Amgen's Fourth Quarter 2005 Adjusted Earnings Per Share Increased 29 Percent to 75 Cents; Full Year 2005 Adjusted Earnings Per Share Increased 33 Percent to $3.20.THOUSAND OAKS Thousand Oaks, residential city (1990 pop. 104,352), Ventura co., S Calif., in a farm area; inc. 1964. Avocados, citrus, vegetables, strawberries, and nursery products are grown. , Calif. -- Amgen (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :AMGN): --Fourth Quarter 2005 GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). Earnings Per Share Increased to 66 Cents from 53 Cents; Full Year 2005 GAAP Earnings Per Share of $2.93 --2006 Total Revenue Expected to be in the Range of $13.9 to $14.4 Billion --2006 Adjusted Earnings Per Share Expected to be In the Range of $3.55 to $3.70 --Adjusted R&D Investment Expected to Grow 30 to 40 Percent in 2006 Amgen (NASDAQ:AMGN) reported adjusted earnings per share (EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. ) of 75 cents for the fourth quarter of 2005, an increase of 29 percent compared to 58 cents during the fourth quarter of 2004. Adjusted net income rose 24 percent to $928 million compared to $749 million in the fourth quarter of 2004. Full year 2005 adjusted EPS were $3.20 versus $2.40 in 2004, a 33 percent increase. Full year 2005 adjusted net income was $4.0 billion versus $3.1 billion in 2004, a 28 percent increase. Total revenue increased 12 percent during the fourth quarter of 2005 to $3.3 billion and 18 percent for the full year to $12.4 billion. Adjusted EPS and adjusted net income for the three months and full years ended December 31, 2005 and 2004 exclude certain expenses related to the acquisitions of Immunex Corporation (Immunex) Tularik Inc. (Tularik) and certain other items. These expenses and other items are itemized on the reconciliation tables below. On a reported basis and calculated in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. (U.S.) Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP), Amgen's EPS increased to 66 cents in the fourth quarter of 2005 from 53 cents in the same quarter last year. Net income was $824 million in the fourth quarter of 2005 versus $689 million in the fourth quarter of 2004. For the full year 2005, Amgen's reported EPS increased 62 percent to $2.93 from $1.81 in 2004. Full year 2005 net income was $3.7 billion versus $2.4 billion in 2004, an increase of 55 percent. Full year 2004 GAAP results were impacted by the acquisition of Tularik, which included a $554 million charge related to acquired in-process research and development. "2005 was another strong year for Amgen," said Kevin Sharer, Amgen's chairman and chief executive officer. "In addition to delivering financially, we achieved four major regulatory milestones and added six new molecules to our pipeline. We made significant progress in advancing our late stage pipeline. Also during the fourth quarter, we received positive data from a pivotal trial with panitumumab, which could potentially advance the treatment of colorectal cancer colorectal cancer Malignant tumour of the large intestine (colon) or rectum. Risk factors include age (after age 50), family history of colorectal cancer, chronic inflammatory bowel diseases, benign polyps, physical inactivity, and a diet high in fat. . This contributed to our strategic decision to acquire Abgenix," concluded Sharer. Product Sales Performance During the fourth quarter, total product sales increased 14 percent to $3.2 billion from $2.8 billion in the fourth quarter of 2004. Sales in the U.S. totaled $2.6 billion, an increase of 13 percent versus the same quarter in 2004. International sales totaled $543 million versus $465 million during the comparable period in 2004. Changes in foreign exchange negatively impacted fourth quarter 2005 international sales by approximately $22 million. For the full year, total product sales were $12.0 billion in 2005 versus $10.0 billion in 2004, a 20 percent increase. Changes in foreign exchange added approximately $46 million to international sales for the full year 2005. Worldwide sales of Aranesp(R) (darbepoetin alfa darbepoetin alfa Aranesp Pharmacologic class: Recombinant human erythropoietin Therapeutic class: Hematopoietic Pregnancy risk category C FDA Boxed Warning) increased 24 percent to $873 million in the fourth quarter of 2005 versus $705 million during the fourth quarter of 2004. This growth was principally driven by demand. U.S. Aranesp sales were $579 million versus $449 million in the prior year, with share gains and greater penetration in all major settings driving growth. International Aranesp sales were $294 million versus $256 million in the same quarter last year. Changes in foreign exchange negatively impacted fourth quarter 2005 sales by approximately $15 million. For the full year 2005, worldwide Aranesp sales were $3.3 billion versus $2.5 billion for 2004, an increase of 32 percent over the prior year's sales, driven by share gains and market growth.Sales of EPOGEN E·po·gen A trademark for the drug epoetin alfa. epoetin alfa Epogen, Eprex (CA) (UK), Procrit Pharmacologic class: Recombinant human erythropoietin Therapeutic class: (R) (Epoetin alfa e·po·e·tin al·fa n. A recombinant preparation of human erythropoietin used to treat some forms of anemia. epoetin alfa Epogen, Eprex (CA) (UK), Procrit Pharmacologic class: ) during the fourth quarter were $626 million versus $697 million in the comparable period of 2004, a decrease of 10 percent. For the full year 2005, EPOGEN sales were $2.5 billion versus $2.6 billion for 2004, a decrease of six percent. Both the quarter and full year decreases reflect lower demand, unfavorable changes in wholesaler inventory levels and unfavorable revised estimates Revised estimate The third estimate of GDP released about three months after the measurement period. of dialysis dialysis (dīăl`ĭsĭs), in chemistry, transfer of solute (dissolved solids) across a semipermeable membrane. Strictly speaking, dialysis refers only to the transfer of the solute; transfer of the solvent is called osmosis. demand (primarily spillover spill·o·ver n. 1. The act or an instance of spilling over. 2. An amount or quantity spilled over. 3. A side effect arising from or as if from an unpredicted source: ) for prior quarters. Demand was affected by conversion to Aranesp in the hospital dialysis setting and reflects higher sales incentives Noun 1. sales incentive - remuneration offered to a salesperson for exceeding some predetermined sales goal bonus, incentive - an additional payment (or other remuneration) to employees as a means of increasing output . This conversion to Aranesp is expected to stabilize stabilize See peg. by mid- mid- pref. Middle: midbrain. 