Amgen Inc. v. F. Hoffmann-LaRoche LTD et al

Filing 283

DECLARATION re #281 MOTION to Enforce the Court's December 29, 2006 Order and To Compel the Further Production of Documents OF DEBORAH E. FISHMAN by Amgen Inc.. (Attachments: #1 Exhibit 1#2 Exhibit 2 (cover page for confidential exhibit 2)#3 Exhibit 3#4 Exhibit 4#5 Exhibit 5#6 Exhibit 6#7 Exhibit 7#8 Exhibit 8#9 Exhibit 9#10 Exhibit 10#11 Exhibit 11#12 Exhibit 12)(Gottfried, Michael)

Download PDF
Amgen Inc. v. F. Hoffmann-LaRoche LTD et al Doc. 283 Att. 9 Case 1:05-cv-12237-WGY Document 283-10 Filed 02/15/2007 Page 1 of 9 Exhibit 9 Dockets.Justia.com C 2007 January 22, ase January 22, 2007 1:05-cv-12237-WGY Document 283-10 Filed 02/15/2007 Page 2Amgen Inc. (AMGN) of 9 COMPANY UPDATE Amgen Inc. (AMGN) Buy Filings further support Amgen in CERA trial but litigation still fluid What's changed In the ongoing patent litigation on CERA between Amgen and Roche, court documents posted last Friday indicate that the starting material of CERA has the same amino acid sequence and carbohydrate composition as EPO and is produced by recombinant DNA technology in Chinese hamster ovary (CHO) cells. Roche has countersued Amgen for anti-trust behavior and challenged the validity of Amgen's patents. Roche has also requested a jury trial which Amgen does not believe Roche is entitled to. As set by Judge Young in 10/06, the trial is targeted to start in 9/07. Investment Profile: Amgen Inc. Low Growth Returns * Multiple Volatility Percentile AMGN Americas Healthcare Est. Market Leaders Peer Group Average * Returns = Return on Capital For a complete description of the investment profile measures please refer to the disclosure section of this document. 20th 40th 60th 80th High Growth Returns * Multiple Volatility 100th Implications The new information on CERA suggests that Roche will probably infringe on Amgen's patents. We expect Amgen shares to react favorably to the news. However, the outcome of the anti-trust dispute is difficult to predict and a jury trial, if allowed to proceed, will likely be less favorable for Amgen. Amgen shares will likely be volatile surrounding FDA approval and the litigation on CERA. We continue to believe that the impact on Amgen's EPS is manageable. If CERA were priced at a 10% discount, sales of Aranesp/Epogen might be reduced by about $0.75 billion (11%) in 2008 leading to 3-year EPS CAGR of about 11% instead of our current projection of 13%, assuming minimal new product sales. The reduction in sales is based on loss of 10%-15% market share and 2%-5% price erosion. The cancer indication on CERA has been delayed by at least 2 years to 2009. Key data Price ($) 12 month price target ($) Market cap ($ mn) Dividend yield (%) Net margin (%) Debt/total capital (%) Current 74.25 80.00 86,614.0 NM 31.4 33.6 Revenue ($ mn) EPS ($) P/E (X) EV/EBITDA (X) ROE (%) 12/05 12,429.4 3.02 24.6 15.2 18.9 9/06 1.01 12/06E 14,157.5 3 .75 19.8 13.9 23.2 12/06E 0 .88 12/07E 15,323.4 4 .24 17.5 12.9 26.7 3/07E 1 .09 12/08E 16,305.2 4.80 15.5 11.2 27.7 6/07E 1.13 EPS ($) Price performance chart Valuation Amgen shares are trading at 15X our 2008 EPS (incl. ESOs) or PEG of 1.1 vs. the biotech average of 22X and 1.2, and drug average of 16X and 2.1, respectively. Our 12-month target price of $80 is based on our 2007 EPS (ex-ESOs) of $4.41, 3 year growth rate of 13%, and historical PEG of 1.4. 80 78 76 74 72 70 68 66 64 62 Jan-06 Apr-06 Jul-06 Nov-06 S&P 500 (R) 1,650 1,600 1,550 1,500 1,450 1,400 1,350 1,300 1,250 1,200 Key risks Risks include litigation vs. Roche and JNJ, cost-containment competition, slower sales, development failures, manufacturing, potential acquisitions. INVESTMENT LIST MEMBERSHIP Americas Buy List Coverage view: Neutral United States: Biotechnology May-Kin Ho, Ph.D. (212) 902-6723 | maykin.ho@gs.com Goldman, Sachs & Co. Meg Malloy, CFA (212) 902-7839 | meg.malloy@gs.com Goldman, Sachs & Co. Jessica Li, Ph.D. (212) 902-0871 | jessica.li@gs.com Goldman, Sachs & Co. Paul Chun (212) 902-2539 | paul.chun@gs.com Goldman, Sachs & Co. Amgen Inc. (L) Share price performance (%) Absolute Rel. to S&P 500 3 month 1.6 (2.9) 6 month 12 month 15.0 (5.3) 1.3 (14.9) Source: Company data, Goldman Sachs Research estimates, FactSet. Price as of 1/19/2007 close. The Goldman Sachs Group, Inc. does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Customers in the US can receive independent, third-party research on companies covered in this report, at no cost to them, where such research is available. Customers can access this independent research at www.independentresearch.gs.com or call 1-866-727-7000. For Reg AC certification, see the text preceding the disclosures. For other important disclosures go to www.gs.com/research/hedge.html. Analysts employed by non-US affiliates are not required to take the NASD/NYSE analyst exam. Global Investment Research The Goldman Sachs Group, Inc. Goldman Sachs Global Investment Research 1 Case January 22, 2007 1:05-cv-12237-WGY Document 283-10 Filed 02/15/2007 Page 3Amgen Inc. (AMGN) of 9 Amgen Inc.: Summary financials Profit model ($ mn) Total revenue Cost of goods sold SG&A R&D Other operating profit/(expense) ESO expense EBITDA Depreciation & amortization EBIT Net interest income/(expense) Income/(loss) from associates Others Pretax profits Provision for taxes Minority interest Net income pre-preferred dividends Preferred dividends Net income (pre-exceptionals) Post tax exceptionals Net income (post-exceptionals) EPS (basic, pre-except) ($) EPS (diluted, pre-except) ($) EPS (basic, post-except) ($) EPS (diluted, post-except) ($) Common dividends paid ($) DPS ($) Dividend payout ratio (%) 12/05 12,429.4 (2,035.0) (2,792.0) (2,302.0) 0.0 (308.7) 5,832.7 (841.0) 4,991.7 (99.0) 0.0 119.0 5,011.7 (1,221.9) 0.0 3,789.8 0.0 3,789.8 (349.0) 3,440.8 3.07 3.02 2.78 2.74 0.0 0.00 0.0 12/06E 14,157.5 (2,045.3) (3,189.2) (3,092.4) 0.0 (244.0) 6,571.4 (924.8) 5,586.6 (109.4) 0.0 288.5 5,765.7 (1,325.4) 0.0 4,440.3 0.0 4,440.3 (1,372.5) 3,067.7 3.78 3.75 2.61 2.59 0.0 0.00 0.0 12/07E 15,323.4 (2,136.7) (3,313.9) (3,358.6) 0. 0 (260.0) 7,157.1 (903.0) 6,254.2 (111.2) 0. 0 269.1 6,412.0 (1,538.9) 0. 0 4,873.1 0. 0 4,873.1 (264.5) 4,608.7 4.28 4.24 4.05 4.01 0. 0 0.00 0. 0 12/08E 16,305.2 (2,272.4) (3,392.7) (3,413.6) 0.0 (260.0) 7,905.8 (939.3) 6,966.5 (111.2) 0.0 271.2 7,126.5 (1,710.4) 0.0 5,416.2 0.0 5,416.2 (264.5) 5,151.7 4.88 4.80 4.64 4.57 0.0 0.00 0.0 Balance sheet ($ mn) Cash & equivalents Accounts receivable Inventory Other current assets Total current assets Net PP&E Net intangibles Total investments Other long-term assets Total assets Accounts payable Short-term debt Other current liabilities Total current liabilities Long-term debt Other long-term liabilities Total long-term liabilities Total liabilities Preferred shares Common stock Retained earnings Other common equity Total common equity Minority interest Total liabilities & equity 12/ 05 1,840.0 1,769.0 1,258.0 4,368.0 9,235.0 5,038.0 14,237.0 0. 0 787.0 29,297.0 596.0 0. 0 2,999.0 3,595.0 3,957.0 1,294.0 5,251.0 8,846.0 0. 0 23,561.0 (3,132.0) 22.0 20,451.0 0. 0 29,297.0 12/06E 897.3 2,069.2 975.3 5,581.9 9,523.6 5,835.2 14,941.0 0.0 1,191.9 31,491.7 516.3 1,773.0 2,979.6 5,269.0 7,233.0 1,228.0 8,461.0 13,729.9 0.0 23,600.0 (5,838.3) 0.0 17,761.7 0.0 31,491.7 12/07E 1,493.8 2,196.6 1,046.7 5,655.3 10,392.3 6,468.2 14,605.0 0.0 1,265.3 32,730.8 554.1 1,773.0 3,163.2 5,490.3 7,233.0 1,237.2 8,470.2 13,960.4 0.0 24,000.0 (5,229.6) 0.0 18,770.4 0.0 32,730.8 12/08E 2,660.9 2,340.9 1,113.6 5,738.4 11,853.8 7,064.9 14,269.0 0.0 1,348.4 34,536.1 589.6 1,773.0 3,370.9 5,733.5 7,233.0 1,247.5 8,480.5 14,214.0 0.0 24,400.0 (4,077.9) 0.0 20,322.1 0.0 34,536.1 Growth & margins (%) Sales growth EBITDA growth EBIT growth Net income (pre-except) growth EPS growth Gross margin EBITDA margin EBIT margin Cash flow statement ($ mn) Net income D&A add-back (incl. ESO) Minority interest add-back Net inc/(dec) working capital Other operating cash flow Cash flow from operations Capital expenditures Acquisitions Divestitures Others Cash flow from investing Dividends paid (common & pref) Inc/(dec) in debt Other financing cash flows Cash flow from financing Total cash flow 12/05 17.8 16.4 16.7 20.4 23.8 83.6 46.9 40.2 12/05 3,789.8 841.0 0.0 10.0 270.2 4,911.0 (867.0) (9,597.0) 10,438.0 (33.0) (59.0) 0.0 (1,175.0) (3,362.8) (4,537.8) 314.2 12/06E 13.9 12.7 11.9 17.2 23.1 85.6 46.4 39.5 12/06E 3,067.7 984.8 0.0 (419.4) 1,346.1 4,979.3 (1,134.0) (1,888.0) 0.0 (1,107.0) (4,129.0) 0.0 (213.0) (1,580.0) (1,793.0) (942.7) 12/07E 8. 