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Amgen (AMGN - Free Report) reported second-quarter 2023 earnings of $5.00 per share, which beat the Zacks Consensus Estimate of $4.44. Earnings rose 8% year over year due to higher revenues, which were offset by higher operating costs.
Total revenues of $6.99 billion beat the Zacks Consensus Estimate of $6.63 billion. Total revenues rose 6% year over year driven by higher product sales.
Total product revenues increased 6% from the year-ago quarter to $6.68 billion (U.S.: $4.74 billion; ex-U.S.: $1.95 billion). Higher volumes were offset by lower selling prices of several drugs. Volumes rose 11% in the quarter, offset by a 2% lower net selling price. Foreign exchange movement hurt sales by 1% in the quarter.
Other revenues were $303 million in the quarter, down 3.2% year over year.
Performance of Key Drugs
General Medicine
Prolia revenues came in at $1.03 billion, up 11% from the year-ago quarter, driven by volume growth. Prolia sales beat the Zacks Consensus Estimate of $974 million as well as our model estimate of $962.6 million.
Evenity recorded sales of $281 million in the quarter, up 47% year over year, driven by strong volume growth both in and outside the United States. Evenity sales beat the Zacks Consensus Estimate of $262 million as well as our model estimate of $242.5 million.
Repatha generated revenues of $424 million, up 30% year over year, as higher volume was partially offset by lower prices. Repatha sales beat the Zacks Consensus Estimate of $382 million as well as our model estimate of $366.2 million.
Aimovig recorded sales of $82 million in the quarter, down 11% year over year due to lower net selling price.
Hematology-Oncology
Xgeva delivered revenues of $530 million, down 1% from the year-ago quarter due to unfavorable changes to estimated sales deductions and lower inventory levels. Xgeva sales were in line with the Zacks Consensus Estimate.
Kyprolis recorded sales of $346 million, up 9% year over year, driven by volume growth, which was partially offset by a lower net selling price. Increased new patient share in the second-line setting pushed up volumes in the quarter.
Vectibix revenues came in at $248 million, up 20% year over year, driven by volume growth. Nplate sales rose 9% to $310 million, driven by volume growth. Blincyto sales increased 48% from the year-ago period to $206 million.
Amgen’s newly approved drug, Lumakras/ Lumykras recorded sales of $77 million in the quarter compared with $74 million in the previous quarter. Lumakras/ Lumykras volumes rose 20% in the quarter. The benefit of higher volumes was offset by lower net selling price and inventory levels. Lumakras/Lumykras sales missed the Zacks Consensus Estimate of $88.0 million as well as our model estimate of $89.0 million.
In oncology biosimilars, sales of Kanjinti (Amgen’s biosimilar of Roche’s Herceptin) were $50 million, down 41% year over year due to lower pricing and volumes as a result of increased competition.
Sales of Mvasi (biosimilar of Roche’s Avastin) were $197 million in the quarter, down 19% year over year due to declines in net selling price.
Inflammation
Sales of Otezla were $600 million in the quarter, up 1%, driven by volume growth. Otezla sales in the United States were hurt by free drug programs launched by new competitors, with the impact expected to continue throughout 2023. Otezla sales beat the Zacks Consensus Estimate of $587 as well as our estimate of $590.3 million.
Enbrel revenues of $1.07 billion rose 2% year over year due to higher prices and the favorable impact of changes to estimated sales deductions, which offset the impact of lower inventory levels. Enbrel sales beat the Zacks Consensus Estimate of $868.0 million as well as our estimate of $797.3 million. Improved payer coverage led to some better volume growth in the second quarter.
Newly approved asthma drug, Tezspire (tezepelumab) recorded sales of $133 million in the quarter, up 39% sequentially, driven by volume growth. Tezspire volumes benefited from the launch of a self-administered, pre-filled, single-use pen formulation of the drug in the first quarter. which improves patient convenience and accessibility and also provides more flexibility in treatment options.
Amgen has a partnership with AstraZeneca (AZN - Free Report) for Tezspire. Amgen and AstraZeneca share costs and profits equally after AstraZeneca’s payment of a mid-single-digit inventor royalty to Amgen. While AstraZeneca leads development, Amgen leads manufacturing.
Amjevita/Amgevita (a biosimilar of AbbVie’s [(ABBV - Free Report) ] Humira) sales were $150 million in the quarter, up 29% year over year.
Second-quarter sales of Amjevita, as expected, were lower than first-quarter sales of $164 million due to inventory drawdowns after stocking to support the biosimilar’s launch in the first quarter. Amgen launched Amjevita in the United States at a 55% lower list price than the current price set by AbbVie for Humira in February. Amgen already markets a biosimilar of AbbVie’s Humira, Amgevita, in the United States.
