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Friday, Aug 12, 2022

Amgen Says No Split, More Layoffs

Shares of Amgen Inc. rose 6 percent Tuesday after Chief Executive Robert Bradway rebuffed a call to break up the company and instead announced additional layoffs of up to 1,100 workers and other restructuring to boost profits.

During a call with analysts, the chief of the Thousand Oaks biotech said the company would cut its facilities footprint by 23 percent and reduce staff by 20 percent by the end of next year.

The company previously announced a plan to lay off up to 2,900 employees, or up to 15 percent of its global workforce. An additional 5 percent cut could total nearly 1,000 workers.

As a result, the company expects to generate up to $1.5 billion in annual savings and increase its adjusted operating margin by 15 points – or up to a total of 54 percent by 2018.

Bradway also said the company would increase its dividend 30 percent in the first quarter of next year and repurchase about $2 billion in shares by the end of next year. All in all, the strategic moves are intended to deliver annual earnings per share growth in the double digits through 2018.

In announcing the strategic moves, Bradway resisted a call made this month by billionaire hedge fund manager Daniel Loeb to split up the company. Loeb said a breakup would help shares reach $249 of the combined companies within two years.

“What I’m not saying is, ‘No, never,’” Bradway said. “But right now we’re not convinced there’s a way through that adds value for all of our shareholders.”

Analysts began discussing a possible breakup earlier this year as a way to rev up growth in the company, which for years has been relying on legacy drugs such as Epogen and Neupogen for most of its revenue and profits.

Amgen has defended its pipeline of developing drugs and last year spent $10.4 billion to acquire Onyx Pharmaceuticals and get its hand on Kyprolis, a best-selling cancer drug that treats multiple myeloma.

On Tuesday, Bradway said the company was preparing to launch four new drugs next year and would expand its program to produce biosimilars, which mimic established biotech drugs already on the market.

“This is an exciting new era for Amgen. We are on the cusp of an important new product cycle with our rich pipeline of innovative and biosimilar medicines that address important societal needs,” he said, in a statement.

Also in the business review, Amgen provided preliminary guidance for next year, including revenue of between $20.8 billion and $21.3 billion and earnings per share of between $9.05 and $9.40.

Shares closed Tuesday at $157.19, up $8.99 for the day.


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