2 8. 9 12.0 9. 7 13.2 86.1 46.7 40.8 12/07E 4,608.7 903.0 0. 0 (50.9) (73.4) 5,387.3 (1,200.0) 0. 0 0. 0 0. 0 (1,200.0) 0. 0 0. 0 (3,590.8) (3,590.8) 596.5 12/08E 6.4 10.5 11.4 11.1 14.0 86.1 48.5 42.7 12/08E 5,151.7 939.3 0.0 (51.1) (83.1) 5,956.8 (1,200.0) 0.0 0.0 0.0 (1,200.0) 0.0 0.0 (3,589.6) (3,589.6) 1,167.2 Additional financials Net debt/equity (%) Interest cover (X) Inventory days Receivable days BVPS ($) ROA (%) CROCI (%) Dupont ROE (%) Margin (%) Turnover (X) Leverage (X) Free cash flow per share ($) Free cash flow yield (%) 12/ 05 10.4 50.4 192.5 47.4 16.71 13.0 18.6 18.5 30.5 0. 4 1. 4 3.95 5. 7 12/06E 45.7 51.1 199.3 49.5 15.12 14.6 19.5 25.0 31.4 0.4 1.8 1.67 2.4 12/07E 40.0 56.2 172.7 50.8 16.49 15.2 18.2 26.0 31.8 0.5 1.7 3.68 5.0 12/08E 31.2 62.6 173.5 50.8 18.31 16.1 19.3 26.7 33.2 0.5 1.7 4.29 5.8 Note: Last actual year may include reported and estimated data. Source: Company data, Goldman Sachs Research estimates. Analyst Contributors May-Kin Ho, Ph.D. maykin.ho@gs.com Meg Malloy, CFA meg.malloy@gs.com Jessica Li, Ph.D. jessica.li@gs.com Paul Chun paul.chun@gs.com Goldman Sachs Global Investment Research 2 Case January 22, 2007 1:05-cv-12237-WGY Document 283-10 Filed 02/15/2007 Page 4Amgen Inc. (AMGN) of 9 4 We continue to believe that Amgen's position is strong in the litigation. With the starting material having the same amino acid and carbohydrate composition as EPO and production in mammalian cells, CERA will probably infringe on Amgen's two issued patents for manufacturing (the 698 and 969 patents) and some of the other four patents under dispute. For Amgen to win, it has to show infringement of only one valid patent claim. Roche argues that all six patents share the same specification and all claim priority to the 5621080 patent on EPO protein that was found to be invalid by the Appeals Court in January 2003. Roche also countersued Amgen on antitrust behavior partly based on its recent five-year exclusive agreement to supply Fresenius' dialysis centers (about 30% of the market) and volume-based contracts. Furthermore, Roche has requested a jury trial. We believe the outcome of the anti-trust suit is more difficult to predict, especially if Roche is successful in obtaining a jury trial. CERA is under review for chronic kidney disease, including dialysis and predialysis patients. The FDA action date was delayed in December 2006 by three months to April 13, 2007. If FDA approval is granted, we expect Roche to launch CERA "at risk" while litigation is ongoing, unless Amgen is successful in obtaining a permanent injunction. We believe the additional data requested by the FDA are related to safety, possibly the link of high hemoglobin with complications which is a "class effect." There might also be data specific to CERA. Prior Phase 3 data on CERA suggest that there were more drug-related severe adverse events. However, the details have not been disclosed by Roche. Of the six patents included in the lawsuit against Roche, five were involved in the patent dispute between Amgen and Transkaryotic Therapies (TKTX) from December 2001 to October 2004. Four of the five patents were found to be valid by both the US District Court in Boston and the Court of Appeals. The exception was the 933 patent which was found to be invalid. The sixth patent (5,441,868) which covers production of EPO in mammalian cells was not applicable in the TKTX suit, but should be relevant in the case against Roche. Please see Exhibit 1 for a summary of the 6 patents. Goldman Sachs Global Investment Research 3 Case January 22, 2007 1:05-cv-12237-WGY Document 283-10 Filed 02/15/2007 Page 5Amgen Inc. (AMGN) of 9 Exhibit 1: Summary of patents in Amgen­Roche and Amgen­TKTX litigations US Patent No. Date of issue Coverage 5,955,422 9/21/1999 Pharmaceutical composition of EPO 5,621,080 4/15/1997 EPO protein w/ 166 amino acids 5,756,349 5/26/1998 Vertebrate