conference date: October 28, 2014 @ 6:00 PM Pacific Time
Special 2014 Business Review Conference
Warning: these are my personal notes, and reflect my investment strategy. To listen to the full conference yourself go to: 2014 Amgen Business Review. There is also an outline in the 2014 Amgen Review press release. Notes will not repeat info from Q4 2014 results — William P. Meyers
Preliminary financial guidance for full-year 2015:
Revenues of $20.8-$21.3 billion;
Adjusted earnings per share (EPS) of $9.05-$9.40;
Adjusted tax rate of 18-19 percent, excluding the R&D tax credit; and capital expenditures of approximately $800 million.
Share Buy Back & Dividend
Share buy backs had been halted after acquisition of Onyx and resulting debt. Amgen is allocating $2 billion to buy back shares in 2015 (WPM: which is pretty minimal, given its $119 billion market capitalization. But the shares do look undervalued, so it is likely a better use of cash than paying off debt)
The dividend will be increased by 30% starting in Q1 2015. That would put it at 0.81 per quarter or $3.24 per year.
These actions indicate that Amgen thinks cash flow will continue to be strong, with new therapy revenue at least replacing therapies with expiring patents.
Amgen is determined to focus on diseases and therapies that result in return on investment. This can include acquiring therapies externally. Focus areas will be inflammation, oncology, metabolism including bone metabolism, cardiovascular, and neuroscience. Incidcated a particular forus on immuno-oncology with target validation in humans.
Amgen has leading-edge genetics capabilities (deCODE) that can lead to target validation on a large scale. One particular focus will be PCSK9 inhibition, which is related to cholesterol and lipid levels. Identified a rate variant in IL-33 that protects from asthma. A rare Gene X genetic variant is associated with markedly low cardiovascular disease. Amgen plans to make a complet catalog of human genetic variation.
BiTE (bispecific T-cell engager) platform and T-VEC will continue to be cornerstones of development.
Plans to conduct R&D more efficiently, to save money and get therapies to market more quickly. For instance Amgen has a "next-generatin" monoclonal antibody manufacturing platform.
Reviewed the status of therapies that may be approved for marketing in 2015.
Amgen plans to compete in the biosimilar (generic large molecule) market. Believes that Amgen's ability to manufacture large molecules (biologics) will lead to "meaningful revenue and profit potential," and will support international expansion. Amgen has five biosimilars that are in the clinical stage (for the originals of Humira, Herceptin, Avastin, Remicade, Rituxan) and four in the process development stage (only Erbitux was announced.) [WPM: but it is a bit of a crowded field, with Mylan (MYL) among others and the original maker to compete with.] Believes about $3 billion in annual revenue could be generated by Amgen.