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Amgen (AMGN) Beats on Q4 Earnings, 2023 Sales View Disappoints
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Amgen (AMGN - Free Report) reported fourth-quarter 2022 earnings of $4.09 per share, which beat the Zacks Consensus Estimate of $4.04. Earnings declined 7% year over year due to a lower operating margin.
Total revenues of $6.84 billion also beat the Zacks Consensus Estimate of $6.74 billion as well as our estimate of $6.66 billion. Total revenues were flat year over year as higher product sales were offset by lower Other revenues.
Total product revenues increased 4% from the year-ago quarter to $6.55 billion (U.S.: $4.79 billion; ex-U.S.: $1.78 billion). Higher volumes were offset by lower selling prices of several drugs and currency headwinds. Volumes rose 10% in the quarter, offset by a 3% lower net selling price. Foreign exchange movement hurt sales by 2% in the quarter.
Other revenues were $287 million in the quarter, down 50% year over year due to lower revenues from its COVID-19 manufacturing collaboration with Eli Lilly.
Amgen’s stock has risen 10.5% in the past year against a decline of 10.4% for the industry.
Image Source: Zacks Investment Research
Performance of Key Drugs
General Medicine
Prolia revenues came in at $992 million, up 14% from the year-ago quarter, driven by volume growth. Prolia sales beat our estimates of $941.2 million.
Evenity recorded sales of $225.0 million in the quarter, up 57% year over year, driven by strong volume growth both in and outside the United States.
Repatha generated revenues of $333.0 million, up 22% 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 were almost in line with our estimates of $333.4 million.
Aimovig recorded sales of $114 million in the quarter, up 27% year over year due to higher net selling price, which offset a decline in volume.
Hematology-Oncology
Xgeva delivered revenues of $484 million, down 11% from the year-ago quarter due to lower volumes and unfavorable changes to estimated sales deductions. Xgeva sales missed our estimates of $518.1 million.
Kyprolis recorded sales of $325 million, up 14% year over year, driven by volume growth.
Vectibix revenues came in at $238 million, down 2% year over due to currency headwinds,
Nplate sales rose 66% to $469 million due to a one-time order from the U.S. government. Blincyto sales increased 24% from the year-ago period to $164 million.
Amgen’s newly approved drug, Lumakras/ Lumykras recorded sales of $71 million in the quarter compared with $75 million in the previous quarter. Lumakras sales declined sequentially due to lower net selling price and unfavorable changes to estimated sales deductions. Lumakras/ Lumykras volumes rose 12% in the quarter. Lumakras/Lumykras sales missed our estimates of $85.6 million.
Sales of Amgen’s oncology biosimilars declined 40% year over year in the fourth quarter.
In oncology biosimilars, sales of Kanjinti (Amgen’s biosimilar of Roche’s Herceptin) were $63 million, down 55% year over year due to lower pricing as a result of increased competition and unfavorable changes to estimated sales deductions.
Sales of Mvasi (biosimilar of Roche’s Avastin) were $205 million in the quarter, down 33% year over year due to declines in net selling price.
Inflammation
Sales of Otezla were $616 million in the quarter, down 2%, due to lower pricing and unfavorable changes to estimated sales deductions. Otezla volumes rose 7% in the quarter. Otezla sales in the United States were hurt by increased competitive pressure. Otezla sales missed our estimates of $640.2 million.
Newly approved asthma drug, Tezspire (tezepelumab) recorded sales of $79 million in the quarter compared with $55 million in the previous quarter as the new drug is being utilized by patients across all types of severe asthma. 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 (a biosimilar of AbbVie’s [(ABBV - Free Report) ] Humira) sales were $119 million in the quarter, up 3% year over year, driven by volume growth, which was partially offset by currency headwinds and lower net selling price due to increased competitive pressure. The same day as its earnings release, Amgen announced that it has launched Amjevita in the United States at a list price 55% below the current list price set by AbbVie for Humira. Amgen is the first company to have launched a biosimilar of AbbVie’s Humira in the United States. With a five-month lead over the next biosimilar entrant, Amgen expects a rapid uptake of the biosimilar in 2023.
Enbrel revenues of $1.08 billion declined 1% year over year due to lower volumes and price, which were partially offset by higher year-end inventory levels. Enbrel sales slightly missed our estimates of $1.11 billion.
The 2022 acquisition of ChemoCentryx added a newly launched innovative product, Tavneos to Amgen’s portfolio. Tavneos is approved for the treatment of patients with ANCA-associated vasculitis, a serious systemic autoimmune disease. Tavneos generated $21 million in sales in the fourth quarter
Operating Margins Decline
The adjusted operating margin declined 1.9 percentage points to 45.9% in the quarter. Adjusted operating expenses were flat at $3.83 billion as higher SG&A costs were offset by lower R&D costs.
SG&A spending rose 2% to $1.47 billion. R&D expenses declined 2% year over year to $1.29 billion due to higher business development activity in the year-ago quarter, partially offset by higher spending behind pipeline candidates.
