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Amgen (AMGN) Q2 Earnings & Sales Beat Estimates, View Up
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Amgen Inc. (AMGN - Free Report) reported second-quarter 2018 earnings of $3.83 per share, which comprehensively beat the Zacks Consensus Estimate of $3.52. Earnings increased 17% year over year driven by higher product sales, a lower tax rate and lower share count.
Total revenues of $6.06 billion in the quarter surpassed the Zacks Consensus Estimate of $5.72 billion and increased 4% year over year.
Quarter in Detail
Total product revenues increased 2% from the year-ago quarter to $5.68 billion (U.S.: $4.37 billion; ex-U.S.: $1.31 billion) as increasing demand for newer products like Prolia, Kyprolis, Xgeva, Repatha and Blincyto was partially offset by lower sales of mature brands like Enbrel, Aranesp, Epogen, Neulasta and Neupogen due to competitive pressure.
Revenues of Amgen’s erythropoiesis-stimulating agent (ESA), Aranesp, declined 12% from the prior-year quarter to $472 million due to lower demand, primarily due to increased competitive pressure and lower selling prices.
Revenues of the other ESA, Epogen, declined 14% to $250 million due to competition and and lower selling price owing to a newly negotiated contract with DaVita Inc.
Neulasta revenues rose 1% to $1.1 billion from the year-ago period as lower volumes were offset by higher selling prices and favorable changes in inventory. Increased competition from PD-1s and other new cancer therapies are hurting demand for Neulasta. However, the Neulasta Onpro kit (on-body injector) continues to perform well, commanding a market share of about 63% in the United States for all Neulasta sales. Amgen is optimistic that it will see more global utilization of Onpro in 2018 with launches in several international markets
Notably, Neulasta and Epogen could start facing a biosimilar competition in the United States this year, which might hurt sales further.
Neupogen recorded a 26% decline in sales to $102 million due to biosimilar competition in the United States. Novartis’ (NVS - Free Report) generic arm Sandoz and Teva (TEVA - Free Report) are marketing biosimilar versions of Neupogen. This week, Pfizer (PFE - Free Report) also gained FDA approval for its biosimilar version of Neupogen.
Enbrel delivered revenues of $1.30 billion, down 11% from the year-ago quarter due to increased competition which hurt demand. Unfavorable changes in inventory levels also hurt Enbrel’s sales.
Prolia revenues came in at $610 million, up 21% from the year-ago quarter due to 16% volume growth resulting from higher demand and share gains in both the United States and international markets.
In June, the European Commission granted marketing approval for the label expansion of Prolia for the treatment of bone loss associated with long-term systemic glucocorticoid therapy in adult patients at increased risk of fracture. Notably, Prolia gained FDA approval for the GIOP indication in May.
Xgeva delivered revenues of $452 million, up 14% from the year-ago quarter mainly due to higher demand, which drove volumes. This year, Xgeva gained approval in both United States and EU for the prevention of skeletal-related events in patients with multiple myeloma. The approval for the expanded patient population drove higher volumes of Xgeva this quarter.
Sensipar/Mimpara revenues declined 2% to $420 million hurt by unfavorable inventory changes as well as Parsabiv launch, which is also marketed for secondary hyperparathyroidism. A generic version of Sensipar is expected to be launched this year, which may hurt sales further.
Vectibix revenues came in at $173 million, up 3%, driven by higher demand.
Kyprolis recorded sales of $263 million, up 25% year over year, driven by increased demand and robust uptake in outside U.S. markets.
Amgen’s regulatory application in the United States to include the overall survival data from the ASPIRE study on the label of Kyprolis was granted an FDA approval in June. The study demonstrated that a triple combination regimen of Kyprolis significantly improved overall survival (OS) in patients with relapsed/refractory multiple myeloma.
Blincyto sales surged 40% from the year-ago period to $60 million, reflecting rise in demand
Notably, last month, Amgen gained approval in EU to include overall survival (OS) data from the TOWER study on the label of Blincyto. The drug’s label in the United States already includes OS data from the TOWER study, following the approval received from the FDA in July last year. In April, Blincyto was approved for a new indication - minimal residual disease (MRD)-positive B-cell precursor acute lymphoblastic leukemia (“ALL”) - that contributed to sales growth.
Amgen’s PCSK9 inhibitor, Repatha, generated revenues of $148 million, up 78% year over year, driven by higher unit demand which made up from lower prices.
Parsabiv, launched in several markets including United States in the first quarter, recorded sales of $73 million in the quarter, much higher than $41 million in the previous quarter.
Other product sales rose 23% to $75 million. Other product sales include sales of Amgen’s newly launched CGRP inhibitor for migraine prevention, Aimovig (erenumab). Aimovig is under review in the EU. Amgen did not separately report early sales of Aimovig.
Other revenues of $380 million rose 61% in the quarter due to a milestone payment from partner Novartis for Aimovig.
Operating Margins Decrease
Adjusted operating margins declined 10 basis points (bps) to 55.1% due to higher operating costs.
