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Amgen (AMGN - Free Report) reported third-quarter 2023 adjusted earnings of $4.96 per share, which beat the Zacks Consensus Estimate of $4.65. Earnings rose 6% year over year due to higher revenues, which were partially offset by higher operating costs.
Total revenues of $6.90 billion missed the Zacks Consensus Estimate of $6.96 billion. Total revenues rose 4% year over year, driven by higher product sales.
Total product revenues increased 5% from the year-ago quarter to $6.55 billion (U.S.: $4.69 billion; ex-U.S.: $1.86 billion). Higher volumes were partially offset by lower selling prices of several drugs. Volumes rose 11% in the quarter, partially offset by a 3% lower net selling price and 3% unfavorable changes to estimated sales deductions.
Other revenues were $355 million in the quarter, down 14.5% year over year.
Performance of Key Drugs
General Medicine
Prolia revenues came in at $986 million, up 14% from the year-ago quarter, driven by volume growth. Prolia sales beat the Zacks Consensus Estimate of $983 million but missed our model estimate of $992 million.
Evenity recorded sales of $307 million in the quarter, up 53% year over year, driven by solid volume growth in and outside the United States. Evenity sales beat the Zacks Consensus Estimate of $284 million as well as our model estimate of $289 million.
Repatha generated revenues of $406 million, up 31% year over year, as higher volume was partially offset by lower prices. Repatha sales marginally missed the Zacks Consensus Estimate of $407 million but beat our model estimate of $400 million.
Aimovig recorded sales of $94 million in the quarter, down 12% year over year due to lower net selling price.
Hematology-Oncology
Xgeva delivered revenues of $519 million, up 5% year over year, driven by higher net selling prices. Xgeva sales missed both the Zacks Consensus Estimate and our model estimates of $522 million and $527 million, respectively.
Kyprolis recorded sales of $349 million, up 10% year over year, driven by volume growth.
Vectibix revenues came in at $252 million, up 2% year over year, driven by volume growth and higher net sales, both of which were partially offset by unfavorable foreign exchange impact.
Nplate sales rose 45% to $419 million, driven by volume growth resulting from a $142 million order from the United States government. Blincyto sales increased 55% from the year-ago period to $220 million, also driven by volume growth.
Lumakras/ Lumykras recorded sales of $52 million in the quarter, down 31% from the year-ago period, due to unfavorable changes to estimated sales deductions related to ongoing reimbursement negotiations in France. Lumakras/Lumykras sales missed the Zacks Consensus Estimate of $87 million as well as our model estimate of $95 million.
In oncology biosimilars, sales of Kanjinti (Amgen’s biosimilar of Roche’s Herceptin) were $20 million, down 72% year over year due to lower pricing and volumes as a result of increased competition.
Sales of Mvasi (biosimilar of Roche’s Avastin) were $213 million in the quarter, up 2% year over year, driven by volume growth and favorable changes to estimated sales deductions, both of which were partially offset by lower pricing.
Inflammation
Sales of Otezla were $567 million in the quarter, down 10%, due to lower pricing, unfavorable changes to estimated sales deductions and lower inventory levels. Otezla sales in the United States continued to be hurt by free drug programs launched by new competitors, with the impact expected to continue throughout 2023. Otezla sales missed the Zacks Consensus Estimate of $635 as well as our estimate of $620 million.
Enbrel revenues of $1.04 billion declined 6% year over year due to unfavorable changes to estimated sales deductions. Enbrel sales beat the Zacks Consensus Estimate and our estimate, both of which stood at $1.02 billion.
Newly approved asthma drug Tezspire (tezepelumab) recorded sales of $161 million in the quarter, up 21% 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 pays 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 $152 million in the quarter, up 30% year over year, driven by volume growth.
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 Amjevita in Europe under the trade name Amgevita.
Also, several more biosimilar versions of AbbVie’s Humira were launched this year, which can hurt Amjevita sales going forward.
New drug Tavneos generated $37 million in sales in the third quarter compared with $30 million in the previous quarter. The drug’s 23% sequential growth was driven by new patient volume growth. Tavneos, approved for the treatment of patients with ANCA-associated vasculitis, a severe 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 30% year over year in the third quarter.
Operating Margins Decline
Adjusted operating margin declined 0.5 percentage points to 52.0% in the quarter. Adjusted operating expenses increased 4% to $3.50 billion due to higher cost of goods sold.
R&D expenses fell 2% year over year to $1.07 billion due to lower spending in research and early pipeline programs. SG&A spending rose 1% to $1.29 billion.
2023 Guidance Raised
Earlier this month, Amgen completed the acquisition of Horizon Therapeutics for $116.50 per share in cash or $27.8 billion. Per the mutually agreed settlement terms with the Federal Trade Commission (“FTC”), Amgen is prohibited from bundling its products with Horizon's Tepezza or Krystexxa. The company will also be required to get the FTC’s permission to buy any competitor to the two acquired drugs till 2032.