2006. Demand for Epogen in the freestanding free·stand·ing adj. Standing or operating independently of anything else: a freestanding bell tower; a freestanding maternity clinic. dialysis clinics remains consistent with patient population growth of 3-4 percent. Spillover is a result of the Company's contractual relationship with Johnson & Johnson. (Please refer to the Company's 2004 Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for a more detailed discussion of this relationship and a description of spillover). Epogen is expected to resume modest growth in 2006. Combined worldwide sales of Neulasta(R) (pegfilgrastim pegfilgrastim Neulasta Pharmacologic class: Granulocytic colony stimulating factor Therapeutic class: Hematopoietic drug Pregnancy risk category C Action) and NEUPOGEN Neupogen® Filgrastim Oncology An agent used to ↓ neutrophil recovery time and duration of fever after chemotherapy for AML. See Acute myelogenous leukemia. (R) (Filgrastim filgrastim /fil·gras·tim/ (fil-gras´tim) a human granulocyte colony-stimulating factor produced by recombinant technology; used to enhance neutrophil function, stimulating hematopoiesis and decreasing neutropenia. ), were $928 million in the fourth quarter of 2005 versus $778 million for the fourth quarter of 2004, an increase of 19 percent. Combined sales growth for Neulasta and NEUPOGEN was primarily driven by increased demand for Neulasta, which benefited from recently updated National Comprehensive Cancer Network (NCCN NCCN National Comprehensive Cancer NetworkNCCN North Carolina Center for Nursing (Raleigh, NC) NCCN Nevada County Community Network ) guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. recommending earlier use. Combined sales of Neulasta and NEUPOGEN in the United States were $729 million in the fourth quarter of 2005 versus $598 million in the fourth quarter of 2004, an increase of 22 percent. Combined international sales increased 11 percent to $199 million in the fourth quarter of 2005 versus $180 million over the same quarter in the prior year. Changes in foreign exchange negatively impacted fourth quarter 2005 combined international sales by approximately $8 million. For the full year 2005, combined worldwide sales of Neulasta and NEUPOGEN were $3.5 billion versus $2.9 billion for the full year 2004, an increase of 20 percent. Neulasta sales in particular, benefited from a label extension based on new clinical data demonstrating the value of first cycle use in moderate risk chemotherapy regimens Chemotherapy regimens are often identified with acronyms, identifying the agents used in combination. Unfortunately, the letters used are not consistent across regimens, and in some cases (for example, "BEACOPP") the same letter is used to represent two different treatments. . Sales of Enbrel En·brel A trademark for the drug etanercept. etanercept Enbrel Pharmacologic class: Immunomodulator Therapeutic class: Antiarthritic Pregnancy risk category B (R) (etanercept etanercept /eta·ner·cept/ (e-tan´er-sept) a soluble tumor necrosis factor receptor that inactivates tumor necrosis factor, used in the treatment of rheumatoid arthritis. e·tan·er·cept n. ) increased 19 percent during the fourth quarter to $674 million versus $567 million during the same period in 2004. For the full year 2005, ENBREL sales increased 35 percent to $2.6 billion versus $1.9 billion in 2004. Strong demand drove sales growth reflecting growth in both rheumatology rheumatology /rheu·ma·tol·o·gy/ (-tol´ah-je) the branch of medicine dealing with rheumatic disorders, their causes, pathology, diagnosis, treatment, etc. rheu·ma·tol·o·gy n. and dermatology dermatology (dûrmətŏl`əjē), branch of medicine concerned with diagnosis and treatment of diseases and disorders of the skin. . ENBREL continues to maintain a leading position in the dermatology and rheumatology biologic marketplaces. Operating Expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. Analysis on an Adjusted Basis: --Cost of sales increased to $511 million in the fourth quarter of 2005 from $476 million during the fourth quarter of 2004. For the full year 2005, cost of sales totaled $2.0 billion versus $1.7 billion in 2004. Increases for the fourth quarter and full year were primarily driven by higher sales volumes. --Research and development (R&D) expenses totaled $658 million during the fourth quarter versus $608 million in the fourth quarter of 2004. For the full year 2005, R&D expenses were $2.3 billion compared to $2.0 billion in 2004. Fourth quarter and full year increases were primarily driven by staff-related expenses and key clinical trials, including the large-scale Phase 3 trials for denosumab, Amgen's investigational therapy for bone loss. Full year staff-related expenses were also impacted by the acquisition of Tularik. --Selling, general and administrative (SG&A) expenses were $913 million in the fourth quarter versus $813 million for the same quarter of the prior year. For full year 2005, SG&A expenses totaled $2.8 billion compared to $2.5 billion in 2004. Increases for the fourth quarter and full year are a result of a higher level of profit sharing profit sharing, arrangement by which employees receive, in addition to their wages, a share of the net profits of a business. The purpose is to give them an incentive to increase their output through enhanced morale, less wasteful