Also, several more biosimilar versions of AbbVie’s Humira were launched in July, which can hurt Amjevita sales going forward.
New drug Tavneos generated $30 million in sales in the second quarter compared with $23 million in the previous quarter. The drug’s 30% sequential growth was driven by new patient volume growth. Tavneos, approved for the treatment of patients with ANCA-associated vasculitis, a serious systemic autoimmune disease, was added to Amgen’s portfolio with the 2022 acquisition of ChemoCentryx.
Established Products
Total sales of established products, which include Epogen, Aranesp, Parsabiv and Neulasta, decreased 17% year over year in the second quarter.
Operating Margins Decline
Adjusted operating margin declined 0.5 percentage points to 52.6% in the quarter. Adjusted operating expenses increased 7% to $3.47 billion due to higher cost of goods sold and R&D costs.
R&D expenses rose 7% year over year to $1.09 billion due to higher investments behind late-stage pipeline candidates. SG&A spending declined 6% to $1.24 billion due to lower marketing costs.
2023 Guidance Raised
Amgen slightly raised its previously issued revenue and earnings guidance for 2023.
Revenues are expected in the range of $26.6 billion to $27.4 billion, up from the previous expectation of $26.2 billion to $27.3 billion. The Zacks Consensus Estimate is pegged at $26.96 billion.
Adjusted earnings are expected in the range of $17.80 to $18.80, up from the prior expectations of $17.60 to $18.70 per share. The Zacks Consensus Estimate is pegged at $17.54 per share.
However, third-quarter revenues and adjusted earnings are expected to be lower than the second quarter.
Adjusted R&D costs are expected to increase 5% year over year from the 2022 level versus the prior expectation of 3% to 4%. S&A spending is expected to decrease slightly year over year, driven by productivity improvements (maintained). Total operating expenses are expected to increase around 3% versus the prior expectation of 1% versus the 2022 level. Amgen expects 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 17.5% to 18.5% (previously 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.
The 2023 guidance excludes any contribution from the pending acquisition of Horizon Therapeutics .
In December 2022, Amgen announced a definitive agreement to acquire Horizon Therapeutics for $116.5 per share in cash or $27.8 billion. In May, the Federal Trade Commission (“FTC”) filed a lawsuit in Federal Court to halt the buyout deal.
Per the FTC, if the acquisition is allowed to go through, a large-cap giant like Amgen could leverage its position with insurance companies and pharmacy benefit managers to entrench the monopoly positions for two of Horizon's key products — Tepezza (approved for treating thyroid eye disease) and Krystexxa (approved for treating chronic refractory gout). Per the agency, the drugs currently face little to no competition in the market and are sold at very high prices to patients. Along with the second-quarter earnings release, Amgen said it expects the acquisition to be closed in December 2023.
Pipeline Update
Along with the earnings release, Amgen announced positive data from a potentially registrational phase II study on its pipeline candidate tarlatamab in patients with relapsed or refractory small cell lung cancer who had failed two or more prior lines of treatment. Data from the DeLLphi-301 study showed that treatment with tarlatamab, a first-in-class DLL3 targeting BiTE molecule, led to a better objective response rate, the study’s primary endpoint, than that seen in earlier phase I study. Responses were durable and longer than that seen with standard-of-care chemotherapy. Amgen plans to discuss this data with the FDA to seek approval of the drug.
Our Take
Amgen’s second-quarter results were strong as it beat estimates for both earnings and sales. The company witnessed robust volume growth across all its three therapeutic areas, general medicine, inflammation and hematology-oncology portfolios. Sales of most key drugs like Prolia, Repatha, Evenity and Otezla topped expectations. Two of its newest medicines, Tezspire and Tavneos, once again achieved sequential growth in the quarter. It raised its earnings and sales guidance for the year as prescription trends and demand for its products are improving.
The stock was up 1.3% in after-hours trading. Amgen’s stock has declined 12.1% so far this year compared with a decline of 12.9% for the industry.
Image Source: Zacks Investment Research
In 2023, Amgen expects strong sales growth of products like Tezspire, Evenity, Repatha, Prolia and Tavneos to be offset by lower revenues from oncology biosimilars and legacy established products such as Enbrel and lower COVID-19 antibody revenues. Amgen also expects a declining net selling price in 2023. The addition of Horizon Therapeutics, if successfully closed, will enhance Amgen’s growth prospects.
Amgen also has some key pipeline assets in obesity and inflammation, which are indications that can have a large market opportunity.
