Amgen Tops Sales and Profit Estimates, Boosts 2016 Forecast

  • Sales of top drugs Enbrel, Neulasta, Aranesp all increase
  • Revenue rises 9.8%, profit jumps 17%, aided by cost-cutting

Amgen Inc., boosted by higher drug sales and the effects of a cost-cutting campaign, reported first-quarter revenue and profit that topped analysts’ estimates. The biotechnology giant raised its forecast for the year.

Profit excluding one-time items was $2.90 a share, Amgen said Thursday in a statement, beating the $2.59 average of analysts’ projections compiled by Bloomberg. Its top two drugs also beat analysts’ estimates, with Enbrel sales driven by higher prices and Neulasta boosted by both pricing and higher demand, according to the company.

Amgen reported sales of its new cholesterol treatment, Repatha, for the first time, missing expectations by a large margin. First-quarter sales were $16 million, compared to the average analyst estimate of $30.2 million. The launch has been hindered by stringent restrictions from insurers on which patients can receive the drug, with about 77 percent of prescriptions being denied at the pharmacy, said Tony Hooper, head of global commercial operations, on a conference call to discuss the results.

Revenue this year will total $22.2 billion to $22.6 billion, and earnings before one-time items will be $10.85 to $11.20, the company said. Previously, Amgen had forecast $22 billion to $22.5 billion in sales and adjusted earnings of $10.60 to $11 a share.

Six New Drugs

To maintain sales growth, Amgen has invested heavily in research and development, introducing six new drugs in 2015, including Repatha and cancer medicine Kyprolis. The company has a broad neuroscience collaboration with Novartis AG and a pact to work on cancer T-cell therapies with Kite Pharma Inc. Amgen has said it’s ready to do bigger deals again, after digesting a $10 billion acquisition of Onyx Pharmaceuticals Inc. from 2013.

Amgen expects to report results from a study of Repatha’s effects on cardiovascular events like heart attacks and strokes later this year. If positive, it should persuade insurers to ease restrictions and boost Repatha’s use “drastically,” according to Bloomberg Intelligence analyst Asthika Goonewardene.

While the company won’t be able to approach insurers to improve the coverage until any benefits are included in the drug’s label, the study results should provide clear evidence once they are presented at a medical meeting, Amgen’s Hooper said. Many leaders in the cardiovascular community already have said they want to update the guidelines for treating heart patients as soon as possible after the results are available, an event that can be important to payers, said Sean Harper, head of research and development.

Frustrated Cardiologists

“Talking to cardiologists, it’s clear that they are extremely frustrated at the moment because the patients they are sending in are appropriate,” Hooper said. He added that there was “no doubt in my mind” that more patients will gain access once the company has evidence that the drug not only lowers cholesterol but also reduces the risk of heart attack and stroke.

Amgen gave additional first-quarter results in the statement, including:

  • Revenue rose 9.8 percent to $5.53 billion from a year earlier, compared with an average prediction of $5.29 billion.
  • Net income rose 17 percent to $1.9 billion, or $2.50 a share, from $1.62 billion, or $2.11, a year ago
  • Operating margin increased by 4.4 percentage points to 54.6 percent from the previous year; Amgen initiated a large restructuring plan in July 2014, cutting more than 2,000 jobs.

Here’s how sales of the company’s top drugs performed:

  • Enbrel: $1.39 billion, estimate was $1.27 billion
  • Neulasta: $1.18 billion, estimate was $1.15 billion
  • Aranesp: $532 million, estimate was $477 million

Amgen also has invested in developing biosimilars, drugs that mimic biological treatments, creating one of the most ambitious pipelines in the industry. The Thousand Oaks, California-based company plans to have as many as five biosimilars on the market by 2019. At the same time, Amgen itself is under threat from other copycats. Novartis AG’s version of Neupogen was approved in the U.S. last year, becoming the first biosimilar to clear that hurdle.

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