'20 | Q2'19 | YOY ? | |||||||
Total Revenues | $ | 6,206 | $ | 5,871 | 6% | |||||
GAAP Operating Income | $ | 2,323 | $ | 2,678 | (13%) | |||||
GAAP Net Income | $ | 1,803 | $ | 2,179 | (17%) | |||||
GAAP EPS | $ | 3.05 | $ | 3.57 | (15%) | |||||
Non-GAAP Operating Income | $ | 3,247 | $ | 2,973 | 9% | |||||
Non-GAAP Net Income | $ | 2,518 | $ | 2,423 | 4% | |||||
Non-GAAP EPS | $ | 4.25 | $ | 3.97 | 7% | |||||
Dividends Paid Per Share | $ | 1.60 | $ | 1.45 | 10% |
References in this release to "non-GAAP" measures, measures presented "on a non-GAAP basis" and to "free cash flow" (computed by subtracting capital expenditures from operating cash flow) refer to non-GAAP financial measures. Adjustments to the most directly comparable GAAP financial measures and other items are presented on the attached reconciliations.
Product Sales Performance
- Notwithstanding the effects of the pandemic, total product sales increased 6% for the second quarter of 2020 versus the second quarter of 2019 driven by 13% volume growth.
- COVID-19 impacts: The pandemic interrupted many physician-patient interactions, which led to delays in diagnosis and treatment with varying degrees of impact across our portfolio. Sales of negatively affected products fell most early in the second quarter with sales beginning to recover in the latter weeks of the quarter. As the quarter progressed, our teams increasingly responded to customer needs via remote interactions and also identified innovative solutions to support the delivery of patient care. Our medicines were reliably supplied to patients throughout the quarter.
- Prolia® (denosumab) sales decreased 6% year-over-year driven by lower unit demand as a result of fewer office visits by osteoporosis patients, a population that is generally older and more vulnerable to COVID-19. Our historical pattern of higher sales in the second quarter was accordingly disrupted, resulting in relatively flat quarter-over-quarter sales. During the month of April, 60% fewer patients in the U.S. were diagnosed with osteoporosis compared to a pre-COVID-19 baseline. In response to the concerns of patients and providers, we worked to identify alternate sites for Prolia administration and have since seen improved sales with many patients returning for therapy as well as increased new patient diagnoses.
- EVENITY generated $101 million of sales in the second quarter of 2020. Although COVID-19 impacted new patient starts in the U.S. this quarter, we saw a continuous increase in new prescribers. We remain focused on increasing the number of patients and ensuring they receive their full 12 months of therapy. While patient uptake remains strong, we anticipate a slowdown in reported sales in the third quarter as the first half of 2020 benefited from larger shipments to Astellas, our partner in Japan, to ensure they had appropriate inventory.
- Repatha sales increased 32% year-over-year driven by 69% volume growth, offset partially by lower net selling price. Sales declined 13% quarter-over-quarter driven by unfavorable changes to estimated sales deductions. Although new-to-brand prescriptions (NBRx) in the U.S. for the proprotein convertase subtilisin/kexin type 9 (PCSK9) segment were negatively impacted by COVID-19, Repatha maintained share leadership among new patients, exiting the quarter with approximately 80% share. Repatha's year-over-year net selling price declined as a result of additional contracting to improve Medicare Part D patient access and patient affordability. We expect net selling price to be relatively stable for the remainder of the year.
- Aimovig® (erenumab-aooe) sales increased 18% year-over-year driven by 45% volume growth, offset partially by lower net selling price as a result of additional contracting to expand patient access. Aimovig remains the segment leader within the preventative calcitonin gene-related peptide (CGRP) class with 48% share of total prescriptions (TRx) in the quarter. Although NBRx for the total CGRP segment were negatively impacted by COVID-19, Aimovig regained NBRx share leadership exiting the quarter with 41% share. We continue to see improvement in our conversion from free to paid prescriptions and expect net selling price to be relatively stable for the remainder of the year.
- Parsabiv® (etelcalcetide) sales increased 11% year-over-year driven by higher unit demand, offset partially by lower net selling price. As expected, on July 6, 2020, the Centers for Medicare & Medicaid Services (CMS) proposed a methodology to modify the end-stage renal disease (ESRD) Prospective Payment System (PPS) base rate to include calcimimetics in the ESRD PPS bundled payment in 2021. This proposal is subject to a public comment period and the Final Rule is expected in November 2020.
- Otezla was acquired in November 2019 and generated $561 million of sales in the second quarter of 2020, reflecting 14% growth year-over-year driven primarily by volume. U.S. Otezla TRx growth remained strong in the quarter. Although NBRx volumes were negatively impacted by COVID-19 early in the quarter, trends have improved since then. From a competitive standpoint, Otezla's NBRx share of the psoriasis segment grew slightly in the quarter. Otezla provides a convenient oral option with an established safety profile and does not require lab monitoring, making it an attractive option during this COVID-19 period and for physicians practicing telemedicine.