cells producing EPO 5,547,933 8/20/1996 Non-natural EPO w/ glycosylation different than urinary EPO 3, 7-9, 11, 12, 14 Y 1,2,9 N 5,618,698 4/8/1997 Process for EPO production in mammalian cells 5,441,868 8/15/1995 Process for EPO production in mammalian cells Claims under dispute vs. Roche Ruling in TKTX case ? Claims under dispute vs. TKTX Infringed ? District 12/01 Appeals 1/03 District 10/04 Valid ? District 12/01 Appeals 1/03 District 10/04 1 Y 1 Y Y Y Y N Y 3, 4, 6 Y 2,3,4 Y* N Y*** Y N Y 7 Y 1,3,4,6,7 Y** Y Y Y N Y 4-9 Y 4-9 N Y Y NA Y Y 1, 2 N NA NA NA NA NA NA NA N N Y - yes; N - no; NA - not applicable * District Court found Infringement under the Doctrine of Equivalents (12/01). The Appeals court disagreed. There was no ruling by district court in 10/04. ** Both the District Court and Appeals Court found infringement on claims 1, 3, 4 & 6. The District Court found claim 7 was not infringed 12/01, but the Appeals Court disagreed. In 10/04, the District Court found claim 7 was valid and infringed. *** District Court reaffirmed infringement 10/30/03 Source: USPTO and Goldman Sachs Research. Goldman Sachs Global Investment Research 4 Case January 22, 2007 1:05-cv-12237-WGY Document 283-10 Filed 02/15/2007 Page 6Amgen Inc. (AMGN) of 9 Reg AC I, May-Kin Ho, Ph.D., hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. Investment profile The Goldman Sachs Investment Profile provides investment context for a security by comparing key attributes of that security to its peer group and market. The four key attributes depicted are: growth, returns, multiple and volatility. Growth, returns and multiple are indexed based on composites of several methodologies to determine the stocks percentile ranking within the region's coverage universe. The precise calculation of each metric may vary depending on the fiscal year, industry and region but the standard approach is as follows: Growth is a composite of next year's estimate over current year's estimate, e.g. EPS, EBITDA, Revenue. Return is a year one prospective aggregate of various return on capital measures, e.g. CROCI, ROACE, and ROE. Multiple is a composite of one-year forward valuation ratios, e.g. P/E, dividend yield, EV/FCF, EV/EBITDA, EV/DACF, Price/Book. Volatility is measured as trailing twelve-month volatility adjusted for dividends. Quantum Quantum is Goldman Sachs' proprietary database providing access to detailed financial statement histories, forecasts and ratios. It can be used for in-depth analysis of a single company, or to make comparisons between companies in different sectors and markets. Disclosures Coverage group(s) of stocks by primary analyst(s) May-Kin Ho, Ph.D.: America-Biotechnology US, America-Emerging Biotechnology. Meg Malloy, CFA: America-Biotechnology US, America-Emerging Biotechnology. America-Biotechnology US: Amgen Inc., Biogen Idec, Inc., Celgene Corp., Genentech Inc., Genzyme Corp., Gilead Sciences Inc., Illumina Inc, Qiagen, N.V.. America-Emerging Biotechnology: Alexion Pharmaceuticals, Inc., Amylin Pharmaceuticals, Inc., Cubist Pharmaceuticals, Inc., Cytokinetics, Inc., Exelixis, Inc., GTx, Inc., Human Genome Sciences, Inc., Idenix Pharmaceuticals, Inc., Imclone Systems, Maxygen, Medarex, Inc., MedImmune, Inc., Millennium Pharmaceuticals, Inc., NPS Pharmaceuticals, Inc., OSI Pharmaceuticals, Inc., Renovis, Inc., Theravance, Inc., Trimeris, Inc., Vertex Pharmaceuticals, Inc., Vical Inc., ViroPharma Inc.. Company-specific regulatory disclosures The following disclosures relate to relationships between The Goldman Sachs Group, Inc. (with its affiliates, "Goldman Sachs") and companies covered by the Global Investment Research Division of Goldman Sachs and referred to in this research. Goldman Sachs has received compensation for investment banking services in the past 12 months: Amgen Inc. ($74.25) and Johnson & Johnson ($67.76) Goldman Sachs expects to receive or intends to seek compensation for investment banking services in the next 3 months: Amgen Inc. ($74.25), Johnson & Johnson ($67.76) and Roche (SFr240.10) Goldman Sachs has received compensation for non-investment banking services during the past 12 months: