Bloomberg News

Amgen Rises as Profit Tops Estimates on Drug Sales

July 27, 2012

Amgen Inc. (AMGN:US), the world’s largest biotechnology company, rose the most in eight months after second-quarter profit topped analysts’ estimates on increased demand for its rheumatoid arthritis and bone drugs and the company raised its 2012 forecast.

Amgen climbed 5.8 percent to $83.92 at the close of trading in New York, its largest single-day gain since Nov. 7. The shares of the Thousand Oaks, California-based company increased 31 percent this year.

Net income jumped 8 percent to $1.27 billion, or $1.61 a share, Amgen said yesterday in a statement. Earnings excluding one-time items were $1.83 a share, topping by 28 cents the average of 19 analysts’ estimates compiled by Bloomberg.

Amgen is trading at its highest level in six years as shareholders grow confident of the company’s new chief executive officer, Robert Bradway, who took over in May, said Michael Yee, an analyst with RBC Capital Markets Corp. in San Francisco. Sales of the rheumatoid arthritis treatment Enbrel and Prolia, an osteoporosis drug, generated higher sales that beat analysts’ estimates for the quarter.

“Investors are gaining more confidence in Amgen’s mid- to long-term outlook,” Yee said in an interview. “There’s a new CEO and head of R&D to bring fresh leadership. They have been aggressively buying back stock, will consistently raise the dividend, and the pipeline gets no credit at all.”

Revenue jumped 13 percent to $4.5 billion, and the company raised its annual profit forecast to $6.20 to $6.35 a share from a previous projection of $5.90 to $6.15 a share. Results also benefited from a one-time payment of $206 million from Takeda Pharmaceutical Co. for rights to lung cancer drug motesanib, the company said.

Drug Sales

Amgen’s annual sales quadrupled to $15.6 billion during the 11-year run of Bradway’s predecessor, Kevin Sharer. The company has shored up declining revenue from its former core anemia drugs by signing long-term deals, and is benefiting from revised Medicare regulations allowing for higher doses. At the same time, the company’s medicines to reduce bone fractures in cancer and osteoporosis patients have expanded since winning U.S. regulatory approval in 2010.

Sales of Xgeva, approved in November 2010 by the U.S. Food and Drug Administration to reduce fractures in cancer patients, and Prolia, used to treat osteoporosis in menopausal women, generated $299 million in the quarter, Amgen said. Analysts had estimated sales of $283.8 million.

Sales of Enbrel, used to treat rheumatoid arthritis, increased 11 percent to $1.06 billion. Analysts had projected $950 million.

Anemia Drugs

Amgen said sales of the anemia drug Aranesp fell 8 percent to $536 million in the second quarter, and Epogen, an older version, slid 3 percent to $525 million. Amgen’s Neulasta and Neupogen, medications used to reduce the risk of infection in patients on chemotherapy, increased 2 percent to $1.35 billion.

“Results were for the most part unexpectedly positive -- across the board,” Chris Raymond, an analyst with Robert W. Baird & Co., wrote in a note to clients yesterday.

Amgen’s 23 percent stock gain this year through yesterday bests the Standard & Poor’s 500 Health Care Index’s 9.3 percent increase, and the shares are trading at their highest level since 2005.

The company is in the middle of a stock buyback plan, purchasing 230 million shares, more than 20 percent of the company, for $13.5 billion since 2010, Raymond wrote in a July 15 note.

Experimental Drugs

Amgen highlighted two experimental drugs during its conference call yesterday that RBC’s Yee said could have a big impact on sales if they work.

One such therapy, AMG 145, targets the PCSK9 gene to lower cholesterol and heart attack risk. Amgen is racing Roche Holding AG, Pfizer Inc., Sanofi and partner Regeneron Pharmaceuticals Inc. (REGN:US) to gain entry into a market that generated $38.7 billion last year, according to IMS Health.

Another is romosozumab, a treatment designed to promote new bone growth, as opposed to its current therapies that prevent bones from fracturing. Amgen and its partner on the drug, Brussels-based UCB SA (UCB), are testing the therapy in post- menopausal osteoporosis patients in a phase 3 trial.

Amgen will present data on the medicine from the second of three trials typically required for U.S. regulatory approval at a science meeting in October. Romosozumab could eventually be a $1 billion drug, while AMG 145 may be a multibillion dollar product over the long term, Yee said.

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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Companies Mentioned

  • AMGN
    (Amgen Inc)
    • $139.33 USD
    • 1.36
    • 0.98%
  • REGN
    (Regeneron Pharmaceuticals Inc)
    • $355.47 USD
    • 9.44
    • 2.66%
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