EXHIBIT 99
AMGEN INC.
FACTORS THAT MAY AFFECT AMGEN
Factors That May Affect Our Company
Amgen operates in a rapidly changing environment that involves a number of
risks, some of which are beyond our control. The following discussion
highlights some of these risks. Other risks are discussed in our Form 10-K and
Form 10-Q's.
Product development
We intend to continue an aggressive product development program. Successful
product development in the biotechnology industry is highly uncertain, and very
few research and development projects produce a commercial product. Product
candidates that appear promising in the early phases of development, such as in
early human clinical trials, may fail to reach the market for a number of
reasons, such as:
- - the product candidate was not effective in treating a specified condition or
illness
- - the product candidate had harmful side effects on humans
- - the necessary regulatory bodies (such as the FDA) did not approve our product
candidate for an indicated use
- - the product candidate was not economical for us to manufacture it
- - other companies or people may have proprietary rights to our product
candidate (e.g. patent rights) and will not let us sell it on reasonable
terms, or at all
- - the product candidate is not cost effective in light of existing therapeutics
- - the product candidate did not demonstrate acceptable clinical trial results
even though it demonstrated positive preclinical trial results.
For example, in 1997, we announced the failure of BDNF (for the treatment of ALS
by subcutaneous injection administration route), because the product candidate,
as administered, did not produce acceptable clinical results in a specific
indication after a Phase 3 trial, even though BDNF had progressed through
preclinical and earlier clinical trials. Of course there may be other factors
that prevent us from marketing a product. We cannot guarantee we will be able
to produce commercially successful products. Further, clinical trial results
are frequently susceptible to varying interpretations by scientists, medical
personnel, regulatory personnel, statisticians and others which may delay, limit
or prevent further clinical development or regulatory approvals of a product
candidate. Also, the length of
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time that it takes for us to complete clinical trials and obtain regulatory
approval for product marketing has in the past varied by product and by the
indicated use of a product. We expect that this will likely be the case with
future product candidates and we cannot predict the length of time to complete
necessary clinical trials and obtain regulatory approval. See "- Regulatory
matters."
Regulatory matters
Our research, preclinical testing, clinical trials, facilities, manufacturing,
pricing, and sales and marketing are subject to extensive regulation by numerous
state and federal governmental authorities in the U.S., such as the FDA and the
Health Care Financing Administration ("HCFA"), as well as by foreign countries
and the European Union (the "EU"). Currently, we are required in the U.S. and in
foreign countries to obtain approval from those countries' regulatory
authorities before we can market and sell our products in those countries. The
success of our current and future products will depend in part upon obtaining
and maintaining regulatory approval to market products in approved indications
in the U.S. and foreign markets. In our experience, the regulatory approval
process is a lengthy and complex process, both in the U.S. and in foreign
countries, including countries in the EU. Even if we obtain regulatory approval,
both our manufacturing processes and our marketed products are subject to
continued review. Later discovery of previously unknown problems with our
products or our manufacturing processes may result in restrictions on such
product or manufacturing processes, including withdrawal of the products from
the market. Our failure to obtain necessary approvals, or the restriction,
suspension or revocation of any approvals, or our failure to comply with
regulatory requirements could prevent us from manufacturing or selling our
products which could have a material adverse effect on us and our results of
operations.
Reimbursement; Third party payors
In both domestic and foreign markets, sales of our products are dependent, in
part, on the availability of reimbursement from third party payors such as state
and federal governments (for example, under Medicare and Medicaid programs in
the U.S.) and private insurance plans. In certain foreign markets, the pricing
and profitability of our products generally are subject to government controls.
In the U.S., there have been, and we expect there will continue to be, a number
of state and federal proposals that limit the amount that state or federal
governments will pay to reimburse the cost of drugs. In addition, we believe
the increasing emphasis on managed care in the U.S. has and will continue to put
pressure on the price and usage of our products, which may impact product sales.
Further, when a new therapeutic is approved, the reimbursement status and rate
of such a product is uncertain. In addition, current reimbursement policies for
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existing products may change at any time. Changes in reimbursement or our
failure to obtain reimbursement for our products may reduce the demand for, or
the price of, our products, which could result in lower product sales or
revenues which could have a material adverse effect on us and our results of
operations. For example, in the U.S. the use of EPOGEN(R) in connection with
treatment for end stage renal disease is funded primarily by the U.S. federal
government. Therefore, as in the past, EPOGEN(R) sales could be affected by
future changes in reimbursement rates or the basis for reimbursement by the
federal government. For example, in early 1997, HCFA instituted a reimbursement
change for EPOGEN(R) which adversely affected the Company's EPOGEN(R) sales.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations - Results of Operations - Product sales - EPOGEN(R) (Epoetin alfa)."