Amgen Inc. ($74.25), Johnson & Johnson ($67.76) and Roche (SFr240.10) Goldman Sachs had an investment banking services client relationship during the past 12 months with: Amgen Inc. ($74.25), Johnson & Johnson ($67.76) and Roche (SFr240.10) Goldman Sachs had a non-investment banking securities-related services client relationship during the past 12 months with: Amgen Inc. ($74.25), Johnson & Johnson ($67.76) and Roche (SFr240.10) Goldman Sachs had a non-securities services client relationship during the past 12 months with: Amgen Inc. ($74.25), Johnson & Johnson ($67.76) and Roche (SFr240.10) Goldman Sachs makes a market in the securities: Amgen Inc. ($74.25) and Roche (SFr240.10) Distribution of ratings/investment banking relationships Goldman Sachs Investment Research global coverage universe Rating Distribution Investment Banking Relationships Goldman Sachs Global Investment Research 5 C 2007 January 22, ase 1:05-cv-12237-WGY Document 283-10 Filed 02/15/2007 Page 7Amgen Inc. (AMGN) of 9 Buy Hold Sell Buy Hold Sell Global 26% 60% 14% 47% 39% 36% As of Jan 1, 2007, Goldman Sachs Global Investment Research had investment ratings on 2,560 equity securities. Prior to June 26, 2006, Goldman Sachs utilized a relative rating system of Outperform, In-Line and Underperform, which, for the purposes of the above disclosure required by NASD/NYSE rules, equated to Buy, Hold and Sell. As of June 26, 2006, Goldman Sachs assigns stocks as Buys and Sells on various regional Investment Lists; stocks not so assigned are deemed Neutral. Such assignments equate to Buy, Hold and Sell for the purposes of the above disclosure. See 'Ratings, Coverage groups and views and related definitions' below. Price target and rating history chart(s) Amgen Inc. (AMGN) Goldman Sachs rating and stock price target history 90 1,500 Curr ency: U.S. Dollar 80 80 70 60 50 79 1,400 1,300 1,200 1,100 1,000 900 Stock Price OP FM AMJ Dec 14 NR Apr 4 OP Jun 26 B 800 J A SOND J FM AM J J A SON D J FM AM J JA SON D 2004 2005 2006 Source: Goldman Sachs Investment Research for ratings and price targets; Reuters for daily closing prices as of 01/01/07. Rating Price target Price target at removal S&P 500; pricing by F actSet Covered by May-Kin Ho, Ph.D. Not covered by current analyst New rating system as of 6/26/06 The price targets shown should be considered in the context of all prior published Goldman Sachs research, which may or m ay not have included price targets, as well as developments relating to the company, its industry and financial markets. Regulatory disclosures Disclosures required by United States laws and regulations See company-specific regulatory disclosures above for any of the following disclosures required as to companies referred to in this report: manager or co-manager in a pending transaction; 1% or other ownership; compensation for certain services; types of client relationships; managed/comanaged public offerings in prior periods; directorships; market making and/or specialist role. The following are additional required disclosures: Ownership and material conflicts of interest: Goldman Sachs policy prohibits its analysts, professionals reporting to analysts and members of their households from owning securities of any company in the analyst's area of coverage. Analyst compensation: Analysts are paid in part based on the profitability of Goldman Sachs, which includes investment banking revenues. Analyst as officer or director: Goldman Sachs policy prohibits its analysts, persons reporting to analysts or members of their households from serving as an officer, director, advisory board member or employee of any company in the analyst's area of coverage. Distribution of ratings: See the distribution of ratings disclosure above. Price chart: See the price chart, with changes of ratings and price targets in prior periods, above, or, if electronic format or if with respect to multiple companies which are the subject of this report, on the Goldman Sachs website at http://www.gs.com/research/hedge.html. Additional disclosures required under the laws and regulations of jurisdictions other than the United States The following