Amgen 2007 Annual Report Download - page 90

through 2011. The elimination of the royalty on potential future sales of denosumab did not result in us incurring
any incremental R&D expenses.
The above assumptions were used solely for the purposes of estimating fair values of these product candi-
dates as of the date of their acquisition. However, we cannot provide assurance that the underlying assumptions
used to forecast the cash flows or the timely and successful completion of development and commercialization
will materialize, as estimated. The major risks and uncertainties associated with the timely and successful com-
pletion of development and commercialization of these product candidates are our ability to confirm their safety
and efficacy based on data from clinical trials, our ability to obtain necessary regulatory approvals and our ability
to successfully complete these tasks within budgeted costs. We are not able to market a human therapeutic with-
out obtaining regulatory approvals, and such approvals require completing clinical trials that demonstrate a
product candidate is safe and effective. Consequently, the eventual realized value of the acquired IPR&D may
vary from its estimated value at the date of acquisition.
At the date of acquisition, we intended to develop panitumumab for treatment of various types of cancer.
Panitumumab received FDA approval in late September 2006 for the treatment of mCRC after disease pro-
gression on, or following, fluoropyrimidine-, oxaliplatin- and irinotecan- containing chemotherapy regimens and
is marketed under the trademark Vectibix™. In December 2007, the European Commission granted a conditional
marketing authorization for Vectibix™ as monotherapy for the treatment of patients with EGFr expressing
mCRC with non-mutated (wild-type) KRAS genes after failure of standard chemotherapy regimens. We are con-
tinuing to develop or are evaluating plans to develop Vectibix™ in all of the remaining indications we had
intended at the date of acquisition. However, since the acquisition, there have been several events that have af-
fected the development plans for Vectibix™, such as the results of our PACCE trial and KRAS biomarker
analysis discussed in “Item 1. Business — Key Developments.” Because of these developments, our expected
time to obtain regulatory approvals for the remaining indications has been delayed compared to our original ex-
pectations. Our development efforts with respect to denosumab are continuing. In addition, we are continuing to
develop the product candidates acquired in the Alantos and Ilypsa acquisitions.
Other items (primarily certain restructuring costs in 2007)
As discussed in Note 2, “Restructuring” to the Consolidated Financial Statements, on August 15, 2007, we
announced a plan to restructure our worldwide operations in order to improve our cost structure while continuing
to make significant R&D investments and build the framework for our future growth. As a result of this re-
structuring plan, we recorded in “Other items (primarily certain restructuring costs in 2007)” charges for staff
separation costs of $209 million, asset impairments of $366 million and other charges of $119 million primarily
related to the loss accruals for leases for certain R&D facilities that will not be used in our business.
Also in 2007, the Company recorded in “Other items (primarily certain restructuring costs in 2007)” a loss
accrual for an ongoing commercial legal proceeding and recorded an expense of $34 million.
In 2005, Other items (primarily certain restructuring costs in 2007) consisted of a $49 million charge, net of
amounts previously accrued, for settling certain legal matters associated with a patent legal proceeding.
Income taxes
Our effective tax rate was 20.1%, 26.6% and 24.5% for 2007, 2006 and 2005, respectively. The decrease in
our effective tax rate for 2007 as compared to 2006 was primarily due to the lesser amount of the write-off of
nondeductible acquired IPR&D costs in 2007 than 2006 and the greater tax benefit from the favorable resolutions
of our prior years’ income tax examinations in 2007 than 2006.
Our effective tax rate for 2006 increased over 2005 primarily due to the write-off of non-deductible acquired
IPR&D costs in connection with the acquisitions of Abgenix and Avidia. The increase in the rate was partially
offset by an increase in the amount of foreign earnings intended to be invested indefinitely outside of the United
States, the absence of tax on the repatriation of foreign earnings in 2005 under the American Jobs Creation Act
and favorable audit settlements.
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