2022 Results
Full-year 2022 sales rose 1% to $26.32 billion, which beat the Zacks Consensus Estimate of $26.23 billion. Sales were within the guided range of $26.0 billion to $26.3 billion
Adjusted earnings for 2022 were $17.69 per share, up 27% year over year. Earnings beat the Zacks Consensus Estimate of $17.62 per share and were within the guided range of $17.25 to $17.85 per share.
2023 Guidance
Amgen gave its financial guidance for 2023 that excluded any contribution from the pending acquisition of Horizon Therapeutics .
In December, Amgen announced a definitive agreement to acquire Horizon Therapeutics for $116.5 per share in cash or $27.8 billion. The acquisition will add several first-in-class early-in-lifecycle biologic drugs like Tepezza, Krystexxa and Uplizna to Amgen’s broad and diversified portfolio. The acquisition is expected to close in the first half of this year. AMGN will provide updated guidance for 2023 after the transaction closes.
Revenues are expected in the range of 26.0 billion to $27.2 billion, which fell short of the Zacks Consensus Estimate of $28.46 billion.
Earnings are expected in the range of $17.40 to $18.60 per share. The Zacks Consensus Estimate stands at $18.43 per share.
Amgen expects Other revenues to be between $1.2 billion to $1.5 billion.
Adjusted cost of sales as a percent of product sales is expected to be 16% to 17% in 2023.
Adjusted R&D costs are expected to increase 3% to 4% year over year from the 2022 level. S&A spending is expected to decrease slightly year over year. Total operating expenses are expected to be flat versus the 2022 level. Amgen expects the operating margin as a percentage of product sales to be roughly 50% in 2023.
The adjusted tax rate is expected to be in the range of 18.0%-19.0%, while capital expenditures are expected to be approximately $925 million. The company expects to buy back shares worth not more than $500 million in 2023.
Our Take
Amgen’s fourth-quarter results were strong as it beat estimates for both earnings and sales. Its 2023 sales guidance fell short of market expectations, which explains the slight decline in the stock price in after-hours trading.
Amgen witnessed double-digit volume growth for a number of its key products like Repatha, Prolia and Evenity in the fourth quarter and in the full year, with the trend expected to continue in 2023. However, pricing pressure and increased competition continued to hurt sales of some drugs as well as biosimilar products.
In 2023, Amgen expects strong sales growth of products like Tezspire, Evenity, Repatha, Prolia and Tavneos to be offset by lower revenues from Nplate, oncology biosimilars and legacy established products such as Enbrel and the absence of COVID-19 antibody revenues. It expects a mid-single-digit price decline in 2023
Image: Shutterstock
Amgen (AMGN) Beats on Q4 Earnings, 2023 Sales View Disappoints
Amgen (AMGN - Free Report) reported fourth-quarter 2022 earnings of $4.09 per share, which beat the Zacks Consensus Estimate of $4.04. Earnings declined 7% year over year due to a lower operating margin.
Total revenues of $6.84 billion also beat the Zacks Consensus Estimate of $6.74 billion as well as our estimate of $6.66 billion. Total revenues were flat year over year as higher product sales were offset by lower Other revenues.
Total product revenues increased 4% from the year-ago quarter to $6.55 billion (U.S.: $4.79 billion; ex-U.S.: $1.78 billion). Higher volumes were offset by lower selling prices of several drugs and currency headwinds. Volumes rose 10% in the quarter, offset by a 3% lower net selling price. Foreign exchange movement hurt sales by 2% in the quarter.
Other revenues were $287 million in the quarter, down 50% year over year due to lower revenues from its COVID-19 manufacturing collaboration with Eli Lilly.
Amgen’s stock has risen 10.5% in the past year against a decline of 10.4% for the industry.
Image Source: Zacks Investment Research
Performance of Key Drugs
General Medicine
Prolia revenues came in at $992 million, up 14% from the year-ago quarter, driven by volume growth. Prolia sales beat our estimates of $941.2 million.
Evenity recorded sales of $225.0 million in the quarter, up 57% year over year, driven by strong volume growth both in and outside the United States.
Repatha generated revenues of $333.0 million, up 22% 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 were almost in line with our estimates of $333.4 million.
Aimovig recorded sales of $114 million in the quarter, up 27% year over year due to higher net selling price, which offset a decline in volume.
Hematology-Oncology
Xgeva delivered revenues of $484 million, down 11% from the year-ago quarter due to lower volumes and unfavorable changes to estimated sales deductions. Xgeva sales missed our estimates of $518.1 million.
Kyprolis recorded sales of $325 million, up 14% year over year, driven by volume growth.
Vectibix revenues came in at $238 million, down 2% year over due to currency headwinds,
Nplate sales rose 66% to $469 million due to a one-time order from the U.S. government. Blincyto sales increased 24% from the year-ago period to $164 million.
Amgen’s newly approved drug, Lumakras/ Lumykras recorded sales of $71 million in the quarter compared with $75 million in the previous quarter. Lumakras sales declined sequentially due to lower net selling price and unfavorable changes to estimated sales deductions. Lumakras/ Lumykras volumes rose 12% in the quarter. Lumakras/Lumykras sales missed our estimates of $85.6 million.
