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Amgen (AMGN - Free Report) reported fourth-quarter 2023 adjusted earnings of $4.71 per share, which beat the Zacks Consensus Estimate of $4.66. Earnings rose 15% year over year on higher revenues, which were partially offset by higher operating costs and higher interest expenses.
Total revenues of $8.2 billion marginally beat the Zacks Consensus Estimate of $8.16 billion. Total revenues rose 20% year over year, driven by higher product sales.
Total product revenues increased 20% from the year-ago quarter to $7.83 billion (U.S.: $5.87 billion; ex-U.S.: $1.969 billion). Higher volumes were partially offset by lower selling prices of several drugs. Volumes rose 23% in the quarter, partially offset by a 3% lower net selling price.
Other revenues were $363 million in the quarter, up 26.5% year over year.
Performance of Key Drugs
General Medicine
Prolia revenues came in at $1.1 billion, up 12% from the year-ago quarter, driven by volume growth and higher net selling prices. Prolia sales beat the Zacks Consensus Estimate of $1.05 billion as well as our model estimate of $1.03 billion.
Evenity recorded sales of $318 million in the quarter, up 41% year over year, driven by solid volume growth in and outside the United States. Evenity sales slightly missed the Zacks Consensus Estimate of $322 million as well as our model estimate of $318.2 million.
Repatha generated revenues of $417 million, up 25% year over year, as volume growth of 35% was partially offset by lower prices due to new formulary coverage by CVS in July for commercial patients. Repatha sales missed the Zacks Consensus Estimate of $428 million and our model estimate of $426.5 million.
Hematology-Oncology
Xgeva delivered revenues of $527 million, up 9% year over year, driven by higher net selling prices.
Kyprolis recorded sales of $350 million, up 8% year over year, and Vectibix revenues came in at $251 million, up 5% year over year, both driven by volume growth.
Nplate sales declined 18% to $386 million due to the unfavorable timing of an order from the United States government. Blincyto sales increased 47% from the year-ago period to $241 million, driven by volume growth as the drug benefited from broad prescribing for patients with B-cell precursor acute lymphoblastic leukemia (ALL).
Lumakras/ Lumykras recorded sales of $77 million in the quarter, up 8% from the year-ago period. Lumakras/Lumykras sales missed the Zacks Consensus Estimate of $90 million, as well as our model estimate of $92.2 million.
Inflammation
Sales of Otezla were $629 million in the quarter, up 2%, due to favorable changes to estimated sales deductions, which offset the impact of lower pricing and lower inventory levels. On the fourth-quarter conference call, Amgen said that it is seeing a reduced impact of the free drug programs launched by new competitors in the United States, which had hurt sales in the past few quarters. Otezla sales beat the Zacks Consensus Estimate of $618.0 million as well as our estimate of $606.4 million.
Enbrel revenues of $1.02 billion declined 8% year over year due to unfavorable changes to estimated sales deductions and lower pricing, which offset the impact of slightly improved volumes. Enbrel sales missed the Zacks Consensus Estimate as well as our model estimate of $1.06 billion.
Newly approved asthma drug Tezspire (tezepelumab) recorded sales of $177 million in the quarter, up 10% 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. The pen formulation helped expand coverage with major pharmacy benefit managers, which led to higher new patient growth in 2023.
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.
Rare Disease
Amgen closed the acquisition of Horizon Therapeutics for $27.8 billion on Oct 6, 2023, which added several rare disease drugs like Tepezza, Krystexxa and Uplizna to AMGN’s portfolio.
Tepezza, Krystexxa, and Uplizna generated sales of $448 million, $272 million and $65 million from Oct 6 to Dec 31, 2023.
New drug Tavneos generated $44 million in sales in the fourth quarter compared with $37 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 10% year over year in the quarter.
Cost and Margin Discussion
Adjusted operating margin rose 0.8 percentage points to 46.7% in the quarter. Adjusted operating expenses increased 18% to $4.54 billion. Excluding the impact of Horizon, adjusted operating expenses increased 3%.
R&D expenses rose 16% year over year to $1.49 billion. SG&A spending rose 20% to $1.76 billion.
2023 Results
Full-year 2023 sales rose 7% to $28.2 billion, which slightly beat the Zacks Consensus Estimate of $28.1 billion. Sales were within the guided range of $28.0 billion to $28.4 billion.
Adjusted earnings for 2023 were $18.65 per share, up 5% year over year. Earnings beat the Zacks Consensus Estimate of $18.61 per share and were within the guided range of $18.20 to $18.80.