use of materials, better care of with Wyeth related to ENBREL sales growth. In addition, increases for the fourth quarter were also impacted by higher spending to support the Company's key products. Stock repurchases Stock repurchase A firm's repurchase of outstanding shares of its common stock. for the fourth quarter 2005 totaled $1.2 billion representing 14.8 million shares. Stock repurchases for the full year 2005 were $4.4 billion representing approximately 63.2 million shares. In December 2005, the Company's board of directors authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: a new stock repurchase program of $5 billion. The Company currently has $1.5 billion remaining under its previous stock repurchase program. In the fourth quarter of 2005, the Company repatriated approximately $500 million of foreign earnings pursuant to the American Jobs Creation Act of 2004. This was the maximum the Company could repatriate repatriate To bring home assets that are currently held in a foreign country. Domestic corporations are frequently taxed on the profits that they repatriate, a factor inducing the firms to leave overseas the profits earned there. under the law, and had the effect of increasing GAAP tax expense by $43 million. The repatriation Repatriation The process of converting a foreign currency into the currency of one's own country. Notes: If you are American, converting British Pounds back to U.S. dollars is an example of repatriation. had no impact on the Company's adjusted tax rate. Capital expenditures for full year 2005 were approximately $900 million versus $1.3 billion in 2004. The Company expects capital expenditures to exceed $1 billion annually over the next few years, as it invests in new manufacturing facilities and expands R&D operations. The Company's cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has were $5.3 billion at the end of 2005. The company recently received FTC FTC See Federal Trade Commission (FTC). clearance for its proposed acquisition of Abgenix, Inc. (Abgenix), and closing is expected by late March/early April 2006. 2006 Guidance The Company expects total revenue for 2006 to be in the range of $13.9 to $14.4 billion. The Company also expects adjusted R&D expense to increase by 30 to 40 percent, primarily due to an expected significant increase in clinical studies in 2006. Amgen initiated several large, late-stage clinical trials in 2005 that will continue in 2006, as well as additional trials that will begin enrollment in 2006. These include trials in denosumab in osteoporosis osteoporosis (ŏs'tēō'pərō`sĭs), disorder in which the normal replenishment of old bone tissue is severely disrupted, resulting in weakened bones and increased risk of fracture; osteopenia and metastatic Metastatic The term used to describe a secondary cancer, or one that has spread from one area of the body to another. Mentioned in: Coagulation Disorders metastatic pertaining to or of the nature of a metastasis. bone disease, panitumumab and AMG AMG All Music Guide (music website) AMG All Media Guide (group of media websites) AMG All Movie Guide (Movie website) AMG Arzneimittelgesetz (German Law) 706 in several oncology oncology /on·col·o·gy/ (ong-kol´ah-je) the sum of knowledge regarding tumors; the study of tumors. on·col·o·gy n. indications, and landmark morbidity/mortality studies with Aranesp in patients with chronic kidney disease Chronic kidney disease (CKD), also know as chronic renal disease, is a progressive loss of renal function over a period of months or years through five stages. Each stage is a progression through an abnormally low and progressively worse glomerular filtration rate, which is (CKD See count-key-data. ) and heart failure. Amgen expects 2006 adjusted EPS in the range of $3.55 to $3.70. This guidance does not include the impact of stock option compensation expense, the dilutive impact of the proposed Abgenix acquisition, and certain expenses related to the acquisitions of Immunex and Tularik as well as the proposed acquisition of Abgenix. Amgen expects the impact of stock option compensation expense to be in the range of $0.12 - $0.14 in 2006 compared to $ 0.19 for 2005. As the Company announced previously, the Abgenix acquisition could result in dilution Dilution A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Notes: Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. of $0.05 to $0.10 for 2006 and 2007, and is expected to be accretive thereafter, assuming commercial success of panitumumab. Fourth Quarter Product and Pipeline Highlights The Company also highlighted research and development matters, including a pipeline overview, selected late-stage clinical programs (Aranesp, AMG 706, panitumumab, AMG 531, and denosumab), new clinical programs, and R&D investment strategy. Aranesp: New Phase 3 data showing the potential benefits of Aranesp dosed every three weeks for chemotherapy-induced anemia anemia (ənē`mēə), condition in which the concentration of hemoglobin in the circulating blood is below normal. Such a condition is caused by a deficient number of erythrocytes (red blood cells), an abnormally low level of hemoglobin were presented at the American Society of Hematology hematology Branch of medicine concerned with the nature, function, and diseases of the blood. It covers the cellular and serum composition of blood, the coagulation process, blood-cell formation, hemoglobin synthesis, and disorders of all these. (ASH). The study revealed that Aranesp increased and maintained patient hemoglobin hemoglobin (hē`məglō'bĭn), respiratory protein found in the red blood cells (erythrocytes) of all vertebrates and some invertebrates. levels to the target level of greater than or equal to 11 grams per deciliter deciliter /dec·i·li·ter/ (dL) (des´i-le?ter) one tenth (10minus;1) of a liter; 100 milliliters. Deciliter (dL) 100 cubic centimeters (cc). Mentioned in: Hypercholesterolemia (g/dL) and reduced the need for red blood cell red blood cell: see blood. transfusions by almost half compared to placebo placebo (pləsē`bō), inert substance given instead of a potent drug. Placebo medications are sometimes prescribed when a drug is not really needed or when one would not be appropriate because they make patients feel well taken care of. . A separate study demonstrated that 85 percent of chronic kidney disease patients not on dialysis who received Aranesp administered once monthly maintained hemoglobin levels of greater than or equal to 11 g/dL. These patients were previously receiving Aranesp dosed every other week. Updated interim Phase 2 data for Aranesp in myelodysplastic syndrome Myelodysplastic Syndrome Definition Myelodysplastic syndrome (MDS) is a disease that is associated with decreased production of blood cells. Blood cells are produced in the bone marrow, and the blood cells of people with MDS do not mature normally. was also presented at ASH suggesting a major response in anemic anemic pertaining to anemia. patients administered 500 mcg of Aranesp every three weeks. Enbrel: New results for ENBREL were announced at the American College American College is the name of:
Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. blinded study in patients with rheumatoid arthritis rheumatoid arthritis Chronic, progressive autoimmune disease causing connective-tissue inflammation, mostly in synovial joints. It can occur at any age, is more common in women, and has an unpredictable course. , more than three quarters of patients treated with ENBREL plus methotrexate methotrexate, drug used in halting the growth of actively proliferating tissues. Introduced in the 1950s, it is used in the treatment of leukemia, psoriasis, and non-Hodgkin's lymphoma. combination therapy experienced no progression of joint damage at three years. Kepivance (palifermin palifermin Kepivance Pharmacologic class: Keratinocyte growth factor (KGF) (rDNA origin) Therapeutic class: Biologic and immunologic agent Pregnancy risk category C Action): The Company announced that Kepivance received regulatory approval in the European Union European Union (EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to theEuropean Community to decrease the incidence, duration and severity of oral mucositis mucositis (mū´kōsī´tis), n an inflammation of the mucous membrane. mucositis, chronic atrophic senile, n (mouth sores) in patients with hematologic hematological, hematologic pertaining to or emanating from blood cells. hematological tests total and differential white cell counts, hematocrit estimation, erythrocyte count. (blood) cancers undergoing myeloablative therapy myeloablative therapy Oncology The use of RT and/or high-dose chemotherapy to eliminate tumor load–eg, of myeloma in BM, followed by restitution of native BM with either allogeneic BMT or autologous–self BMT, which is reinfused after purging it of associated with a high incidence of severe oral mucositis and requiring autologous autologous /au·tol·o·gous/ (aw-tol´ah-gus) related to self; belonging to the same organism. au·tol·o·gous adj. 1. blood and bone marrow transplant bone marrow transplant: see bone marrow. . Panitumumab: Top line Phase 3 trial results were announced during the quarter, showing that panitumumab met its primary endpoint of improving progression-free survival in patients with metastatic colorectal cancer who had failed standard chemotherapy chemotherapy (kē'mōthĕr`əpē), treatment of disease with chemicals or drugs. One chemotherapeutic approach is the development of selectively toxic substances, i.e. . In this randomized ran·dom·ize tr.v. ran·dom·ized, ran·dom·iz·ing, ran·dom·iz·es To make random in arrangement, especially in order to control the variables in an experiment. trial involving 463 patients, those who received panitumumab every two weeks showed a 46 percent decrease in tumor tumor: see neoplasm. progression rate versus those who received best supportive care supportive care, n medical and other interventions that attempt to support and make comfortable rather than to cure. alone (p less than 0.000000001). Based on this data, Amgen and Abgenix initiated a biologics license application (BLA BLA abbr. Bachelor of Liberal Arts ) with the Food and Drug Administration (FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. ). In addition, Amgen announced the acquisition of Abgenix, which would provide the Company with full ownership of panitumumab. Denosumab (formerly known as AMG 162): Phase 2 trial results for denosumab in osteoporosis were presented at ACR. The data showed that twice-yearly subcutaneous injections Noun 1. subcutaneous injection - an injection under the skin injection, shot - the act of putting a liquid into the body by means of a syringe; "the nurse gave him a flu shot" of denosumab (60 mg) increased bone mineral density bone mineral density n. See bone density. bone mineral density A measurement of bone mass, expressed as the amount of mineral–in grams divided by the area scanned in cm2. See Bone densitometry. in the lumbar spine Lumbar spine The segment of the human spine above the pelvis that is involved in low back pain. There are five vertebrae, or bones, in the lumbar spine. Mentioned in: Low Back Pain , total hip, distal distal /dis·tal/ (-t'l) remote; farther from any point of reference. dis·tal adj. 1. Anatomically located far from a point of reference, such as an origin or a point of attachment. 1/3 radius and total body compared to placebo at 24 months. In addition, topline Phase 2 results for denosumab in rheumatoid arthritis patients was disclosed at the company's analyst meeting. The results indicated that when compared to placebo, denosumab decreased the proportion of patients whose joint erosion progressed as measured by MRI 1. (application) MRI - Magnetic Resonance Imaging. 2. MRI - Measurement Requirements and Interface. . Denosumab may also inhibit inhibit /in·hib·it/ (in-hib´it) to retard, arrest, or restrain. in·hib·it v. 1. To hold back; restrain. 