Sales of Amgen’s oncology biosimilars declined 40% year over year in the fourth quarter.
In oncology biosimilars, sales of Kanjinti (Amgen’s biosimilar of Roche’s Herceptin) were $63 million, down 55% year over year due to lower pricing as a result of increased competition and unfavorable changes to estimated sales deductions.
Sales of Mvasi (biosimilar of Roche’s Avastin) were $205 million in the quarter, down 33% year over year due to declines in net selling price.
Inflammation
Sales of Otezla were $616 million in the quarter, down 2%, due to lower pricing and unfavorable changes to estimated sales deductions. Otezla volumes rose 7% in the quarter. Otezla sales in the United States were hurt by increased competitive pressure. Otezla sales missed our estimates of $640.2 million.
Newly approved asthma drug, Tezspire (tezepelumab) recorded sales of $79 million in the quarter compared with $55 million in the previous quarter as the new drug is being utilized by patients across all types of severe asthma. 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 (a biosimilar of AbbVie’s [(ABBV - Free Report) ] Humira) sales were $119 million in the quarter, up 3% year over year, driven by volume growth, which was partially offset by currency headwinds and lower net selling price due to increased competitive pressure. The same day as its earnings release, Amgen announced that it has launched Amjevita in the United States at a list price 55% below the current list price set by AbbVie for Humira. Amgen is the first company to have launched a biosimilar of AbbVie’s Humira in the United States. With a five-month lead over the next biosimilar entrant, Amgen expects a rapid uptake of the biosimilar in 2023.
Enbrel revenues of $1.08 billion declined 1% year over year due to lower volumes and price, which were partially offset by higher year-end inventory levels. Enbrel sales slightly missed our estimates of $1.11 billion.
The 2022 acquisition of ChemoCentryx added a newly launched innovative product, Tavneos to Amgen’s portfolio. Tavneos is approved for the treatment of patients with ANCA-associated vasculitis, a serious systemic autoimmune disease. Tavneos generated $21 million in sales in the fourth quarter
Operating Margins Decline
The adjusted operating margin declined 1.9 percentage points to 45.9% in the quarter. Adjusted operating expenses were flat at $3.83 billion as higher SG&A costs were offset by lower R&D costs.
SG&A spending rose 2% to $1.47 billion. R&D expenses declined 2% year over year to $1.29 billion due to higher business development activity in the year-ago quarter, partially offset by higher spending behind pipeline candidates.
2022 Results
Full-year 2022 sales rose 1% to $26.32 billion, which beat the Zacks Consensus Estimate of $26.23 billion. Sales were within the guided range of $26.0 billion to $26.3 billion
Adjusted earnings for 2022 were $17.69 per share, up 27% year over year. Earnings beat the Zacks Consensus Estimate of $17.62 per share and were within the guided range of $17.25 to $17.85 per share.
2023 Guidance
Amgen gave its financial guidance for 2023 that excluded any contribution from the pending acquisition of Horizon Therapeutics .
In December, Amgen announced a definitive agreement to acquire Horizon Therapeutics for $116.5 per share in cash or $27.8 billion. The acquisition will add several first-in-class early-in-lifecycle biologic drugs like Tepezza, Krystexxa and Uplizna to Amgen’s broad and diversified portfolio. The acquisition is expected to close in the first half of this year. AMGN will provide updated guidance for 2023 after the transaction closes.
Revenues are expected in the range of 26.0 billion to $27.2 billion, which fell short of the Zacks Consensus Estimate of $28.46 billion.
Earnings are expected in the range of $17.40 to $18.60 per share. The Zacks Consensus Estimate stands at $18.43 per share.
Amgen expects Other revenues to be between $1.2 billion to $1.5 billion.
Adjusted cost of sales as a percent of product sales is expected to be 16% to 17% in 2023.
Adjusted R&D costs are expected to increase 3% to 4% year over year from the 2022 level. S&A spending is expected to decrease slightly year over year. Total operating expenses are expected to be flat versus the 2022 level. Amgen expects the operating margin as a percentage of product sales to be roughly 50% in 2023.
The adjusted tax rate is expected to be in the range of 18.0%-19.0%, while capital expenditures are expected to be approximately $925 million. The company expects to buy back shares worth not more than $500 million in 2023.
Our Take
Amgen’s fourth-quarter results were strong as it beat estimates for both earnings and sales. Its 2023 sales guidance fell short of market expectations, which explains the slight decline in the stock price in after-hours trading.
Amgen witnessed double-digit volume growth for a number of its key products like Repatha, Prolia and Evenity in the fourth quarter and in the full year, with the trend expected to continue in 2023. However, pricing pressure and increased competition continued to hurt sales of some drugs as well as biosimilar products.
In 2023, Amgen expects strong sales growth of products like Tezspire, Evenity, Repatha, Prolia and Tavneos to be offset by lower revenues from Nplate, oncology biosimilars and legacy established products such as Enbrel and the absence of COVID-19 antibody revenues. It expects a mid-single-digit price decline in 2023
Amgen currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.