SG&A spend increased 14% to $133 billion on higher investments to support growth products as well as investments in product launches. R&D expenses were almost flat at $850 million compared with the year-ago figure.
Adjusted tax rate was 14.2% for the quarter, a 3.2 points decrease from the second quarter of 2017.
Amgen repurchased 18.2 million shares worth $3.2 billion in the second quarter and has $5.4 billion remaining under its stock repurchase authorization.
2018 Guidance
Amgen raised its sales and earnings guidance for 2018. Better-than-expected second quarter results and an optimistic outlook for the rest of the year led to the increase in the earnings guidance.
The company now expects its revenues in the range of $22.5-$23.2 billion compared with the previous prediction of $21.9-$22.8 billion. Adjusted earnings are now anticipated in the range of $13.30-$14.00 in 2018 compared with the previous projection $12.80-$13.70.
Operating margin is expected to be lower in the remaining quarters of 2018 due to the timing of expenses. Operating expenses in the third and fourth quarters are expected to be consistent with second-quarter levels as the company invests in new and growth products. Adjusted tax rate guidance was maintained in the range of 13.5%-14.5%.
Hoping to achieve an improved cash position following the new tax law, Amgen plans to invest approximately $750 million this year in capital expenditures.
Our Take
Amgen second-quarter results were impressive as it beat estimates for both earnings and sales and also increased its outlook for the year. Shares were up slightly more than 1% in after-hours trading on Thursday. In fact, so far this year, the stock has risen 11.6%, against 1.5% decrease of its industry.
Amgen’s newer drugs – Prolia, Xgeva, Blincyto, Repatha, Kyprolis – are performing well on the back of volume-driven growth, which is making up for weaker sales of older ones. Amgen also boasts a strong biosimilar portfolio, which remains an important long-term growth driver for the company. In the quarter, Amgen launched Kanjinti, a biosimilar version of Herceptin, Roche’s blockbuster breast cancer drug, in Europe.
However, possible generic competition for Sensipar and new competition for Neulasta and Aranesp could be the new challenges in the remainder of 2018 and are accounted for in the full-year guidance.
In the wake of intense political scrutiny over the high cost of prescription medicines, like many other drug-biotech bigwigs, Amgen committed that it will not raise prices of any of its medicines through the rest of the year. Amgen’s global commercial operations chief, Tony Hooper said the company has not increased list prices of any of its medicines since President Trump’s blueprint was announced. In May, Amgen decided against executing list price increases that were planned for July.
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New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Image: Bigstock
Amgen (AMGN) Q2 Earnings & Sales Beat Estimates, View Up
Amgen Inc. (AMGN - Free Report) reported second-quarter 2018 earnings of $3.83 per share, which comprehensively beat the Zacks Consensus Estimate of $3.52. Earnings increased 17% year over year driven by higher product sales, a lower tax rate and lower share count.
Total revenues of $6.06 billion in the quarter surpassed the Zacks Consensus Estimate of $5.72 billion and increased 4% year over year.
Quarter in Detail
Total product revenues increased 2% from the year-ago quarter to $5.68 billion (U.S.: $4.37 billion; ex-U.S.: $1.31 billion) as increasing demand for newer products like Prolia, Kyprolis, Xgeva, Repatha and Blincyto was partially offset by lower sales of mature brands like Enbrel, Aranesp, Epogen, Neulasta and Neupogen due to competitive pressure.
Revenues of Amgen’s erythropoiesis-stimulating agent (ESA), Aranesp, declined 12% from the prior-year quarter to $472 million due to lower demand, primarily due to increased competitive pressure and lower selling prices.
Revenues of the other ESA, Epogen, declined 14% to $250 million due to competition and and lower selling price owing to a newly negotiated contract with DaVita Inc.
Neulasta revenues rose 1% to $1.1 billion from the year-ago period as lower volumes were offset by higher selling prices and favorable changes in inventory. Increased competition from PD-1s and other new cancer therapies are hurting demand for Neulasta. However, the Neulasta Onpro kit (on-body injector) continues to perform well, commanding a market share of about 63% in the United States for all Neulasta sales. Amgen is optimistic that it will see more global utilization of Onpro in 2018 with launches in several international markets
Notably, Neulasta and Epogen could start facing a biosimilar competition in the United States this year, which might hurt sales further.
Neupogen recorded a 26% decline in sales to $102 million due to biosimilar competition in the United States. Novartis’ (NVS - Free Report) generic arm Sandoz and Teva (TEVA - Free Report) are marketing biosimilar versions of Neupogen. This week, Pfizer (PFE - Free Report) also gained FDA approval for its biosimilar version of Neupogen.
Enbrel delivered revenues of $1.30 billion, down 11% from the year-ago quarter due to increased competition which hurt demand. Unfavorable changes in inventory levels also hurt Enbrel’s sales.
Prolia revenues came in at $610 million, up 21% from the year-ago quarter due to 16% volume growth resulting from higher demand and share gains in both the United States and international markets.
