You recall from our q2 btsuk call

Amgen q3 2006 earnings call transcript Good afternoon, my name is derrick and i will be your conference operator.At this time, i would like to welcome everyone to the amgen third quarter financial results 2006 conference call.All lines have been placed on mute to prevent any background noise.After the speakers' remarks, there will be a questionandanswer session. (Operator instructions).Thank you.I would now like to turn the conference over toMr.Arvind sood, vp of investor relations.Mr.Sood, you may begin your conference. Okay, thanks very much.Good afternoon everybody.I would like to welcome to our third quarter results conference call.I hope you've had a chance to access the slides that we intend to use today for presentation from our website.Since the last conference call, we have received many favorable comments on using the slide format, so we'll continue to provide as a way of improving our communications efforts with the investment community. In terms of our presentations today, kevin sharer, our chairman and ceo, will lead off with an overview of our quarterly and yeartodate accomplishment followed by our chief financial officer, richard nanula, who will discuss our third quarter performance in detail and provide an outlook for the remainder of the year.George morrow, who is our evp of commercial operations, will then provide a commercial update, followed by roger perlmutter, our evp of research and development, who will provide a pipeline update. So, before we start, i would like to mention that through the course of our presentation today, we'll make certain forwardlooking statements and, of course, actual results could vary materially. So with that i'd like to turn the call over toKevin.Kevin? Thanks, arvind.Good afternoon, everybody.It's good to be with you.We're going to, as arvind said, go over the slide that we've sent you, expect you had the chance to look at our press release.But let me first just start out by talking about some of the highlights in the quarter, and i am very pleased with the company's performance in the quarter, and i think it really says a lot about our ability to execute and plan for the future. First of all, when we look at the revenue and adjusted eps, they grew 15% and 22% respectively, and the earnings per share number at $1.04 is really a strong number.We also decided for the second time this year to raise guidance for adjusted eps guidance to the $3.85 to $3.95 range, another good sign. As we told you in january, one of the most important things we are doing this year is investing in r and that it manifest itself in the initiation and expansion of large trials in our important product opportunities, and we initiated two more megatrials in the third quarter, and by way of definition a megatrial is with more than 200 sites.One is vectibix in firstline colorectal cancer and the other one is our, surprising to me at least, a drug in its financial performance, a delightful surprise, sensipar, outcomes morbidity and mortality, which if that works says a lot about the future. We are pleased to announce another strategic acquisition, avidia, an important small company up in the bay area that we expect to close in the fourth quarter that both expands our therapeutic modality capability and gives us an important opportunity in the inflammation pathway, roger can talk about that a bit. As you know, we launched vectibix, our first cancer therapeutic, and we're very, very pleased with the initial market reaction, george will expand on that. We are taking steps to defend our dialysis franchise in united states, and we signed an agreement with fresenius to be the sole supplier of erythropoietin stimulating proteins, and as they said that was based on the safety and efficacy of the molecule, and we are pleased with that. And today the district court said a few things that are important, i'll get to that in a minute, but we've already you already know they denied roche's motion to dismiss.So, all in all, a very, very solid quarter and i feel good about it.If we then take a perspective, the years coming to a close here, we basically only have got two months left.It's not a bad time to take a picture of the year, and again i think the story is an expansion of what we saw in the third quarter. We made a strategic decision to deliver good eps growth and also invest heavily in r and we're delivering on that, and by the way the eps growth is significantly in excess of what we projected in january and the revenues are coming in about where we thought, yet we're still able to increase r investment by 30 to 40% this year, almost double the rate of revenue growth. We will have initiated nine megatrials this year;For any company that would be a terrific accomplishment.I kind of don't care what size the company is for a company in http://www.teamskyuser.co.uk/beats-by-dr-dre-pro.html our stage of the development is particularly significant;It's just the beginning, we've got lots of work to do, but i'm proud of the team. We also are expanding our research and development presence, both in san francisco, south san francisco, in seattle, in boston and in europe.We are excited about that and the number of good new people that we're getting is encouraging as well.We also continue to invest heavily in capital expenditures with success.We are expanding our facilities in puerto rico meaningfully, and we've initiated work on our big new factory in ireland. And then finally in terms of 2006 accomplishments, although it seems a while ago, the acquisition and integration of abgenix, both in the vectibix product launch itself and then our facilities for manufacturing up in fremont have gone very, very smoothly and we're happy to welcome our new colleagues to amgen.So, 2006 is shaping up to be another very strong year for amgen. Before i turn the call over richard to talk in more details about the business results, let me just make a few comments