Amgen Reports That the IRS Is Pursuing Billions of Dollars in Back Taxes, Causing Its Stock to Fall 6%.


Amgen Inc (AMGN.O) said Wednesday that the US Internal Revenue Service (IRS) is seeking an additional $5.1 billion in back taxes, plus interest and penalties, related to the drugmaker’s 2013 to 2015 profit accounting between the United States and Puerto Rico, where the majority of its manufacturing operations are located.

Amgen’s shares fell more than 6% to $233 in extended trading, despite the company reporting higher first-quarter revenue and earnings.

While the company’s quarterly financial results contained “no major surprises,” Jefferies analyst Michael Yee noted in a research note that the tax dispute is “notable.” “So we’re now approaching $12 billion in claims, and the 2016-2018 period is also being audited,” he explained.

Amgen was already contesting an earlier IRS decision to increase the company’s taxable income for 2010-2012 by an amount equal to approximately $3.6 billion in additional federal tax, plus interest.




The California-based biotech is contesting the tax notices “vigorously” and anticipates the legal process will last years, Chief Financial Officer Peter Griffith said during a conference call.

He noted that changes to the US corporate tax code in 2017 significantly narrowed the gap between the US and Puerto Rico corporate tax rates.

Additionally, Amgen stated that it believes the IRS adjustments from 2010 to 2015 are overstated by approximately $2 billion.

“Any additional tax imposed for the 2010-2015 period would be offset by up to approximately $3.1 billion in previously accumulated repatriation tax on the company’s Puerto Rico earnings,” the company said in a statement.

Additionally, Amgen stated that it has made advance tax deposits to the IRS totaling $1.1 billion for the 2010-2015 period, which will offset any additional tax imposed.

Amgen reported a 6% increase in first-quarter revenue to $6.2 billion, as product sales increased 2%, and the company benefited from an agreement to manufacture COVID treatments sold by Eli Lilly and Co. (LLY.N).

Earnings adjusted for non-recurring items increased 15% year over year to $4.25 per share, driven by higher revenue and share repurchases, outperforming the average analyst estimate by 16 cents, according to Refinitiv.

Profitability decreased 5% to $2.68 per share.

Enbrel’s first-quarter sales fell 7% to $862 million, while Otezla’s fell 5% to $451 million, as both drugs’ prices were pressured by increased competition.


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Lumakras, Amgen’s new lung cancer drug, generated $62 million in revenue during the quarter, in line with analyst estimates.

Amgen said it continues to expect adjusted earnings of $17.00 to $18.00 per share on revenue of $25.4 billion to $26.5 billion for the full year.

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