Amgen must face lawsuit claiming it hid $10.7 billion tax bill
Adds details from decision, case citation, byline
By Jonathan Stempel
NEW YORK, Sept 30 (Reuters) -A federal judge said Amgen AMGN.O must face a proposed class action accusing the drugmaker of waiting too long to tell shareholders it might owe the Internal Revenue Service $10.7 billion for underreporting six years of taxes.
U.S. District Judge John Cronan in Manhattan ruled on Monday that shareholders plausibly alleged they were misled by Amgen's "reckless" concealing of its "enormous" potential tax liability.
Neither Amgen nor its lawyers immediately responded to requests for comment. Lawyers for shareholders led by the Detroit-based Roofers Local No. 149 Pension Fund did not immediately respond to similar requests.
Amgen's top-selling products include the osteoporosis treatment Prolia and the rheumatoid arthritis drug Enbrel.
The IRS accused Amgen of underreporting taxes from 2010 to 2015, mainly for attributing what should have been U.S. taxable income to a Puerto Rico unit that produces many of its drugs.
Though Puerto Rico is a U.S. territory, it is considered a foreign country for corporate tax purposes.
The roofers fund said Amgen's share price fell 6.5% on Aug. 4, 2021 and 4.3% on April 28, 2022 because the Thousand Oaks, California-based biotech company waited until then to disclose the tax risks.
In seeking a dismissal, Amgen said it "did not hide" the IRS' position, and had warned that the agency was becoming more aggressive in policing how companies allocated income and expenses among tax jurisdictions.
The judge said investors were "left in the dark" about the size of Amgen's potential payout, equal to one-sixth of its assets and more than its cash on hand.
Amgen's disclosures resembled "a child telling his parents that he had 'dessert' when in fact he had eaten the 'whole cake,'" Cronan wrote. "This court does not believe that analogy would have come out differently had the child described his treat as merely 'significant' or 'substantial.'"
In its latest quarterly report, Amgen maintained that the IRS case had no merit. A trial is scheduled for Nov. 4, court records show.
The case is In re Amgen Inc Securities Litigation, U.S. District Court, Southern District of New York, No. 23-02138.
Reporting by Jonathan Stempel in New York; Editing by Leslie Adler and Bill Berkrot
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