2. damage to cartilage cartilage (kär`təlĭj), flexible semiopaque connective tissue without blood vessels or nerve cells. It forms part of the skeletal system in humans and in other vertebrates, and is also known as gristle. as measured by CTX-II. AMG 531: Interim long-term follow-up data were shown at ASH demonstrating that AMG 531 increases platelets Platelets Fragments of a large precursor cell (a megakaryocyte) found in the bone marrow. These fragments adhere to areas of blood vessel damage and release chemical signals that direct the formation of a blood clot. in patients with immune thrombocytopenic purpura immune thrombocytopenic purpura n. See idiopathic thrombocytopenic purpura. immune thrombocytopenic purpura Idiopathic thrombocytopenic purpura, see there . Overall, 85 percent of patients in the study (29 of 34) achieved a platelet platelet: see blood clotting. platelet or thrombocyte Small, colourless, irregular blood cell crucial in coagulation. Produced in bone marrow and stored in the spleen, platelets accumulate to block a cut in a blood vessel and provide response, defined as doubling of the baseline platelet count Platelet Count Definition A platelet count is a diagnostic test that determines the number of platelets in the patient's blood. Platelets, which are also called thrombocytes, are small disk-shaped blood cells produced in the bone marrow and involved in and at least 50,000 platelets per microliter microliter /mi·cro·li·ter/ (µL) (mi´kro-le?ter) one millionth (10-6) of a liter. mi·cro·li·ter n. A unit of volume equal to one-millionth (10-6) of a liter. of blood. For more product information or the full prescribing information, please refer to the Amgen Web site at www.amgen.com. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This news release contains forward-looking statements that involve significant risks and uncertainties, including those discussed below and others that can be found in our Form 10-K for the year ended December 31, 2004, and in our periodic reports on Form 10-Q Form 10-Q See 10-Q. and Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. . Amgen is providing this information as of the date of this news release and does not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise. No forward-looking statement can be guaranteed and actual results may differ materially from those we project. The Company's results may be affected by our ability to successfully market both new and existing products domestically and internationally, sales growth of recently launched products, difficulties or delays in manufacturing our products, and regulatory developments (domestic or foreign) involving current and future products and manufacturing facilities. In addition, sales of our products are affected by reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. policies imposed by first party payors, including governments, private insurance plans and managed care providers, and may be affected by domestic and international trends toward managed care and healthcare cost containment cost containment, n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. as well as possible US legislation affecting pharmaceutical pricing and reimbursement. Government regulations and reimbursement policies may affect the development, usage and pricing of our products. Furthermore, our research, testing, pricing, marketing and other operations are subject to extensive regulation by domestic and foreign government regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities . We, or others could identify side effects Side effects Effects of a proposed project on other parts of the firm. or manufacturing problems with our products after they are on the market. In addition, we compete with other companies with respect to some of our marketed products as well as for the discovery and development of new products. Discovery or identification of new product candidates cannot be guaranteed and movement from concept to product is uncertain; consequently, there can be no guarantee that any particular product candidate will be successful and become a commercial product. In addition, while we routinely obtain patents for our products and technology, the protection offered by our patents and patent applications may be challenged, invalidated in·val·i·date tr.v. in·val·i·dat·ed, in·val·i·dat·ing, in·val·i·dates To make invalid; nullify. in·val or circumvented by our competitors. Further, some raw materials, medical devices, and component parts for our products are supplied by sole third party suppliers. About Amgen Amgen discovers, develops and delivers innovative human therapeutics therapeutics Treatment and care to combat disease or alleviate pain or injury. Its tools include drugs, surgery, radiation therapy, mechanical devices, diet, and psychiatry. . A biotechnology pioneer since 1980, Amgen was one of the first companies to realize the new science's promise by bringing safe and effective medicines from lab, to manufacturing plant, to patient. Amgen therapeutics have changed the practice of medicine, helping millions of people around the world in the fight against cancer, kidney disease Kidney Disease Definition Kidney disease is a general term for any damage that reduces the functioning of the kidney. Kidney disease is also called renal disease. , rheumatoid arthritis, and other serious illnesses. With a broad and deep pipeline of potential new medicines, Amgen remains committed to advancing science to dramatically improve people's lives. To learn more about our pioneering science and our vital medicines, visit www.amgen.com. EDITOR'S NOTE Editor's Note (foaled in 1993 in Kentucky) is an American thoroughbred Stallion racehorse. He was sired by 1992 U.S. Champion 2 YO Colt Forty Niner, who in turn was a son of Champion sire Mr. Prospector and out of the mare, Beware Of The Cat. Trained by D. : An electronic version of this news release may be accessed via our Web site at www.amgen.com. Journalists and media representatives may sign up to receive all news releases electronically at time of announcement by filling out a short form in the Media section of the Web site.
Amgen Inc.