In June, the European Commission granted marketing approval for the label expansion of Prolia for the treatment of bone loss associated with long-term systemic glucocorticoid therapy in adult patients at increased risk of fracture. Notably, Prolia gained FDA approval for the GIOP indication in May.
Xgeva delivered revenues of $452 million, up 14% from the year-ago quarter mainly due to higher demand, which drove volumes. This year, Xgeva gained approval in both United States and EU for the prevention of skeletal-related events in patients with multiple myeloma. The approval for the expanded patient population drove higher volumes of Xgeva this quarter.
Sensipar/Mimpara revenues declined 2% to $420 million hurt by unfavorable inventory changes as well as Parsabiv launch, which is also marketed for secondary hyperparathyroidism. A generic version of Sensipar is expected to be launched this year, which may hurt sales further.
Vectibix revenues came in at $173 million, up 3%, driven by higher demand.
Kyprolis recorded sales of $263 million, up 25% year over year, driven by increased demand and robust uptake in outside U.S. markets.
Amgen’s regulatory application in the United States to include the overall survival data from the ASPIRE study on the label of Kyprolis was granted an FDA approval in June. The study demonstrated that a triple combination regimen of Kyprolis significantly improved overall survival (OS) in patients with relapsed/refractory multiple myeloma.
Blincyto sales surged 40% from the year-ago period to $60 million, reflecting rise in demand
Notably, last month, Amgen gained approval in EU to include overall survival (OS) data from the TOWER study on the label of Blincyto. The drug’s label in the United States already includes OS data from the TOWER study, following the approval received from the FDA in July last year. In April, Blincyto was approved for a new indication - minimal residual disease (MRD)-positive B-cell precursor acute lymphoblastic leukemia (“ALL”) - that contributed to sales growth.
Amgen’s PCSK9 inhibitor, Repatha, generated revenues of $148 million, up 78% year over year, driven by higher unit demand which made up from lower prices.
Parsabiv, launched in several markets including United States in the first quarter, recorded sales of $73 million in the quarter, much higher than $41 million in the previous quarter.
Other product sales rose 23% to $75 million. Other product sales include sales of Amgen’s newly launched CGRP inhibitor for migraine prevention, Aimovig (erenumab). Aimovig is under review in the EU. Amgen did not separately report early sales of Aimovig.
Other revenues of $380 million rose 61% in the quarter due to a milestone payment from partner Novartis for Aimovig.
Operating Margins Decrease
Adjusted operating margins declined 10 basis points (bps) to 55.1% due to higher operating costs.
SG&A spend increased 14% to $133 billion on higher investments to support growth products as well as investments in product launches. R&D expenses were almost flat at $850 million compared with the year-ago figure.
Adjusted tax rate was 14.2% for the quarter, a 3.2 points decrease from the second quarter of 2017.
Amgen repurchased 18.2 million shares worth $3.2 billion in the second quarter and has $5.4 billion remaining under its stock repurchase authorization.
2018 Guidance
Amgen raised its sales and earnings guidance for 2018. Better-than-expected second quarter results and an optimistic outlook for the rest of the year led to the increase in the earnings guidance.
The company now expects its revenues in the range of $22.5-$23.2 billion compared with the previous prediction of $21.9-$22.8 billion. Adjusted earnings are now anticipated in the range of $13.30-$14.00 in 2018 compared with the previous projection $12.80-$13.70.
Operating margin is expected to be lower in the remaining quarters of 2018 due to the timing of expenses. Operating expenses in the third and fourth quarters are expected to be consistent with second-quarter levels as the company invests in new and growth products. Adjusted tax rate guidance was maintained in the range of 13.5%-14.5%.
Hoping to achieve an improved cash position following the new tax law, Amgen plans to invest approximately $750 million this year in capital expenditures.
Our Take
Amgen second-quarter results were impressive as it beat estimates for both earnings and sales and also increased its outlook for the year. Shares were up slightly more than 1% in after-hours trading on Thursday. In fact, so far this year, the stock has risen 11.6%, against 1.5% decrease of its industry.
Amgen’s newer drugs – Prolia, Xgeva, Blincyto, Repatha, Kyprolis – are performing well on the back of volume-driven growth, which is making up for weaker sales of older ones. Amgen also boasts a strong biosimilar portfolio, which remains an important long-term growth driver for the company. In the quarter, Amgen launched Kanjinti, a biosimilar version of Herceptin, Roche’s blockbuster breast cancer drug, in Europe.
However, possible generic competition for Sensipar and new competition for Neulasta and Aranesp could be the new challenges in the remainder of 2018 and are accounted for in the full-year guidance.
In the wake of intense political scrutiny over the high cost of prescription medicines, like many other drug-biotech bigwigs, Amgen committed that it will not raise prices of any of its medicines through the rest of the year. Amgen’s global commercial operations chief, Tony Hooper said the company has not increased list prices of any of its medicines since President Trump’s blueprint was announced. In May, Amgen decided against executing list price increases that were planned for July.
Zacks Rank
Amgen currently carries 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 and EPS Surprise | Amgen Inc. Quote
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Click here to see the 5 stocks >>