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Amgen (AMGN - Free Report) reported third-quarter 2022 earnings of $4.70 per share, which beat the Zacks Consensus Estimate of $4.43 as well as our estimate of $4.37 per share. Earnings rose 15% year over year. Lower operating expenses and share count boosted earnings in the quarter.
Total revenues of $6.65 billion also beat the Zacks Consensus Estimate of $6.57 billion as well as our estimate of $6.61 billion. Total revenues declined 1% year over year due to lower product sales.
Total product revenues declined 1% from the year-ago quarter to $6.32 billion (U.S.: $4.46 billion; ex-U.S.: $1.77 billion). Higher volumes were offset by lower selling prices of several drugs and currency headwinds. Volumes rose 8% in the quarter, offset by a 5% lower net selling price. Foreign exchange movement hurt sales by 2% in the quarter.
Other revenues were $415 million in the quarter, up 7.5% year over year.
Amgen’s stock has risen 18.2% this year so far against a decline of 22.2% for the industry.
Image Source: Zacks Investment Research
Performance of Key Drugs
General Medicine
Prolia revenues came in at $862 million, up 7% from the year-ago quarter, driven by volume growth. Prolia sales missed our estimates of $917.7 million.
Evenity recorded sales of $201 million in the quarter, up 35% year over year, driven by strong volume growth.
Repatha generated revenues of $309 million, up 14% year over year, as higher volume was partially offset by lower prices. Increased rebates to support broad Medicare Part D and commercial patient access in the United States and the inclusion of Repatha on China’s National Reimbursement Drug List led to lower prices in the quarter. Repatha sales missed our estimates of $321.1 million.
Aimovig recorded sales of $107 million in the quarter, up 35% year over year due to higher net selling price and favorable changes to estimated sales deductions, which offset a decline in volume.
Hematology-Oncology
Xgeva delivered revenues of $495 million, down 4% from the year-ago quarter due to lower volumes and inventory levels and currency headwinds. Xgeva sales significantly missed our estimates of $545.0 million.
Kyprolis recorded sales of $318 million, up 9% year over year, driven by volume growth.
Vectibix revenues came in at $247 million, up 24% year over, driven by volume growth, mainly due to the favorable timing of shipments to Japanese partner, Takeda.
Nplate sales rose 5% to $288 million. Blincyto sales increased 14% from the year-ago period to $142 million.
Amgen’s newly approved drug, Lumakras/ Lumykras, recorded sales of $75 million in the quarter compared with $77 million in the previous quarter. Lumakras sales declined sequentially due to a lower net selling price due to reimbursement approval in Germany, resulting in an unfavorable price adjustment. Lumakras/ Lumykras volumes rose 15% in the quarter. Lumakras/Lumykras sales missed our estimates of $95.1 million.
Sales of Amgen’s oncology biosimilars declined 25% year over year in the third quarter.
In oncology biosimilars, sales of Kanjinti (Amgen’s biosimilar of Roche’s [(RHHBY - Free Report) ] Herceptin) were $72 million, down 38% year over year due to lower volumes and pricing as a result of increased competition.
Sales of Mvasi (biosimilar of Roche’s Avastin) were $209 million in the quarter, down 24% year over year due to declines in net selling price.
Inflammation
Sales of Otezla were $627 million in the quarter, up 3%, driven by higher volumes, which offset the impact of lower inventory levels and currency headwinds. Otezla sales beat our estimates of $616.4 million.
Newly approved asthma drug, Tezspire (tezepelumab) recorded sales of $55 million in the quarter compared with $29 million in the previous quarter. Amgen has a partnership with AstraZeneca (AZN - Free Report) for Tezspire. In September, AstraZeneca announced that Tezspire was approved in Japan and Europe. Amgen and AstraZeneca share costs and profits equally after payment by AstraZeneca of a mid-single-digit inventor royalty to Amgen. While AstraZeneca leads development, Amgen leads manufacturing.
Amgevita (biosimilar of AbbVie’s [(ABBV - Free Report) ] Humira) sales were $117 million in the quarter, up 5% year over year, driven by volume growth, which was partially offset by currency headwinds and lower net selling price due to increased competitive pressure. Amgen will be one of the first companies to launch its biosimilar of AbbVie’s Humira in early 2023.
Enbrel revenues of $1.11 billion declined 14% year over year due to lower volumes, price and unfavorable changes to estimated sales deductions. Enbrel sales beat our estimates of $1.04 billion.
Established Products
Total sales of mature drugs like Parsabiv, Neupogen, Aranesp, Epogen and Neulasta declined 17% in the quarter due to an array of branded and generic competitors.
Operating Margins Rise
The adjusted operating margin rose 4.2 percentage points to 52.5% in the quarter due to lower operating costs. Adjusted operating expenses declined 8% to $3.37 billion.