Condensed Consolidated Statements of Operations and
Reconciliation of GAAP Earnings to "Adjusted" Earnings
(In millions, except per share data)
(Unaudited)
Three Months Ended
December 31, 2005
------------------------------
GAAP Adjustments "Adjusted"
------- ----------- ----------
Revenues:
Product sales $3,168 $- $3,168
Other revenues 103 - 103
------- ------- ----------
Total revenues 3,271 - 3,271
Operating expenses:
Cost of sales (excludes amortization
of acquired intangible assets
presented below) 511 - 511
Research and development 661 (3)(1) 658
Selling, general and administrative 911 2 (2) 913
Amortization of intangible assets 87 (87)(3) -
------- ------- ----------
Total operating expenses 2,170 (88) 2,082
Operating income 1,101 88 1,189
Interest and other income, net 10 - 10
------- ------- ----------
Income before income taxes 1,111 88 1,199
Provision for income taxes 287 (43)(4) 271
27 (11)
------- ------- ----------
Net income $824 $104 $928
======= ======= ==========
Earnings per share:
Basic $0.67 $0.76
Diluted(12) $0.66 $0.75
Shares used in calculation of earnings
per share:
Basic 1,229 1,229
Diluted(12) 1,243 1,243
Three Months Ended
December 31, 2004
------------------------------
GAAP Adjustments "Adjusted"
------- ----------- ----------
Revenues:
Product sales $2,778 $- $2,778
Other revenues 131 - 131
------- ------- ----------
Total revenues 2,909 - 2,909
Operating expenses:
Cost of sales (excludes amortization
of acquired intangible assets
presented below) 476 - 476
Research and development 617 (9)(1) 608
Selling, general and administrative 816 (3)(1) 813
Amortization of intangible assets 81 (81)(3) -
------- ------- ----------
Total operating expenses 1,990 (93) 1,897
Operating income 919 93 1,012
Interest and other income, net 1 - 1
------- ------- ----------
Income before income taxes 920 93 1,013
Provision for income taxes 231 33 (11) 264
------- ------- ----------
Net income $689 $60 $749
======= ======= ==========
Earnings per share:
Basic $0.55 $0.59
Diluted(12) $0.53 $0.58
Shares used in calculation of earnings
per share:
Basic 1,263 1,263
Diluted(12) 1,310 1,310
(1)-(12) See explanatory notes
Amgen Inc.
Condensed Consolidated Statements of Operations and
Reconciliation of GAAP Earnings to "Adjusted" Earnings
(In millions, except per share data)
(Unaudited)
Year Ended
December 31, 2005
-------------------------------
GAAP Adjustments "Adjusted"
-------------------- ----------
Revenues:
Product sales $12,022 $- $12,022
Other revenues 408 - 408
-------- ------- ----------
Total revenues 12,430 - 12,430
Operating expenses:
Cost of sales (excludes amortization
of acquired intangible assets
presented below) 2,082 (47)(5) 2,035
Research and development 2,314 (12)(1) 2,302
Selling, general and administrative 2,790 2 (2) 2,792
Write-off of acquired in-process R&D - - -
Amortization of intangible assets 347 (347)(3) -
Legal settlements 49 (49)(6) -
-------- ------- ----------
Total operating expenses 7,582 (453) 7,129
Operating income 4,848 453 5,301
Interest and other income, net 20 (20)(7) 20
20 (8)
-------- ------- ----------
Income before income taxes 4,868 453 5,321
Provision for income taxes 1,194 (43)(4) 1,298
147 (11)
-------- ------- ----------
Net income $3,674 $349 $4,023
======== ======= ==========
Earnings per share:
Basic $2.97 $3.25
Diluted(12) $2.93 $3.20
Shares used in calculation of earnings
per share:
Basic 1,236 1,236
Diluted(12) 1,258 1,258
Year Ended
December 31, 2004
-------------------------------
GAAP Adjustments "Adjusted"
-------------------- ----------
Revenues:
Product sales $9,977 $- $9,977
Other revenues 573 - 573
-------- ------- ----------
Total revenues 10,550 - 10,550
Operating expenses:
Cost of sales (excludes amortization
of acquired intangible assets
presented below) 1,731 (2)(9) 1,729
Research and development 2,028 (16)(1) 1,996
(16)(9)
Selling, general and administrative 2,556 (11)(1) 2,548
(8)(9)
11 (2)
Write-off of acquired in-process R&D 554 (554)(10) -
Amortization of intangible assets 333 (333)(3) -
Legal settlements - - -
-------- ------- ----------
Total operating expenses 7,202 (929) 6,273
Operating income 3,348 929 4,277
Interest and other income, net 47 - 47
-------- ------- ----------
Income before income taxes 3,395 929 4,324
Provision for income taxes 1,032 144 (11) 1,176
-------- ------- ----------
Net income $2,363 $785 $3,148
======== ======= ==========
Earnings per share:
Basic $1.86 $2.48
Diluted(12) $1.81 $2.40
Shares used in calculation of earnings
per share:
Basic 1,271 1,271
Diluted(12) 1,320 1,320
(1)-(12) See explanatory notes
Amgen Inc.
Notes to Reconciliation of GAAP Earnings to "Adjusted" Earnings
(In millions, except per share data)
(Unaudited)
(1) To exclude the incremental compensation provided to certain
Tularik Inc. ("Tularik") employees principally related to
non-cash compensation expense associated with stock options
assumed in connection with the acquisition and amounts payable
under the Tularik short-term retention plan. The total estimated
remaining costs of such incremental compensation is approximately
$15 million, pre-tax.
(2) To exclude the impact to the Company of its share of the
third-party reimbursements received by Kirin-Amgen, Inc. related
to the Genentech, Inc. ("Genentech") legal settlement in August
2003.