disclosures are those required by the jurisdiction indicated, except to the extent already made above pursuant to United States laws and regulations. Australia: This research, and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. Canada: Goldman Sachs Canada Inc. has approved of, and agreed to take responsibility for, this research in Canada if and to the extent it relates to equity securities of Canadian issuers. Analysts may conduct site visits but are prohibited from accepting payment or reimbursement by the company of travel expenses for such visits. Hong Kong: Further information on the securities of covered companies referred to in this research may be obtained on request from Goldman Sachs (Asia) L.L.C. India: Further information on the subject company or companies referred to in this research may be obtained from Goldman Sachs (India) Securities Private Limited; Japan: See company-specific disclosures as to any applicable disclosures required by Japanese stock exchanges, the Japanese Securities Dealers Association or the Japanese Securities Finance Company. Korea: Further information on the subject company or companies referred to in this research may be obtained from Goldman Sachs (Asia) L.L.C., Seoul Branch. Russia: Research reports distributed in the Russian Federation are not advertising as defined in Russian law, but are information and analysis not having product promotion as their main purpose and do not provide appraisal within the meaning of the Russian Law on Appraisal. Singapore: Further information on the covered companies referred to in this research may be obtained from Goldman Sachs (Singapore) Pte. (Company Number: 198602165W). United Kingdom: Persons who would be categorized as private customers in the United Kingdom, as such term is defined in the rules of the Financial Services Authority, should read this research in conjunction with prior Goldman Sachs research on the covered companies referred to herein and should refer to the risk warnings that have been sent to them by Goldman Sachs International. A copy of these risks warnings, and a glossary of certain financial terms used in this report, are available from Goldman Sachs International on request. European Union: Disclosure information in relation to Article 4 (1) (d) and Article 6 (2) of the European Commission Directive 2003/126/EC is available at http://www.gs.com/client_services/global_investment_research/europeanpolicy.html Ratings, coverage groups and views and related definitions Buy (B), Neutral (N), Sell (S) -Analysts recommend stocks as Buys or Sells for inclusion on various regional Investment Lists. Being assigned a Buy or Sell on an Investment List is determined by a stock's return potential relative to its coverage group as described below. Any stock not assigned as a Buy or a Sell on an Investment List is deemed Neutral. Each regional Investment Review Committee manages various regional Investment Lists to a global guideline of 25%-35% of stocks as Buy and 10%-15% of stocks as Sell; however, the distribution of Buys and Sells in any particular coverage Goldman Sachs Global Investment Research Index Price 6 Case January 22, 2007 1:05-cv-12237-WGY Document 283-10 Filed 02/15/2007 Page 8Amgen Inc. (AMGN) of 9 group may vary as determined by the regional Investment Review Committee. Regional Conviction Buy and Sell lists represent investment recommendations focused on either the size of the potential return or the likelihood of the realization of the return. Return potential represents the price differential between the current share price and the price target expected during the time horizon associated with the price target. Price targets are required for all covered stocks. The return potential, price target and associated time horizon are stated in each report adding or reiterating an Investment List membership. Coverage groups and views: A list of all stocks in each coverage group is available by primary analyst, stock and coverage group at http://www.gs.com/research/hedge.html. The analyst assigns one of the following coverage views which represents the analyst's investment outlook on the