Bloomberg News

Amgen Misses Profit Estimates on Slowing Anemia Drug Sales

January 31, 2012

(Updates with drug sales starting in sixth paragraph.)

Jan. 26 (Bloomberg) -- Amgen Inc., the company that agreed to buy Micromet Inc. today for $1.16 billion, reported fourth- quarter profit that fell short of analysts’ estimates on decreasing sales of its anemia drugs.

Net income fell 9 percent to $934 million, or $1.08 a share, from $1.02 billion, or $1.08 a share a year earlier, the Thousand Oaks, California-based company said in a statement today. Earnings, excluding some items of $1.21 a share missed by 2 cents the average of estimates of 23 analysts compiled by Bloomberg. Revenue rose 3 percent to $3.97 billion.

Amgen, the world’s largest biotechnology company, earlier today said it would acquire Rockville, Maryland-based Micromet for $11 a share to add an experimental leukemia medicine to its pipeline of oncology treatments. The company is also working to boost its presence in the cancer market through sales of Xgeva, a bone drug that reduces fractures.

“They’ve made great progress in prostate for Xgeva, and they still have some wood to chop in breast cancer,” Geoffrey Meacham, an analyst with JPMorgan Chase & Co. in New York said in an interview before the statement was released.

Amgen forecast 2012 earnings, excluding some items, to be in a range of $5.90 to $6.15 a share. Analysts had expected $5.94 a share, the average of 24 estimates compiled by Bloomberg.

Product Sales

Sales of Xgeva, approved by the U.S. Food and Drug Administration to reduce fractures in cancer patients in November 2010, and Prolia, used to treat osteoporosis in menopausal women, were $215 million in the quarter, reaching $554 million in 2011, their first full year on the market, Amgen said. Analysts had estimated annual sales of $544 million.

Sales of the anemia drug Aranesp fell 15 percent to $538 million, and Epogen, an older version, declined 18 percent to $486 million in the fourth quarter. Amgen’s Neulasta and Neupogen, which are used to reduce the risk of infection in patients on chemotherapy, increased 7 percent to $1.32 billion.

Amgen shares declined 1.6 percent to $68.08 at the close of New York trading before the earnings were announced. The company has gained 21 percent in the past 12 months.

Robert Bradway, Amgen’s president who will become chief executive officer in May, said earlier this month that 2012 revenue will accelerate because of growth in cancer medicine sales and possible wider regulatory approval.

Awaiting Decision

Amgen is waiting for U.S. regulators to decided the company’s application to expand the use of Xgeva to include preventing or delaying the spread of prostate cancer to bones.

The company’s research and development costs increased 2 percent to $842 million, as Amgen spent more on clinical trials for later-stage drugs.

The Micromet deal signals Amgen may be making more acquisitions, Michael Yee, an analyst with RBC Capital Markets in San Francisco, said in a note to clients today.

Amgen “will be looking to diversify its business and look at more deals and acquisitions given pending new CEO, new head of R&D, and understanding of maturing business becomes more obvious,” Yee wrote.

--Editors: Angela Zimm, Andrew Pollack

To contact the reporter on this story: Ryan Flinn in San Francisco at rflinn@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net


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