Amgen Tops Profit Estimates on Sales of Cancer Drugs

Amgen Inc., the world’s largest biotechnology company, reported fourth-quarter profit that beat analyst estimates as sales of arthritis and bone drugs rose.

Net income declined 16 percent to $788 million, or $1.01 a share, from $934 million, or $1.08 a share, a year earlier, on higher expenses for late-stage clinical trials and drug promotion, the Thousand Oaks, California-based company said today in a statement. Earnings, excluding some items, of $1.40 a share topped by 1 cent the average of 10 analyst estimates compiled by Bloomberg. Revenue rose 11 percent to $4.42 billion.

Amgen is looking for new products and acquisitions as its former core anemia business declines. Last month, the company agreed to buy DeCode Genetics Inc., a genetics research company, for $415 million. Amgen acquired Micromet Inc. last year for $1.16 billion to add an experimental leukemia drug, signed a development deal with London-based AstraZeneca Plc and boosted its cancer-market presence with Xgeva, a bone drug that reduces fractures.

“We enter 2013 with good momentum, a broad late-stage pipeline and a continued focus on building our business internationally,” Amgen Chief Executive Officer Robert Bradway said in the statement.

Amgen declined less than 1 percent to $83.07 at the close in New York before earnings were announced. The company’s shares have dropped 7.9 percent since Dec. 12 when they reached their highest value ever at $90.17. The stock gained 34 percent in 2012, it’s best annual increase since 1999, as investors rewarded the company for its buyback program, dividend and sales increase.

Earnings Forecast

Amgen forecast 2013 earnings, excluding some items, from $6.85 to $7.15 a share. Analysts had expected $7 a share, the average of 26 estimates compiled by Bloomberg.

Last year “was a fantastic year of execution and out-performance, they met or beat estimates every quarter and raised guidance multiple times,” Michael Yee, an RBC Capital Markets analyst in San Francisco, said in an interview. “On a relative basis, it’s going to be a less exciting year.”

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, increased 72 percent to $369 million in the quarter and reached $1.22 billion in 2012, meeting analyst estimates.

Enbrel Sales

Sales of Amgen’s best-seller Enbrel, used to treat rheumatoid arthritis, gained 23 percent to $1.16 billion in the quarter. Analysts had estimated $1.08 billion.

Amgen has two late-stage drugs in development that may add to sales if approved, potentially in 2015. One, a heart medication called AMG-145, targets cholesterol-regulating gene PCSK9 in the liver. The other therapy, romosozumab, aims to grow bone for patients with osteoporosis.

The company is focusing on the potential of the experimental treatments to help offset declining revenue from its anemia drugs Aranesp and Epogen. Sales of Aranesp fell 9.1 percent to $489 million, and Epogen, an older version, declined 1.4 percent to $479 million in the fourth quarter.

Amgen is almost finished with its $10 billion share repurchase plan, begun in 2010, and said last month it would buy back an additional $2 billion and boost its dividend 31 percent to 47 cents. The company has repurchased about 20 percent of its outstanding shares since 2011, Bradway said earlier this month during a presentation at the annual health-care conference sponsored by JPMorgan Chase & Co. in San Francisco.

Sensipar Protection

Sales of Sensipar, a treatment for end-stage renal disease, rose 19 percent to $256 million. The drug is among several that won’t be included in a U.S. government plan to trim costs for dialysis patients until after 2016.

The provision protecting the drug from potential cuts was included in the tax deal passed by Congress and signed by President Barack Obama on Jan. 2. It was backed by Amgen to give the company and U.S. health officials time to address patient access and care issues, said Ashleigh Koss, a company spokeswoman. The inclusion of the drug pricing benefit in the tax bill has drawn criticism.

“The special exception is the sort of thing that saps health-care reform of the moral legitimacy its proponents like to wrap around it,” Erik Gordon, a professor at the University of Michigan’s Ross School of Business, wrote in an e-mail. “At the end of the day, it works like any federal regulation that can hurt a company’s profits: it’s an invitation for political contributions in return for relief.”

U.S. Representative Peter Welch, a Democrat from Vermont, introduced legislation to repeal the provision, which he said is worth $500 million.

“This 11th-hour, backroom deal confirms the American public’s worst suspicions of how Congress operates,” Welch said today in a statement. “As the nation’s economy teetered on the edge of a congressional-created fiscal cliff, lobbyists for a private, for-profit company seized an opportunity to feed at the public trough.”

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