- Enbrel® (etanercept) sales decreased 9% year-over-year driven by lower unit demand. Consistent with prior periods, Enbrel continued to lose share and the effects of such share loss were compounded by lower growth of the rheumatology segment due to COVID-19. Consistent with other agents within the class, Enbrel experienced a decline in new patients. Of note, earlier this month, the U.S. Court of Appeals for the Federal Circuit affirmed the judgment of the New Jersey District Court upholding the validity of the two patents that describe and claim Enbrel and methods for making it.
- AMGEVITA™ (adalimumab) generated $62 million of sales in the second quarter of 2020 and is the most prescribed adalimumab biosimilar in Europe for the fourth consecutive quarter. AMGEVITA sales declined 28% quarter-over-quarter driven by lower net selling prices and reductions in customer inventories following COVID-19-related stocking in the first quarter.
- KYPROLIS® (carfilzomib) sales decreased 5% year-over-year driven by lower unit demand. This decline was driven by reduced multiple myeloma patient visits to providers due to COVID-19.
- XGEVA® (denosumab) sales decreased 13% year-over-year driven by lower unit demand. This decline was driven by the impact of COVID-19, including a decrease in patient visits and recently revised treatment recommendations from the National Comprehensive Cancer Network (NCCN) in response to COVID-19 to prioritize primary cancer treatments over bone targeting agents.
- Vectibix® (panitumumab) sales were relatively flat year-over-year.
- Nplate® (romiplostim) sales decreased 4% year-over-year driven by unfavorable changes to estimated sales deductions. Volume growth slowed primarily as a result of fewer physician office visits due to COVID-19, and a loss of new patient starts to oral alternatives.
- BLINCYTO® (blinatumomab) sales increased 19% year-over-year driven by higher unit demand as we continue to see broader adoption in the community hospital setting.
- MVASI generated $172 million of sales in the second quarter of 2020, with a 39% exit share of the bevacizumab segment in the U.S. Going forward, we expect increased competition in the U.S. given the launch of a competing biosimilar earlier this year.
- KANJINTI generated $123 million of sales in the second quarter of 2020, with a 32% exit share of the trastuzumab segment in the U.S. The trastuzumab market has become increasingly competitive with the launches of four additional biosimilar products in the U.S. earlier this year.
- Neulasta® (pegfilgrastim) sales decreased 28% year-over-year driven by the impact of biosimilar competition on net selling price and unit demand. Unit volumes for the overall long-acting granulocyte colony-stimulating factors (G-CSFs) segment grew, supported by the NCCN guidelines, recently revised in response to COVID-19 recommending increased use of long-acting G-CSFs in intermediate risk febrile neutropenia cancer patients. Within the long-acting G-CSF segment, Neulasta Onpro® continues to be the preferred choice for physicians and patients and share increased to 58% this quarter. Onpro provides a unique value proposition during the pandemic as it allows patients to receive their G-CSF treatment without having to return to their doctor's office or other site of care for administration.
- NEUPOGEN® (filgrastim) sales decreased 35% year-over-year driven by the impact of competition on unit demand and unfavorable changes to estimated sales deductions.
- EPOGEN® (epoetin alfa) sales decreased 28% year-over-year driven by lower unit demand and lower net selling price from our existing contractual commitment with DaVita.
- Aranesp® (darbepoetin alfa) sales decreased 11% year-over-year driven by lower net selling price and the impact of competition on unit demand.
- Sensipar/Mimpara® (cinacalcet) sales decreased 34% year-over-year driven by the impact of generic competition on unit demand. Supplemental patent protection certificates for cinacalcet have now expired in major European markets and generic launches have begun. We expect ex-U.S. sales to continue to decline in the second half of 2020.
