Amgen Second-Quarter Profit Tops Estimates

Amgen Inc. (AMGN), the world’s largest biotechnology company, reported second-quarter profit that topped analysts’ estimates on higher drug sales and said 2011 earnings would reach the upper end of its forecast.

Net income fell to $1.17 billion, or $1.25 a share, from $1.2 billion, or $1.25, a year earlier, the Thousand Oaks, California-based company said today in a statement. Adjusted for acquisitions and restructuring costs, profit of $1.37 beat the average $1.28 estimate of 20 analysts surveyed by Bloomberg.

Amgen has increased marketing spending to promote denosumab, approved last year as Prolia, for women with osteoporosis, and Xgeva, to reduce fractures in cancer patients. The medicines helped boost revenue in the quarter by 4.1 percent to $3.96 billion, joined by increased sales of Neulasta, Neupogen and Enbrel, Amgen said. The company declared its first quarterly dividend, of 28 cents per share.

“The business on the top line was very strong,” Eric Schmidt, an analyst with Cowen & Co. in New York, said today in a telephone interview. “They did spend more than expected, but they were able to beat on the bottom line despite the increased spend because the top line was so good.”

Amgen rose 35 cents, or 0.7 percent, to $53.78 at 10:04 a.m. New York time in Nasdaq Stock Market trading, while the Standard & Poor’s 500 Index dropped 0.9 percent. Amgen shares had lost 2.7 percent this year before today.

Dividend, Forecast

In April, Amgen said it would start paying its first dividend, and reaffirmed its forecast for 2011 adjusted earnings of $5 to $5.20 a share and revenue of $15.1 billion to $15.5 billion. The company has been buying back stock, helping boost earnings per share, said Gene Mack, an analyst with Mizuho Securities in New York, in a telephone interview yesterday.

Research costs rose 26 percent in the quarter, to $808 million. For the full year, Amgen forecast the expenses, adjusted for some items, would reach the upper range of 18 to 20 percent of product sales. Selling, general and administrative costs rose 15 percent to $1.11 billion.

Revenue from Neupogen and Neulasta, used to reduce the risk of infection in patients on chemotherapy, rose 13 percent to $1.33 billion in the second quarter, while sales of Enbrel, for autoimmune disorders like rheumatoid arthritis, increased 9 percent to $956 million.

Xgeva drew $73 million in sales, topping the average $68.5 million estimate of four analysts in a Bloomberg survey. Prolia had revenue of $44 million, above the $38.5 million average estimate of five analysts.

Medicare Reimbursement

Revenue from Epogen, used by patients with kidney disease, has slipped this year after tighter rules were put in place for reimbursement from Medicare, the U.S.-backed insurance plan for the elderly and disabled. Epogen sales in the second quarter dropped 17 percent to $543 million.

Further reimbursement and labeling changes proposed by the Centers for Medicare and Medicaid Services may lead to a decline in Epogen dosing of 20 percent to 25 percent in 2011, if implemented, Amgen said.

“Amgen means it to be a worst-case scenario,” Schmidt said. “That’s mostly reflected in the stock. Putting that out there should give some comfort and remove some fears that Epogen’s in a freefall situation.”

To contact the reporter on this story: Meg Tirrell in New York at mtirrell@bloomberg.net.

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