Image: Bigstock
Amgen (AMGN) Q2 Earnings Beat Estimates, 2023 View Raised
Amgen (AMGN - Free Report) reported second-quarter 2023 earnings of $5.00 per share, which beat the Zacks Consensus Estimate of $4.44. Earnings rose 8% year over year due to higher revenues, which were offset by higher operating costs.
Total revenues of $6.99 billion beat the Zacks Consensus Estimate of $6.63 billion. Total revenues rose 6% year over year driven by higher product sales.
Total product revenues increased 6% from the year-ago quarter to $6.68 billion (U.S.: $4.74 billion; ex-U.S.: $1.95 billion). Higher volumes were offset by lower selling prices of several drugs. Volumes rose 11% in the quarter, offset by a 2% lower net selling price. Foreign exchange movement hurt sales by 1% in the quarter.
Other revenues were $303 million in the quarter, down 3.2% year over year.
Performance of Key Drugs
General Medicine
Prolia revenues came in at $1.03 billion, up 11% from the year-ago quarter, driven by volume growth. Prolia sales beat the Zacks Consensus Estimate of $974 million as well as our model estimate of $962.6 million.
Evenity recorded sales of $281 million in the quarter, up 47% year over year, driven by strong volume growth both in and outside the United States. Evenity sales beat the Zacks Consensus Estimate of $262 million as well as our model estimate of $242.5 million.
Repatha generated revenues of $424 million, up 30% year over year, as higher volume was partially offset by lower prices. Repatha sales beat the Zacks Consensus Estimate of $382 million as well as our model estimate of $366.2 million.
Aimovig recorded sales of $82 million in the quarter, down 11% year over year due to lower net selling price.
Hematology-Oncology
Xgeva delivered revenues of $530 million, down 1% from the year-ago quarter due to unfavorable changes to estimated sales deductions and lower inventory levels. Xgeva sales were in line with the Zacks Consensus Estimate.
Kyprolis recorded sales of $346 million, up 9% year over year, driven by volume growth, which was partially offset by a lower net selling price. Increased new patient share in the second-line setting pushed up volumes in the quarter.
Vectibix revenues came in at $248 million, up 20% year over year, driven by volume growth. Nplate sales rose 9% to $310 million, driven by volume growth. Blincyto sales increased 48% from the year-ago period to $206 million.
Amgen’s newly approved drug, Lumakras/ Lumykras recorded sales of $77 million in the quarter compared with $74 million in the previous quarter. Lumakras/ Lumykras volumes rose 20% in the quarter. The benefit of higher volumes was offset by lower net selling price and inventory levels. Lumakras/Lumykras sales missed the Zacks Consensus Estimate of $88.0 million as well as our model estimate of $89.0 million.
In oncology biosimilars, sales of Kanjinti (Amgen’s biosimilar of Roche’s Herceptin) were $50 million, down 41% year over year due to lower pricing and volumes as a result of increased competition.
Sales of Mvasi (biosimilar of Roche’s Avastin) were $197 million in the quarter, down 19% year over year due to declines in net selling price.
Inflammation
Sales of Otezla were $600 million in the quarter, up 1%, driven by volume growth. Otezla sales in the United States were hurt by free drug programs launched by new competitors, with the impact expected to continue throughout 2023. Otezla sales beat the Zacks Consensus Estimate of $587 as well as our estimate of $590.3 million.
Enbrel revenues of $1.07 billion rose 2% year over year due to higher prices and the favorable impact of changes to estimated sales deductions, which offset the impact of lower inventory levels. Enbrel sales beat the Zacks Consensus Estimate of $868.0 million as well as our estimate of $797.3 million. Improved payer coverage led to some better volume growth in the second quarter.
Newly approved asthma drug, Tezspire (tezepelumab) recorded sales of $133 million in the quarter, up 39% sequentially, driven by volume growth. Tezspire volumes benefited from the launch of a self-administered, pre-filled, single-use pen formulation of the drug in the first quarter. which improves patient convenience and accessibility and also provides more flexibility in treatment options.
Amgen has a partnership with AstraZeneca (AZN - Free Report) for Tezspire. Amgen and AstraZeneca share costs and profits equally after AstraZeneca’s payment of a mid-single-digit inventor royalty to Amgen. While AstraZeneca leads development, Amgen leads manufacturing.
Amjevita/Amgevita (a biosimilar of AbbVie’s [(ABBV - Free Report) ] Humira) sales were $150 million in the quarter, up 29% year over year.
Second-quarter sales of Amjevita, as expected, were lower than first-quarter sales of $164 million due to inventory drawdowns after stocking to support the biosimilar’s launch in the first quarter. Amgen launched Amjevita in the United States at a 55% lower list price than the current price set by AbbVie for Humira in February. Amgen already markets a biosimilar of AbbVie’s Humira, Amgevita, in the United States.