SG&A spending rose 1% to $1.28 billion. R&D expenses declined 22% year over year to $1.10 billion due to a one-time upfront payment recorded in the year-ago quarter. In the third quarter of 2021, Amgen had made an upfront payment of $400 million to license rights to AMG 451 from Kyowa Kirin Corporation. Excluding this one-time payment, R&D expenses increased 10%. Acquired IPR&D expenses were zero in the quarter.
2022 Guidance
Revenues are expected in the range of $26.0 billion to $26.3 billion versus the prior expectation of $25.5 billion to $26.4 billion. Earnings are expected in the range of $17.25 to $17.85 versus the prior expectation of $17.00 to $18.00.
Amgen expects other revenues to be between $1.5 billion and $1.6 billion versus the prior guidance of $1.4 billion to $1.6 billion.
Adjusted cost of sales as a percent of product sales is expected to be 15.5% to 16.5% in 2022 (same as before). Adjusted R&D costs are expected to decrease in the range of 5% to 8% year over year in 2022 (previously 4% to 6%). SG&A spending is expected to be roughly flat year over year as a percentage of product sales (previously flat to slightly down). Total operating expenses are expected to decline year over year at a low double-digit rate. Amgen expects the operating margin as a percentage of product sales to be roughly 50% in 2022.
Currency headwinds are expected to hurt adjusted earnings by approximately 45 cents in 2022.
The adjusted tax rate is expected to be in the range of 13.5%-14.5% (previously 14.0% to 15.0%), while capital expenditures are expected to be approximately $950 million (maintained). The company expects to buy back shares in the range of $6.0 billion to $7.0 billion in 2022.
Our Take
Amgen’s third-quarter results were strong as it beat estimates for both earnings and sales. Amgen tightened its previously issued revenue and adjusted earnings guidance ranges.
Amgen’s four key products, Repatha, Otezla, Prolia and Evenity generated a combined $2 billion in sales in the third quarter with volume growth of 17%. However, pricing pressure and increased competition continued to hurt sales of some drugs as well as biosimilar products. Two of Amgen’s newest drugs, Lumakras and Tezspire, are off to an encouraging start. The recent acquisition of ChemoCentryx added another newly launched innovative product, Tavneos to Amgen’s portfolio which is approved for the treatment for patients with ANCA-associated vasculitis, a serious systemic autoimmune disease.
Image: Shutterstock
Amgen (AMGN) Beats on Q3 Earnings & Sales, Tweaks 2022 View
Amgen (AMGN - Free Report) reported third-quarter 2022 earnings of $4.70 per share, which beat the Zacks Consensus Estimate of $4.43 as well as our estimate of $4.37 per share. Earnings rose 15% year over year. Lower operating expenses and share count boosted earnings in the quarter.
Total revenues of $6.65 billion also beat the Zacks Consensus Estimate of $6.57 billion as well as our estimate of $6.61 billion. Total revenues declined 1% year over year due to lower product sales.
Total product revenues declined 1% from the year-ago quarter to $6.32 billion (U.S.: $4.46 billion; ex-U.S.: $1.77 billion). Higher volumes were offset by lower selling prices of several drugs and currency headwinds. Volumes rose 8% in the quarter, offset by a 5% lower net selling price. Foreign exchange movement hurt sales by 2% in the quarter.
Other revenues were $415 million in the quarter, up 7.5% year over year.
Amgen’s stock has risen 18.2% this year so far against a decline of 22.2% for the industry.
Image Source: Zacks Investment Research
Performance of Key Drugs
General Medicine
Prolia revenues came in at $862 million, up 7% from the year-ago quarter, driven by volume growth. Prolia sales missed our estimates of $917.7 million.
Evenity recorded sales of $201 million in the quarter, up 35% year over year, driven by strong volume growth.
Repatha generated revenues of $309 million, up 14% year over year, as higher volume was partially offset by lower prices. Increased rebates to support broad Medicare Part D and commercial patient access in the United States and the inclusion of Repatha on China’s National Reimbursement Drug List led to lower prices in the quarter. Repatha sales missed our estimates of $321.1 million.
Aimovig recorded sales of $107 million in the quarter, up 35% year over year due to higher net selling price and favorable changes to estimated sales deductions, which offset a decline in volume.
Hematology-Oncology
Xgeva delivered revenues of $495 million, down 4% from the year-ago quarter due to lower volumes and inventory levels and currency headwinds. Xgeva sales significantly missed our estimates of $545.0 million.
Kyprolis recorded sales of $318 million, up 9% year over year, driven by volume growth.
Vectibix revenues came in at $247 million, up 24% year over, driven by volume growth, mainly due to the favorable timing of shipments to Japanese partner, Takeda.
Nplate sales rose 5% to $288 million. Blincyto sales increased 14% from the year-ago period to $142 million.