(3) To exclude the ongoing, non-cash amortization of acquired
intangible assets, primarily Enbrel(R), related to the Immunex
Corporation ("Immunex") acquisition. The annual non-cash charge
is currently estimated to be approximately $347 million, pre-tax.
(4) To exclude the tax liability incurred as a result of
repatriating certain foreign earnings under the American Jobs
Creation Act of 2004.
(5) To exclude the impact of writing off the cost of a
semi-completed manufacturing asset that will not be used due to a
change in manufacturing strategy.
(6) To exclude the impact of legal settlements incurred, net of
amounts previously accrued, primarily related to settling a
patent legal proceeding.
(7) To exclude the net gain realized on the termination of a
manufacturing agreement with Genentech for the production of
ENBREL at Genentech's manufacturing facility in San Francisco,
California.
(8) To exclude the pro rata portion of the debt issuance costs
that were immediately charged to interest expense, as a result of
certain holders of the convertible notes exercising their March
1, 2005 put option and the related convertible notes being repaid
in cash.
(9) To exclude the incremental compensation payable to certain
Immunex employees principally under the Immunex short-term
retention plan. All amounts have been incurred under this plan.
(10) To exclude the non-cash expense associated with writing off
the acquired in-process research and development related to the
Tularik acquisition.
(11) To reflect the tax effect of the above adjustments, except
for the tax liability incurred as a result of repatriating
certain foreign earnings (see (4) above), the write-off of the
cost of a semi-completed manufacturing asset (see (5) above), and
the write-off of acquired in-process R&D (see (10) above).
(12) The following table presents the computations for GAAP and
"Adjusted" diluted earnings per share (EPS) computed under the
treasury stock and the "if-converted" methods:
Three Months Ended Three Months Ended
December 31, 2005 December 31, 2004
--------------------- ------------------
GAAP "Adjusted" GAAP "Adjusted"
---------- ---------- ------------------
Income (Numerator):
Net income for basic EPS $824 $928 $689 $749
Adjustment for interest
expense on convertible
notes, net of tax - (A) - (A) 6 6
------- ---------- ------- ----------
Net income for diluted
EPS, after assumed
conversion of
convertible notes $824 $928 $695 $755
======= ========== ======= ==========
Shares (Denominator):
Weighted-average shares
for basic EPS 1,229 1,229 1,263 1,263
Effect of dilutive
securities 14 14 12 12
Effect of convertible
notes, after assumed
conversion - (A) - (A) 35 35
------- ---------- ------- ----------
Weighted-average shares
for diluted EPS 1,243 1,243 1,310 1,310
======= ========== ======= ==========
Diluted earnings per
share $0.66 $0.75 $0.53 $0.58
======= ========== ======= ==========
Year Ended Year Ended
December 31, 2005 December 31, 2004
--------------------- ------------------
GAAP "Adjusted" GAAP "Adjusted"
---------- ---------- ------------------
Income (Numerator):
Net income for basic EPS $3,674 $4,023 $2,363 $3,148
Adjustment for interest
expense on convertible
notes, net of tax 6 (A) 6 (A) 21 21
------- ---------- ------- ----------
Net income for diluted
EPS, after assumed
conversion of
convertible notes $3,680 $4,029 $2,384 $3,169
======= ========== ======= ==========
Shares (Denominator):
Weighted-average shares
for basic EPS 1,236 1,236 1,271 1,271
Effect of dilutive
securities 12 12 14 14
Effect of convertible
notes, after assumed
conversion 10 (A) 10 (A) 35 35
------- ---------- ------- ----------
Weighted-average shares
for diluted EPS 1,258 1,258 1,320 1,320
======= ========== ======= ==========
Diluted earnings per
share $2.93 $3.20 $1.81 $2.40
======= ========== ======= ==========
(A) On May 6, 2005 and August 17, 2005, in connection with an
exchange offer, we modified the terms of approximately 99 percent
of our convertible notes then outstanding (the "Modified
Convertible Notes"). As a result of certain of these
modifications, if converted, the Modified Convertible Notes would
be settled in 1) cash equal to the lesser of the accreted value of
the Modified Convertible Notes at the conversion date or the
conversion value, as defined, and 2) shares of common stock, if
any, to the extent the conversion value exceeds the accreted
value. Accordingly, the Modified Convertible Notes do not impact
diluted earnings per share under the "if-converted" method but
rather, they impact diluted earnings per share under the treasury
stock method, and only to the extent that the conversion value
exceeds the accreted value during any reporting period, requiring
such difference, if any, to be potentially settled in shares of
common stock.
Amgen Inc.
Product Sales Detail by Product and Geographic Region
(In millions)
(Unaudited)
Three Months Year
Ended Ended
December 31, December 31,
--------------- ----------------
2005 2004 2005 2004
--------------- ----------------
Aranesp(R) - U.S. $579 $449 $2,104 $1,533
Aranesp(R) - International 294 256 1,169 940
EPOGEN(R) - U.S. 626 697 2,455 2,601
Neulasta(R) - U.S. 519 394 1,900 1,476
NEUPOGEN(R) - U.S. 210 204 805 778
Neulasta(R) - International 104 75 388 264
NEUPOGEN(R) - International 95 105 411 397
Enbrel(R) - U.S. 645 545 2,470 1,827
Enbrel(R) - International 29 22 103 73
Sensipar(R) - U.S. 37 18 122 36
Sensipar(R) - International 14 1 35 1
Other product sales - U.S. 9 6 36 28
Other product sales - International 7 6 24 23
--------------- ----------------
Total product sales $3,168 $2,778 $12,022 $9,977
=============== ================
U.S. $2,625 $2,313 $9,892 $8,279
International 543 465 2,130 1,698
--------------- ----------------
$3,168 $2,778 $12,022 $9,977
=============== ================
Amgen Inc.