Also, several more biosimilar versions of AbbVie’s Humira were launched in July, which can hurt Amjevita sales going forward.
New drug Tavneos generated $30 million in sales in the second quarter compared with $23 million in the previous quarter. The drug’s 30% sequential growth was driven by new patient volume growth. Tavneos, approved for the treatment of patients with ANCA-associated vasculitis, a serious systemic autoimmune disease, was added to Amgen’s portfolio with the 2022 acquisition of ChemoCentryx.
Established Products
Total sales of established products, which include Epogen, Aranesp, Parsabiv and Neulasta, decreased 17% year over year in the second quarter.
Operating Margins Decline
Adjusted operating margin declined 0.5 percentage points to 52.6% in the quarter. Adjusted operating expenses increased 7% to $3.47 billion due to higher cost of goods sold and R&D costs.
R&D expenses rose 7% year over year to $1.09 billion due to higher investments behind late-stage pipeline candidates. SG&A spending declined 6% to $1.24 billion due to lower marketing costs.
2023 Guidance Raised
Amgen slightly raised its previously issued revenue and earnings guidance for 2023.
Revenues are expected in the range of $26.6 billion to $27.4 billion, up from the previous expectation of $26.2 billion to $27.3 billion. The Zacks Consensus Estimate is pegged at $26.96 billion.
Adjusted earnings are expected in the range of $17.80 to $18.80, up from the prior expectations of $17.60 to $18.70 per share. The Zacks Consensus Estimate is pegged at $17.54 per share.
However, third-quarter revenues and adjusted earnings are expected to be lower than the second quarter.
Adjusted R&D costs are expected to increase 5% year over year from the 2022 level versus the prior expectation of 3% to 4%. S&A spending is expected to decrease slightly year over year, driven by productivity improvements (maintained). Total operating expenses are expected to increase around 3% versus the prior expectation of 1% versus the 2022 level. Amgen expects 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 17.5% to 18.5% (previously 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.
The 2023 guidance excludes any contribution from the pending acquisition of Horizon Therapeutics .
In December 2022, Amgen announced a definitive agreement to acquire Horizon Therapeutics for $116.5 per share in cash or $27.8 billion. In May, the Federal Trade Commission (“FTC”) filed a lawsuit in Federal Court to halt the buyout deal.
Per the FTC, if the acquisition is allowed to go through, a large-cap giant like Amgen could leverage its position with insurance companies and pharmacy benefit managers to entrench the monopoly positions for two of Horizon's key products — Tepezza (approved for treating thyroid eye disease) and Krystexxa (approved for treating chronic refractory gout). Per the agency, the drugs currently face little to no competition in the market and are sold at very high prices to patients. Along with the second-quarter earnings release, Amgen said it expects the acquisition to be closed in December 2023.
Pipeline Update
Along with the earnings release, Amgen announced positive data from a potentially registrational phase II study on its pipeline candidate tarlatamab in patients with relapsed or refractory small cell lung cancer who had failed two or more prior lines of treatment. Data from the DeLLphi-301 study showed that treatment with tarlatamab, a first-in-class DLL3 targeting BiTE molecule, led to a better objective response rate, the study’s primary endpoint, than that seen in earlier phase I study. Responses were durable and longer than that seen with standard-of-care chemotherapy. Amgen plans to discuss this data with the FDA to seek approval of the drug.
Our Take
Amgen’s second-quarter results were strong as it beat estimates for both earnings and sales. The company witnessed robust volume growth across all its three therapeutic areas, general medicine, inflammation and hematology-oncology portfolios. Sales of most key drugs like Prolia, Repatha, Evenity and Otezla topped expectations. Two of its newest medicines, Tezspire and Tavneos, once again achieved sequential growth in the quarter. It raised its earnings and sales guidance for the year as prescription trends and demand for its products are improving.
The stock was up 1.3% in after-hours trading. Amgen’s stock has declined 12.1% so far this year compared with a decline of 12.9% for the industry.
Image Source: Zacks Investment Research
In 2023, Amgen expects strong sales growth of products like Tezspire, Evenity, Repatha, Prolia and Tavneos to be offset by lower revenues from oncology biosimilars and legacy established products such as Enbrel and lower COVID-19 antibody revenues. Amgen also expects a declining net selling price in 2023. The addition of Horizon Therapeutics, if successfully closed, will enhance Amgen’s growth prospects.
Amgen also has some key pipeline assets in obesity and inflammation, which are indications that can have a large market opportunity.
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