Guidelines
Government agencies promulgate regulations and guidelines directly applicable to
us and to our products. However, professional societies, practice management
groups, private health/science foundations and organizations involved in various
diseases may also publish, from time to time, guidelines or recommendations to
the health care and patient communities. These organizations may make
recommendations that affect a patient's usage of certain therapies, drugs or
procedures, including our products. Recommendations of government agencies or
these other groups/organizations may relate to such matters as usage, dosage,
route of administration and use of concomitant therapies. Recommendations or
guidelines that are followed by patients and health care providers could result
in, among other things, decreased use of our products which could have a
material adverse effect on our results of operations. In addition, the
perception by the investment community or stockholders that such recommendations
or guidelines will be followed could adversely affect prevailing market prices
for our common stock.
Intellectual property and legal matters
The patent positions of pharmaceutical and biotechnology companies can be highly
uncertain and often involve complex legal, scientific and factual questions. To
date, there has emerged no consistent policy regarding breadth of claims allowed
in such companies' patents. Accordingly, the patents and patent applications
relating to our products and technologies may be challenged, invalidated or
circumvented by third parties and might not protect us against competitors with
similar products or technology. Patent disputes are frequent and can preclude
commercialization of products. We are currently, and in the future may be,
involved in patent litigation. The results of such litigation could subject us
to competition and/or significant liabilities, could require us to enter into
third
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party licenses or could cause us to cease using the technology or product in
dispute. In addition, we cannot guarantee that such licenses will be available
on terms acceptable to us.
The Company is currently involved in arbitration proceedings with Ortho
Pharmaceutical Corporation, a subsidiary of Johnson & Johnson ("Johnson &
Johnson"), relating to a license granted by the Company to Johnson & Johnson for
sales of Epoetin alfa in the U.S. for all human uses except dialysis and
diagnostics. See Note 4 to the Condensed Consolidated Financial Statements,
"Contingencies - Johnson & Johnson arbitrations".
Competition
We operate in a highly competitive environment. Our principal competitors are
pharmaceutical and biotechnology companies. Some of our competitors, mainly
large pharmaceutical corporations, have greater clinical, research, regulatory
and marketing resources than we do. In addition, some of our competitors may
have technical or competitive advantages over us for the development of
technologies and processes and the acquisition of technology from academic
institutions, government agencies and other private and public research
organizations. We cannot guarantee that we will be able to produce or acquire
rights to products that have commercial potential. Even if we achieve
successful product commercialization, we cannot guarantee that one or more of
our competitors will not achieve product commercialization earlier than we do,
obtain patent protection that dominates or adversely affects our activities, or
have significantly greater marketing capabilities.
Fluctuations in operating results
Our operating results may fluctuate from period to period for a number of
reasons. In budgeting our operating expenses, some of which are fixed in the
short term, we assume that revenues will continue to grow. Accordingly, even a
relatively small revenue shortfall may cause a period's results to be below our
expectations. A revenue shortfall could arise from any number of factors, such
as:
- - lower than expected demand for our products
- - changes in the government's or private payor's reimbursement policies for our
products
- - changes in wholesaler buying patterns
- - increased competition from new or existing products
- - fluctuations in foreign currency exchange rates
- - changes in our product pricing strategies
Of course, there may be other factors that affect the Company's revenues in any
given period.
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Rapid growth
We have an aggressive growth plan that includes substantial and increasing
investments in research and development and facilities. Our plan has a number
of risks, such as:
- - the need to generate higher revenues to cover a higher level of operating
expenses
- - the need to manage complexities associated with a larger and faster growing
organization
- - the need to accurately anticipate demand for the products we manufacture and
maintain adequate manufacturing capacity.
Of course there may be other risks and we cannot guarantee that we will be able
to successfully manage these or other risks.
Stock price volatility
Our stock price, like that of other biotechnology companies, is extremely
volatile. Our stock price may be affected by, among other things, clinical
trial results and other product-development announcements by us or our
competitors, regulatory matters, announcements in the scientific and research
community, intellectual property and legal matters, changes in reimbursement
policies or medical practices or broader industry and market trends unrelated to
our performance. In addition, if our revenues or earnings in any period fail to
meet the investment community's expectations, there could be an immediate
adverse impact on our stock price.
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