coverage group relative to the group's historical fundamentals and/or valuation. Attractive (A). The investment outlook over the following 12 months is favorable relative to the coverage group's historical fundamentals and/or valuation. Neutral (N). The investment outlook over the following 12 months is neutral relative to the coverage group's historical fundamentals and/or valuation. Cautious (C). The investment outlook over the following 12 months is unfavorable relative to the coverage group's historical fundamentals and/or valuation. Not Rated (NR). The investment rating and target price, if any, have been removed pursuant to Goldman Sachs policy when Goldman Sachs is acting in an advisory capacity in a merger or strategic transaction involving this company and in certain other circumstances. Rating Suspended (RS). Goldman Sachs Research has suspended the investment rating and price target, if any, for this stock, because there is not a sufficient fundamental basis for determining an investment rating or target. The previous investment rating and price target, if any, are no longer in effect for this stock and should not be relied upon. Coverage Suspended (CS). Goldman Sachs has suspended coverage of this company. Not Covered (NC). Goldman Sachs does not cover this company. Not Available or Not Applicable (NA). The information is not available for display or is not applicable. Not Meaningful (NM). The information is not meaningful and is therefore excluded. Ratings, coverage views and related definitions prior to June 26, 2006 Our rating system requires that analysts rank order the stocks in their coverage groups and assign one of three investment ratings (see definitions below) within a ratings distribution guideline of no more than 25% of the stocks should be rated Outperform and no fewer than 10% rated Underperform. The analyst assigns one of three coverage views (see definitions below), which represents the analyst's investment outlook on the coverage group relative to the group's historical fundamentals and valuation. Each coverage group, listing all stocks covered in that group, is available by primary analyst, stock and coverage group at http://www.gs.com/research/hedge.html. Definitions Outperform (OP). We expect this stock to outperform the median total return for the analyst's coverage universe over the next 12 months. In-Line (IL). We expect this stock to perform in line with the median total return for the analyst's coverage universe over the next 12 months. Underperform (U). We expect this stock to underperform the median total return for the analyst's coverage universe over the next 12 months. Coverage views: Attractive (A). The investment outlook over the following 12 months is favorable relative to the coverage group's historical fundamentals and/or valuation. Neutral (N). The investment outlook over the following 12 months is neutral relative to the coverage group's historical fundamentals and/or valuation. Cautious (C). The investment outlook over the following 12 months is unfavorable relative to the coverage group's historical fundamentals and/or valuation. Current Investment List (CIL). We expect stocks on this list to provide an absolute total return of approximately 15%-20% over the next 12 months. We only assign this designation to stocks rated Outperform. We require a 12-month price target for stocks with this designation. Each stock on the CIL will automatically come off the list after 90 days unless renewed by the covering analyst and the relevant Regional Investment Review Committee. Global product; distributing entities The Global Investment Research Division of Goldman Sachs produces and distributes research products for clients of Goldman Sachs, and pursuant to certain contractual arrangements, on a global basis. Analysts based in Goldman Sachs offices around the world produce equity research on industries and companies, and research on macroeconomics, currencies, commodities and portfolio strategy. This research is disseminated in Australia by Goldman Sachs JBWere Pty Ltd (ABN 21 006 797 897) on behalf of Goldman Sachs; in Canada by Goldman Sachs Canada