Condensed Consolidated Balance Sheets - GAAP
(In millions)
(Unaudited)
December 31, December 31,
2005 2004
------------- ------------
Assets
Current assets:
Cash and marketable securities $5,255 $5,808
Trade receivables, net 1,769 1,461
Inventories 1,258 888
Other current assets 953 1,013
------------- ------------
Total current assets 9,235 9,170
Property, plant, and equipment, net 5,038 4,712
Intangible assets, net 3,742 4,033
Goodwill 10,495 10,525
Other assets 787 781
------------- ------------
Total assets $29,297 $29,221
============= ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued
liabilities $3,595 $2,984
Convertible notes 1,759 (2) 1,173 (1)
------------- ------------
Total current liabilities 5,354 4,157
Deferred tax liabilities 1,163 1,294
Convertible notes - 1,739 (2)
Other long-term debt 2,198 2,198
Other non-current liabilities 131 128
Stockholders' equity 20,451 19,705
------------- ------------
Total liabilities and
stockholders' equity $29,297 $29,221
============= ============
Shares outstanding 1,224 1,260
(1) On March 2, 2005, as a result of certain holders of the
Convertible notes exercising their March 1, 2005 put option, the
Company repurchased $1,175 million, or approximately 40 percent,
of the outstanding Convertible notes at their then-accreted value
for cash. Accordingly, the Convertible notes repurchased were
classified as current liabilities at December 31, 2004.
(2) Holders of the remaining outstanding Convertible notes may
require the Company to purchase all or a portion of the notes on
specific dates as early as March 1, 2006 at the original issuance
price plus accrued original issue discount through the purchase
date. Accordingly, as of December 31, 2005, the Convertible notes
have been classified as current liabilities.
Amgen Inc.
Reconciliation of "Adjusted" Earnings Per Share Guidance to GAAP
Earnings Per Share Guidance for the Year Ended December 31, 2006
2006
--------------
"Adjusted" earnings per share guidance $3.55 - $3.70
Known adjustments to arrive at GAAP earnings:
Amortization of acquired intangible assets(1) (0.18)
Tularik merger related incremental compensation(2) (0.01)
Stock option compensation(3) -
Write-off of Abgenix acquired in-process R&D
and other merger-related expenses(4) -
--------------
GAAP earnings per share guidance $3.36 - $3.51
--------------
Note: The guidance for both "Adjusted" earnings per share and GAAP
earnings per share does not include dilution of $0.05-$0.10 from
the proposed acquisition of Abgenix, Inc. ("Abgenix")
(1) To exclude the ongoing, non-cash amortization of acquired
intangible assets, primarily Enbrel(R), related to the Immunex
acquisition. The total 2006 annual non-cash charge is currently
estimated to be approximately $347 million, pre-tax.
(2) To exclude the incremental compensation provided to certain
Tularik employees principally related to non-cash compensation
expense associated with stock options assumed in connection with
the acquisition and amounts payable under the Tularik short-term
retention plan.
(3) To exclude the estimated stock option compensation expense
associated with Amgen's adoption of Statement of Financial
Accounting Standard No. 123R "Share-Based Payment" on January 1,
2006. The total 2006 stock option compensation expense is
currently estimated to be approximately $210-$250 million,
pre-tax, or approximately $0.12-$0.14 dilution to GAAP earnings
per share. As the final amount of such expense has not yet been
determined, no adjustment is reflected above.
(4) In connection with the proposed acquisition of Abgenix, Amgen will
incur a one-time expense associated with writing off acquired
in-process research and development. In addition, Amgen will incur
other merger-related expenses. As the final amount of such
expenses has not yet been determined, no adjustment is reflected
above.
Amgen Inc.
Reconciliation of "Adjusted" Research and Development Expense Guidance
to GAAP Research and Development Expense Guidance for the Year Ended
December 31, 2006
(In millions)
2006
----------------
"Adjusted" research and development expense guidance $2,993 - $3,223
Known adjustments to arrive at GAAP earnings:
Tularik merger related expenses
(acquired August 2004) 12
Abgenix merger related expenses
(proposed acquisition) (1) -
Stock option compensation (2) -
----------------
GAAP research and development expense guidance $3,005 - $3,235
----------------
Note: The guidance for both "Adjusted" and GAAP research and
development expense excludes a one-time expense associated
with writing off acquired in-process research and development
to be incurred in connection with the proposed acquisition of
Abgenix. The amount of such expense has not yet been
determined. For GAAP reporting purposes, charges relating to
acquired in-process research and development are reported
separately from research and development expense on the
consolidated statements of operations.
(1) In connection with the proposed acquisition of Abgenix, Amgen
will incur research and development merger-related expenses.
As the final amounts of such expenses have not yet been
determined, no adjustment is reflected above.
(2) In connection with Amgen's adoption of Statement of Financial
Accounting Standard No. 123R "Share-Based Payment" on January
1, 2006, Amgen will expense stock option compensation. As the
final amount of such expense has not yet been determined, no
adjustment is reflected above.
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