New Cholesterol Drug Falls Short as Sales Driver for Amgen

  • Sales of its biggest brand, Enbrel, also down 15% on year
  • Biotech reaffirmed annual revenue guidance despite the decline

Amgen Inc.’s new cholesterol drug is still struggling to gain traction, missing analysts’ estimates at a time when the biotechnology giant is anxious for its newer drugs to make up for slowing sales of its older ones.

Sales of the drug, called Repatha, in the first quarter were $49 million, the company said in a statement Wednesday. That was far short of the $71.6 million average of analysts’ estimates compiled by Bloomberg. 

Sales of Amgen’s top drug, the arthritis treatment Enbrel, fell 15 percent from a year ago and were short of analysts’ expectations. Enbrel was hurt by lower demand, according to an Amgen slide presentation. The drug is the Thousand Oaks, California-based company’s biggest and made up more than a quarter of its sales last year.

“Enbrel is a good example of why Amgen needs to show where they’re going to drive growth,” said Tony Scherrer, director of research at Smead Capital Management, a shareholder with $2.1 billion under management. “They’ve done fantastically well off Enbrel, but this data point shows why they need to refresh the portfolio.”

Amgen shares fell 3.1 percent to $159.55 after the markets closed in New York.

Repatha has had a rocky start. Earlier this year, the drug was shown to reduce a broad range of heart complications, but disappointed investors because it didn’t benefit patients as much as hoped. With a list price of $14,000 a year, it has faced pushback from insurers who have limited access for patients.

Sales in the first quarter failed to grow from the quarter before, partly because of a one-time sale to the Middle East that wasn’t repeated, said Tony Hooper, Amgen’s executive vice president of global commercial operations. In the U.S. and Europe, however, Repatha prescriptions grew 14 percent and 28 percent, respectively, from the fourth quarter, Hooper said.

New Drugs

Repatha belongs to a new type of cholesterol drugs called PCSK9 inhibitors that lower cholesterol dramatically. When approved in 2015, Repatha and its competitor Praluent, made by Regeneron Pharmaceuticals Inc. and Sanofi, were expected to quickly become blockbusters.

Amgen needs products like Repatha to succeed. It has sought to develop novel drugs to help maintain growth as it plays defense with its mature brands, anticipating future competition from cheaper copycats known as biosimilars. As U.S. insurers have increasingly pushed back on the cost of medicines, Amgen hasn’t been able to rely on price increases to boost sales.

Besides Repatha, Amgen has recently gained U.S. approval for Parsabiv, to treat hyperparathyroidism for patients with chronic kidney disease. It’s awaiting approval for an osteoporosis treatment, Evenity, and plans to file an application in 2017 for a novel migraine drug.

While Amgen has cash to do deals to bring in new drugs, the high prices on many potential takeover targets makes that challenging, Chief Executive Officer Bob Bradway said on the conference call. Amgen is hoping the Trump administration will reform the U.S. tax code, he said.

“Obviously, we think such a change would improve our flexibility.” That could let them bring back funds stashed overseas and potentially use the money to make acquisitions.

Amgen also raised the bottom end of its 2017 forecast. Earnings excluding one-time items will be $12 to $12.60 per share, up from its previous guidance of $11.80 to $12.60 per share. The company reaffirmed its 2017 revenue projection of $22.3 billion to $23.1 billion. That wasn’t enough to ease analysts’ concerns.

“Going forward, I would continue to be wary about Enbrel,” said Asthika Goonewardene, an analyst at Bloomberg Intelligence.

First-quarter earnings were $3.15 per share excluding one-time items, compared to the $3.01 average of analysts’ estimates compiled by Bloomberg.

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