Inc. regarding Canadian equities and by Goldman Sachs & Co. (all other research); in Germany by Goldman Sachs & Co. oHG; in Hong Kong by Goldman Sachs (Asia) L.L.C.; in India by Goldman Sachs (India) Securities Private Ltd.; in Japan by Goldman Sachs Japan Co., Ltd.; in the Republic of Korea by Goldman Sachs (Asia) L.L.C., Seoul Branch; in New Zealand by Goldman Sachs JBWere (NZ) Limited on behalf of Goldman Sachs; in Singapore by Goldman Sachs (Singapore) Pte. (Company Number: 198602165W); and in the United States of America by Goldman, Sachs & Co. Goldman Sachs International has approved this research in connection with its distribution in the United Kingdom and European Union. European Union: Goldman Sachs International, authorised and regulated by the Financial Services Authority, has approved this research in connection with its distribution in the European Union and United Kingdom; Goldman, Sachs & Co. oHG, regulated by the Bundesanstalt für Finanzdienstleistungsaufsicht, may also be distributing research in Germany. General disclosures in addition to specific disclosures required by certain jurisdictions This research is for our clients only. Other than disclosures relating to Goldman Sachs, this research is based on current public information that we consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. We seek to update our research as appropriate, but various regulations may prevent us from doing so. Other than some industry reports published on a periodic basis, the large majority of reports are published at irregular intervals as appropriate in the analyst's judgment. Goldman Sachs conducts a global full-service, integrated investment banking, investment management, and brokerage business. We have investment banking and other business relationships with a substantial percentage of the companies covered by our Global Investment Research Division. Our salespeople, traders, and other professionals may provide oral or written market commentary or trading strategies to our clients and our proprietary trading desks that reflect opinions that are contrary to the opinions expressed in this research. Our asset management area, our proprietary trading desks and investing businesses may make investment decisions that are inconsistent with the recommendations or views expressed in this research. Goldman Sachs Global Investment Research 7 Case January 22, 2007 1:05-cv-12237-WGY Document 283-10 Filed 02/15/2007 Page 9Amgen Inc. (AMGN) of 9 We and our affiliates, officers, directors, and employees, excluding equity analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives (including options and warrants) thereof of covered companies referred to in this research. This research is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Clients should consider whether any advice or recommendation in this research is suitable for their particular circumstances and, if appropriate, seek professional advice, including tax advice. The price and value of the investments referred to in this research and the income from them may fluctuate. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Certain transactions, including those involving futures, options, and other derivatives, give rise to substantial risk and are not suitable for all investors. Current options disclosure documents are available from Goldman Sachs sales representatives or at http://theocc.com/publications/risks/riskstoc.pdf. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments. Our research is disseminated primarily electronically, and, in some cases, in printed form. Electronic research is simultaneously available to all clients. Disclosure information is also available at http://www.gs.com/research/hedge.html or from Research Compliance, One New York Plaza, New York, NY 10004. Copyright 2007 The Goldman Sachs Group, Inc. No part of this material may be (i) copied, photocopied or duplicated in any form by any means or (ii) redistributed without the prior written consent of The Goldman Sachs Group, Inc. Goldman Sachs Global Investment Research 8

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.


Why Is My Information Online?