Product Sales Detail by Product and Geographic Region
$Millions, except percentages | Q2'20 | Q2'19 | YOY ? | |||||||||||||||
US | ROW | TOTAL | TOTAL | TOTAL | ||||||||||||||
Prolia® | $ | 441 | $ | 218 | $ | 659 | $ | 698 | (6%) | |||||||||
EVENITY® | 40 | 61 | 101 | 28 | * | |||||||||||||
Repatha® | 115 | 85 | 200 | 152 | 32% | |||||||||||||
Aimovig® | 98 | — | 98 | 83 | 18% | |||||||||||||
Parsabiv® | 160 | 26 | 186 | 168 | 11% | |||||||||||||
Otezla® | 464 | 97 | 561 | — | * | |||||||||||||
Enbrel® | 1,213 | 33 | 1,246 | 1,363 | (9%) | |||||||||||||
AMGEVITA™ | — | 62 | 62 | 52 | 19% | |||||||||||||
KYPROLIS® | 167 | 86 | 253 | 267 | (5%) | |||||||||||||
XGEVA® | 318 | 117 | 435 | 499 | (13%) | |||||||||||||
Vectibix® | 79 | 116 | 195 | 196 | (1%) | |||||||||||||
Nplate® | 107 | 86 | 193 | 201 | (4%) | |||||||||||||
BLINCYTO® | 56 | 37 | 93 | 78 | 19% | |||||||||||||
KANJINTI® | 101 | 22 | 123 | 30 | * | |||||||||||||
MVASI® | 149 | 23 | 172 | — | * | |||||||||||||
Neulasta® | 520 | 73 | 593 | 824 | (28%) | |||||||||||||
NEUPOGEN® | 28 | 21 | 49 | 75 | (35%) | |||||||||||||
EPOGEN® | 161 | — | 161 | 223 | (28%) | |||||||||||||
Aranesp® | 156 | 231 | 387 | 436 | (11%) | |||||||||||||
Sensipar®/Mimpara® | 32 | 49 | 81 | 122 | (34%) | |||||||||||||
Other** | 23 | 37 | 60 | 79 | (24%) | |||||||||||||
Total product sales | $ | 4,428 | $ | 1,480 | $ | 5,908 | $ | 5,574 | 6% | |||||||||
* Change in excess of 100% | ||||||||||||||||||
** Other includes GENSENTA, IMLYGIC®, Corlanor® and Bergamo |
Operating Expense, Operating Margin and Tax Rate Analysis
On a GAAP basis:
- Total Operating Expenses increased 22% primarily driven by Otezla-related expenses, including the amortization of intangible assets, offset partially by the reduction in certain expenses as a result of COVID-19. Cost of Sales margin increased 7 percentage points driven by amortization expense related to the Otezla acquisition and the benefit of Hurricane Maria insurance proceeds in 2019, offset partially by lower manufacturing costs. Research & Development (R&D) expenses increased 4% driven by higher spend in support of our late-stage development programs, primarily AMG 510 (sotorasib) and our biosimilar programs, along with Otezla, offset partially by recoveries from our collaboration with BeiGene. Selling, General & Administrative (SG&A) expenses increased 3% primarily due to Otezla commercial and acquisition-related expenses, offset partially by COVID-19-related deceleration of certain expenses. Other expenses increased due to a legal settlement.
- Operating Margin decreased 8.7 percentage points to 39.3% driven primarily by the amortization of intangible assets from our Otezla acquisition.
- Tax Rate decreased 3.8 percentage points due primarily to net favorable items in the quarter, amortization related to the Otezla acquisition and changes in jurisdictional mix of earnings.
On a non-GAAP basis:
- Total Operating Expenses increased 2% driven by Otezla-related expenses, offset partially by the reduction in certain expenses as a result of COVID-19. Cost of Sales margin decreased 0.4 percentage points driven primarily by lower manufacturing costs, offset partially by an increase in royalties and the benefit of Hurricane Maria insurance proceeds in 2019. R&D expenses increased 3% driven by higher spend in support of our late-stage development programs, primarily AMG 510 (sotorasib) and our biosimilar programs, along with Otezla, offset partially by recoveries from our collaboration with BeiGene. SG&A expenses increased 1% due primarily to Otezla commercial related expenses, offset partially by COVID-19-related deceleration of certain expenses.
- Operating Margin increased 1.7 percentage points to 55.0%.
- Tax Rate decreased 1.6 percentage points due primarily to net favorable items in the quarter.
$Millions, except percentages | GAAP | Non-GAAP | ||||||||||||||||||
Q2'20 | Q2'19 | YOY ? | Q2'20 | Q2'19 | YOY ? | |||||||||||||||
Cost of Sales | $ | 1,488 | $ | 1,012 | 47% | $ | 758 | $ | 736 | 3% | ||||||||||
% of product sales | 25.2 | % | 18.2 | % | 7 pts | 12.8 | % | 13.2 | % | (0.4) pts | ||||||||||
Research & Development | $ | 964 | $ | 924 | 4% | $ | 936 | $ | 906 | 3% | ||||||||||
% of product sales | 16.3 | % | 16.6 | % | (0.3) pts | 15.8 | % | 16.3 | % | (0.5) pts | ||||||||||
Selling, General & Administrative | $ | 1,295 | $ | 1,260 | 3% | $ | 1,265 | $ | 1,256 | 1% | ||||||||||
% of product sales | 21.9 | % | 22.6 | % | (0.7) pts | 21.4 | % | 22.5 | % | (1.1) pts | ||||||||||
Other | $ | 136 | $ | (3) | * | $ | — | $ | — | —% | ||||||||||
Total Operating Expenses | $ | 3,883 | $ | 3,193 | 22% | $ | 2,959 | $ | 2,898 | 2% | ||||||||||
Operating Margin | ||||||||||||||||||||
operating income as % of product sales | 39.3 | % | 48.0 | % | (8.7) pts | 55.0 | % | 53.3 | % | 1.7 pts | ||||||||||
Tax Rate | 11.2 | % | 15.0 | % | (3.8) pts | 13.7 | % | 15.3 | % | (1.6) pts | ||||||||||
- 28 Jul 2020
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