that are not in the slides that you have.They are kind of latebreaking, but i want to share them with you.Judge young in boston today accepted jurisdiction over the pegepo litigation and established a clear schedule for discovery, practice and motions.We see this as a positive step and we really are looking forward to getting to the merits of the case back in the court and are pleased that the judge has scheduled this matter for trial on september of 2007. Many of you have asked me in different forms what i think about this, and i want to try to give you as much as i can now.First of all, we are very confident that roche infringes our patents.You have asked me questions, will roche launch at risk?They say they will.Well, amgen seek a preliminary injunction and for reasons you all understand, we won't be able to answer that question and while we can't speculate in detail about roche's strategy and intentions or discuss our legal strategy, you can rest assured that we will be very, very big risk on all fronts in defending our franchise and making sure that the patients get the right product.And we will see how this plays out, but we are on our toes and ready in all fronts. I know that roche has made a lot of public announcements or pronouncements about this litigation, but we chose to litigate in court and not in other forms.So, this will have to play out.It's a matter of a lot of interest and importance, but i want all the investors in amgen to have a lot of confidence that we are ready on all fronts. And so, with that let me ask my colleague, richard, to take over and return to our presentation here on page 8, and talk about the financials results for the quarter, richard. Thank you, kevin.I will spend a few minutes on page 8.Revenue growth was 15% for the quarter driven by strong demand, especially for aranesp and the filgrastim franchise.The quarter is really demand driven, george will talk about inventories, but we exited q3 with wholesaler inventories down versus q2 and flatter down versus q3 of 2005.Neulasta was actually below our normal range of inventory and the other products were within their ranges. Q3 sales in the us were $2.9 billion, an increase of 14% versus Q3 of 2005.Internationally, q3 sales were $639 million, an increase of 18% versus q3 of last year.They were positively impacted by $16 million from foreign exchange.Excluding foreign exchange, worldwide product sales would have increased 14% and international products sales would have increased 15%. Operating expenses, which we are discussed on an adjusted basis, the cost of sales for the quarter decreased 4%.That was driven by lower royalty expenses, a favorable product mix, and to a lesser extent production efficiencies.You recall from our q2 btsuk call, royalty expenses were lower than prior year driven by the exploration in december of certain royalty obligations on neulasta and neupogen.Also, we repurchased royalty rights from one institution on international neupogen and neulasta and settled with another, effectively ending a royalty obligation on enbrel sales.So, royalties are probably the biggest reason why cost of sales are favorable;We have benefited from mix and product efficiencies. R expense was 49% increase, that was due to the very much a planned hiring in support of our aggressive clinical program and increased funding necessary to support the latestage programs, including clinical material and manufacturing costs, which belongs in the r line http://www.teamskyuser.co.uk/ on the income state. Sg expense growth of 19% was due to higher staff and additional infrastructure costs to support our organization, but in particular to a couple of a large items like erp and then higher litigation costs associated with our ongoing couple of different lawsuits, as well as higher wyeth profit share expenses on enbrel profitability.Enbrel profitability improves as royalties go down and as we get more efficient making enbrel. The adjusted tax rate was 21% for the quarter, that's versus 26% from q3 of '05.Q3 of '06 was a lot lower than '05 due to the beneficial federal and california audit settlements, which reduced our rate by a couple of points, as well as expanded manufacturing in the puerto rico.Earnings per share, then as kevin mentioned, was $1.04, up 22%, EPS growth exceeded revenue growth of 15% by 7 percentage points, and that was driven, again by fewer shares due to our aggressive share repurchase program and the lower tax rate. On a gaap basis, eps in the third quarter was $0.94 versus $0.77 last year.These gaap results were negatively impacted by $50 million in pretax costs associated with stock options.And our adjusted eps, including stock option expense, would have been $1.01, an increase of 23% compared to $0.82 in Q3 of 2005. Let me turn you to page 9.As we discussed in our second quarter call, our major products, particularly those we've launched in the last five years, are exhibiting seasonality trends shown here, new year's day and 4th of july holidays at the beginning of the first and third quarters do impact shipping patterns.Wholesalers tend to raise inventory levels typically to the upper end of the normal range.We are just above sometimes in anticipation of shipping being on hold during the holidays.And so, as you can see from the graph, 2006 continues to follow this pattern with the q3 sequential growth roughly flat. Turning to page 10, where i will talk a little bit about the fourth quarter outlook.As in prior years, we would expect fourth quarter exit inventory levels to increase some from the third quarter;Again, due to the holiday shutdown, which is likely to occur at the end of the fourth quarter.We also expect continued favorability in cost of sales driven by the same practices as the third quarter, which i just discussed, namely, lower royalty expenses, a more profitable mix and to a lesser extent production efficiencies.

Yorum Yaz
Arkadaşların Burada !
Arkadaşların Burada !