Amgen’s newly approved drug, Lumakras/ Lumykras, recorded sales of $75 million in the quarter compared with $77 million in the previous quarter. Lumakras sales declined sequentially due to a lower net selling price due to reimbursement approval in Germany, resulting in an unfavorable price adjustment. Lumakras/ Lumykras volumes rose 15% in the quarter. Lumakras/Lumykras sales missed our estimates of $95.1 million.
Sales of Amgen’s oncology biosimilars declined 25% year over year in the third quarter.
In oncology biosimilars, sales of Kanjinti (Amgen’s biosimilar of Roche’s [(RHHBY - Free Report) ] Herceptin) were $72 million, down 38% year over year due to lower volumes and pricing as a result of increased competition.
Sales of Mvasi (biosimilar of Roche’s Avastin) were $209 million in the quarter, down 24% year over year due to declines in net selling price.
Inflammation
Sales of Otezla were $627 million in the quarter, up 3%, driven by higher volumes, which offset the impact of lower inventory levels and currency headwinds. Otezla sales beat our estimates of $616.4 million.
Newly approved asthma drug, Tezspire (tezepelumab) recorded sales of $55 million in the quarter compared with $29 million in the previous quarter. Amgen has a partnership with AstraZeneca (AZN - Free Report) for Tezspire. In September, AstraZeneca announced that Tezspire was approved in Japan and Europe. Amgen and AstraZeneca share costs and profits equally after payment by AstraZeneca of a mid-single-digit inventor royalty to Amgen. While AstraZeneca leads development, Amgen leads manufacturing.
Amgevita (biosimilar of AbbVie’s [(ABBV - Free Report) ] Humira) sales were $117 million in the quarter, up 5% year over year, driven by volume growth, which was partially offset by currency headwinds and lower net selling price due to increased competitive pressure. Amgen will be one of the first companies to launch its biosimilar of AbbVie’s Humira in early 2023.
Enbrel revenues of $1.11 billion declined 14% year over year due to lower volumes, price and unfavorable changes to estimated sales deductions. Enbrel sales beat our estimates of $1.04 billion.
Established Products
Total sales of mature drugs like Parsabiv, Neupogen, Aranesp, Epogen and Neulasta declined 17% in the quarter due to an array of branded and generic competitors.
Operating Margins Rise
The adjusted operating margin rose 4.2 percentage points to 52.5% in the quarter due to lower operating costs. Adjusted operating expenses declined 8% to $3.37 billion.
SG&A spending rose 1% to $1.28 billion. R&D expenses declined 22% year over year to $1.10 billion due to a one-time upfront payment recorded in the year-ago quarter. In the third quarter of 2021, Amgen had made an upfront payment of $400 million to license rights to AMG 451 from Kyowa Kirin Corporation. Excluding this one-time payment, R&D expenses increased 10%. Acquired IPR&D expenses were zero in the quarter.
2022 Guidance
Revenues are expected in the range of $26.0 billion to $26.3 billion versus the prior expectation of $25.5 billion to $26.4 billion. Earnings are expected in the range of $17.25 to $17.85 versus the prior expectation of $17.00 to $18.00.
Amgen expects other revenues to be between $1.5 billion and $1.6 billion versus the prior guidance of $1.4 billion to $1.6 billion.
Adjusted cost of sales as a percent of product sales is expected to be 15.5% to 16.5% in 2022 (same as before). Adjusted R&D costs are expected to decrease in the range of 5% to 8% year over year in 2022 (previously 4% to 6%). SG&A spending is expected to be roughly flat year over year as a percentage of product sales (previously flat to slightly down). Total operating expenses are expected to decline year over year at a low double-digit rate. Amgen expects the operating margin as a percentage of product sales to be roughly 50% in 2022.
Currency headwinds are expected to hurt adjusted earnings by approximately 45 cents in 2022.
The adjusted tax rate is expected to be in the range of 13.5%-14.5% (previously 14.0% to 15.0%), while capital expenditures are expected to be approximately $950 million (maintained). The company expects to buy back shares in the range of $6.0 billion to $7.0 billion in 2022.
Our Take
Amgen’s third-quarter results were strong as it beat estimates for both earnings and sales. Amgen tightened its previously issued revenue and adjusted earnings guidance ranges.
Amgen’s four key products, Repatha, Otezla, Prolia and Evenity generated a combined $2 billion in sales in the third quarter with volume growth of 17%. However, pricing pressure and increased competition continued to hurt sales of some drugs as well as biosimilar products. Two of Amgen’s newest drugs, Lumakras and Tezspire, are off to an encouraging start. The recent acquisition of ChemoCentryx added another newly launched innovative product, Tavneos to Amgen’s portfolio which is approved for the treatment for patients with ANCA-associated vasculitis, a serious systemic autoimmune disease.
Amgen currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Amgen Inc. Price, Consensus and EPS Surprise
Amgen Inc. price-consensus-eps-surprise-chart | Amgen Inc. Quote