Following the completion of the Horizon acquisition, Amgen updated its previously issued revenue and earnings guidance for 2023.
Revenues are now expected in the range of $28.0 billion to $28.4 billion, up from the previous expectation of $26.6 billion to $27.4 billion. The Zacks Consensus Estimate is pegged at $27.54 billion.
Adjusted earnings are expected in the range of $18.20 to $18.80, up from the prior expectations of $17.80 to $18.80 per share. The Zacks Consensus Estimate is pegged at $18.29 per share.
The adjusted tax rate is expected to be in the range of 16.5% to 17.0% (previously 17.5%-18.5%), while capital expenditures are now expected to be approximately $950 million (previously $925 million). Amgen expects to buy back shares worth not more than $500 million (maintained) in 2023.
Our Take
Amgen’s Q3 results were mixed as it beat estimates for earnings but missed the mark for sales. The company witnessed robust volume growth across all its three therapeutic areas: general medicine, inflammation and hematology-oncology portfolios. However, the continued weak sales of some key drugs like Lumakras and Otezla are hurting investor sentiment. This was likely the reason for the stock being down 2.7% in pre-market trading post the earnings announcement.
Year-to-date, Amgen’s stock has gained 0.2% against the industry‘s 25.4% decline.
Image Source: Zacks Investment Research
In the first nine months ended September 2023, Amgen’s top-line has demonstrated consistent year-over-year growth, backed by old medicines like Evenity, Repatha and Prolia, as well as newer medicines like Tavneos and Tezspire. The sales of these drugs more than offset the declining revenues from oncology biosimilars and legacy established products such as Enbrel and Otezla. With the completion of the Horizon acquisition, we expect a further boost to revenue growth, which is likely to be accretive to earnings from next year.
In the past 30 days, estimates for Ligand Pharmaceuticals’ 2023 earnings per share have increased from $4.98 to $5.10. During the same period, the earnings estimate per share for 2024 have risen from $4.26 to $4.59. Shares of Ligand lost 23.9% in the year-to-date period.
Ligand beat earnings estimates in three of the last four quarters while missing the mark on one occasion. The company has delivered an earnings surprise of 52.47% on average. In the last reported quarter, Ligand’s earnings beat estimates by 86.84%.
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Amgen (AMGN) Beats on Q3 Earnings Beat, Lags Sales, Ups View
Amgen (AMGN - Free Report) reported third-quarter 2023 adjusted earnings of $4.96 per share, which beat the Zacks Consensus Estimate of $4.65. Earnings rose 6% year over year due to higher revenues, which were partially offset by higher operating costs.
Total revenues of $6.90 billion missed the Zacks Consensus Estimate of $6.96 billion. Total revenues rose 4% year over year, driven by higher product sales.
Total product revenues increased 5% from the year-ago quarter to $6.55 billion (U.S.: $4.69 billion; ex-U.S.: $1.86 billion). Higher volumes were partially offset by lower selling prices of several drugs. Volumes rose 11% in the quarter, partially offset by a 3% lower net selling price and 3% unfavorable changes to estimated sales deductions.
Other revenues were $355 million in the quarter, down 14.5% year over year.
Performance of Key Drugs
General Medicine
Prolia revenues came in at $986 million, up 14% from the year-ago quarter, driven by volume growth. Prolia sales beat the Zacks Consensus Estimate of $983 million but missed our model estimate of $992 million.
Evenity recorded sales of $307 million in the quarter, up 53% year over year, driven by solid volume growth in and outside the United States. Evenity sales beat the Zacks Consensus Estimate of $284 million as well as our model estimate of $289 million.
Repatha generated revenues of $406 million, up 31% year over year, as higher volume was partially offset by lower prices. Repatha sales marginally missed the Zacks Consensus Estimate of $407 million but beat our model estimate of $400 million.
Aimovig recorded sales of $94 million in the quarter, down 12% year over year due to lower net selling price.
Hematology-Oncology
Xgeva delivered revenues of $519 million, up 5% year over year, driven by higher net selling prices. Xgeva sales missed both the Zacks Consensus Estimate and our model estimates of $522 million and $527 million, respectively.
Kyprolis recorded sales of $349 million, up 10% year over year, driven by volume growth.
Vectibix revenues came in at $252 million, up 2% year over year, driven by volume growth and higher net sales, both of which were partially offset by unfavorable foreign exchange impact.
Nplate sales rose 45% to $419 million, driven by volume growth resulting from a $142 million order from the United States government. Blincyto sales increased 55% from the year-ago period to $220 million, also driven by volume growth.
Lumakras/ Lumykras recorded sales of $52 million in the quarter, down 31% from the year-ago period, due to unfavorable changes to estimated sales deductions related to ongoing reimbursement negotiations in France. Lumakras/Lumykras sales missed the Zacks Consensus Estimate of $87 million as well as our model estimate of $95 million.
In oncology biosimilars, sales of Kanjinti (Amgen’s biosimilar of Roche’s Herceptin) were $20 million, down 72% year over year due to lower pricing and volumes as a result of increased competition.
Sales of Mvasi (biosimilar of Roche’s Avastin) were $213 million in the quarter, up 2% year over year, driven by volume growth and favorable changes to estimated sales deductions, both of which were partially offset by lower pricing.
Inflammation
Sales of Otezla were $567 million in the quarter, down 10%, due to lower pricing, unfavorable changes to estimated sales deductions and lower inventory levels. Otezla sales in the United States continued to be hurt by free drug programs launched by new competitors, with the impact expected to continue throughout 2023. Otezla sales missed the Zacks Consensus Estimate of $635 as well as our estimate of $620 million.
Enbrel revenues of $1.04 billion declined 6% year over year due to unfavorable changes to estimated sales deductions. Enbrel sales beat the Zacks Consensus Estimate and our estimate, both of which stood at $1.02 billion.
Newly approved asthma drug Tezspire (tezepelumab) recorded sales of $161 million in the quarter, up 21% 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 pays 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 $152 million in the quarter, up 30% year over year, driven by volume growth.
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 Amjevita in Europe under the trade name Amgevita.
Also, several more biosimilar versions of AbbVie’s Humira were launched this year, which can hurt Amjevita sales going forward.
New drug Tavneos generated $37 million in sales in the third quarter compared with $30 million in the previous quarter. The drug’s 23% sequential growth was driven by new patient volume growth. Tavneos, approved for the treatment of patients with ANCA-associated vasculitis, a severe 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 30% year over year in the third quarter.
Operating Margins Decline
Adjusted operating margin declined 0.5 percentage points to 52.0% in the quarter. Adjusted operating expenses increased 4% to $3.50 billion due to higher cost of goods sold.
R&D expenses fell 2% year over year to $1.07 billion due to lower spending in research and early pipeline programs. SG&A spending rose 1% to $1.29 billion.
2023 Guidance Raised
Earlier this month, Amgen completed the acquisition of Horizon Therapeutics for $116.50 per share in cash or $27.8 billion. Per the mutually agreed settlement terms with the Federal Trade Commission (“FTC”), Amgen is prohibited from bundling its products with Horizon's Tepezza or Krystexxa. The company will also be required to get the FTC’s permission to buy any competitor to the two acquired drugs till 2032.
Following the completion of the Horizon acquisition, Amgen updated its previously issued revenue and earnings guidance for 2023.
Revenues are now expected in the range of $28.0 billion to $28.4 billion, up from the previous expectation of $26.6 billion to $27.4 billion. The Zacks Consensus Estimate is pegged at $27.54 billion.
Adjusted earnings are expected in the range of $18.20 to $18.80, up from the prior expectations of $17.80 to $18.80 per share. The Zacks Consensus Estimate is pegged at $18.29 per share.
The adjusted tax rate is expected to be in the range of 16.5% to 17.0% (previously 17.5%-18.5%), while capital expenditures are now expected to be approximately $950 million (previously $925 million). Amgen expects to buy back shares worth not more than $500 million (maintained) in 2023.
Our Take
Amgen’s Q3 results were mixed as it beat estimates for earnings but missed the mark for sales. The company witnessed robust volume growth across all its three therapeutic areas: general medicine, inflammation and hematology-oncology portfolios. However, the continued weak sales of some key drugs like Lumakras and Otezla are hurting investor sentiment. This was likely the reason for the stock being down 2.7% in pre-market trading post the earnings announcement.
Year-to-date, Amgen’s stock has gained 0.2% against the industry‘s 25.4% decline.
Image Source: Zacks Investment Research
In the first nine months ended September 2023, Amgen’s top-line has demonstrated consistent year-over-year growth, backed by old medicines like Evenity, Repatha and Prolia, as well as newer medicines like Tavneos and Tezspire. The sales of these drugs more than offset the declining revenues from oncology biosimilars and legacy established products such as Enbrel and Otezla. With the completion of the Horizon acquisition, we expect a further boost to revenue growth, which is likely to be accretive to earnings from next year.
Amgen Inc. Price
Amgen Inc. price | Amgen Inc. Quote
Zacks Rank & Key Picks
Amgen currently carries a Zacks Rank #3 (Hold).A top-ranked stock in the overall healthcare sector is Ligand Pharmaceuticals (LGND - Free Report) , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 30 days, estimates for Ligand Pharmaceuticals’ 2023 earnings per share have increased from $4.98 to $5.10. During the same period, the earnings estimate per share for 2024 have risen from $4.26 to $4.59. Shares of Ligand lost 23.9% in the year-to-date period.
Ligand beat earnings estimates in three of the last four quarters while missing the mark on one occasion. The company has delivered an earnings surprise of 52.47% on average. In the last reported quarter, Ligand’s earnings beat estimates by 86.84%.