2024 Guidance
In 2024, the company expects to record revenues in the range of $32.4 billion to $33.8 billion. The Zacks Consensus Estimate is pegged at $32.4 billion.
Adjusted earnings are expected in the range of $18.90 to $20.30. The Zacks Consensus Estimate is pegged at $19.81 per share.
R&D costs are expected to increase approximately 20% in 2024. Adjusted SG&A costs are expected to be between 21% and 22% of product sales in 2024. Adjusted operating margin is expected to be approximately 48% in 2024, lower than 49.7% in 2023 due to dilution from the Horizon acquisition.
The adjusted tax rate is expected to be in the range of 16.0% to 17.0%, while capital expenditures are expected to be approximately $1.1 billion. Amgen expects to buy back shares worth not more than $500 million in 2024.
Pipeline Update
Along with the earnings release, the company announced that enrollment had been completed in a phase II study on its GLP-1 receptor candidate, maridebart cafraglutide, for obesity. Top-line data from the study is expected in late 2024. The company recently added another part to this study to explore the candidate’s ability to achieve durable weight loss beyond 52 weeks. Amgen is planning to conduct a comprehensive phase III program on the candidate across multiple indications.
The GLP-1 segment is an important class of drugs for multiple cardiometabolic diseases and is gaining significant popularity.
Some popular GLP-1 receptor drugs available in the market are Eli Lilly’s (LLY - Free Report) Zepbound and Novo Nordisk’s (NVO - Free Report) Wegovy. Eli Lilly’s Zepbound, which was approved in November 2023 and launched in December, recorded sales of $175.8 million in the fourth quarter.
Sales of Novo Nordisk’s Wegovy rose 311% at a constant exchange rate in the fourth quarter to DKK 9.6 billion as a second contract manufacturer for Wegovy initiated production in April 2023 to meet the increasing demand for the drug.
Initial top-line data from the phase I study on AMG 786, Amgen’s small molecule obesity candidate, is expected in the first half of 2024. AMG 786 is not an incretin-based therapy and has a different target than maridebart cafraglutide.
Our Take
Amgen’s fourth-quarter results were strong as it beat estimates for earnings as well as for sales. Products like Prolia, Repatha, Blincyto and Evenity achieved double-digit volume growth in the quarter. Horizon’s products added $954 million in sales in the quarter. Excluding the contribution from Horizon, product sales grew 5% while volumes rose 9%.
Shares were down 2.7% in after-market hours on Tuesday, probably as the 2024 earnings guidance fell short of investor expectations.
In the past year, Amgen’s stock has gained 29.4% against the industry‘s 14.9% decline.
Image Source: Zacks Investment Research
In 2023, Amgen’s top line 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.
In 2024, Amgen expects continued volume-driven growth in brands like Evenity, Repatha, Blincyto Tezspire and Prolia. The addition of Horizon products should further boost revenue growth in 2024, which is likely to be accretive to earnings.
In 2023, Amgen achieved impressive enrollment goals in key programs, setting up 2024 as the year with significant data readouts including from the obesity programs on maridebart cafraglutide and AMG 786. The data readouts could prove to be important catalysts for the stock.
Image: Bigstock
Amgen (AMGN) Q4 Earnings Top, Horizon Drugs Drive Sales
Amgen (AMGN - Free Report) reported fourth-quarter 2023 adjusted earnings of $4.71 per share, which beat the Zacks Consensus Estimate of $4.66. Earnings rose 15% year over year on higher revenues, which were partially offset by higher operating costs and higher interest expenses.
Total revenues of $8.2 billion marginally beat the Zacks Consensus Estimate of $8.16 billion. Total revenues rose 20% year over year, driven by higher product sales.
Total product revenues increased 20% from the year-ago quarter to $7.83 billion (U.S.: $5.87 billion; ex-U.S.: $1.969 billion). Higher volumes were partially offset by lower selling prices of several drugs. Volumes rose 23% in the quarter, partially offset by a 3% lower net selling price.
Other revenues were $363 million in the quarter, up 26.5% year over year.
Performance of Key Drugs
General Medicine
Prolia revenues came in at $1.1 billion, up 12% from the year-ago quarter, driven by volume growth and higher net selling prices. Prolia sales beat the Zacks Consensus Estimate of $1.05 billion as well as our model estimate of $1.03 billion.
Evenity recorded sales of $318 million in the quarter, up 41% year over year, driven by solid volume growth in and outside the United States. Evenity sales slightly missed the Zacks Consensus Estimate of $322 million as well as our model estimate of $318.2 million.
Repatha generated revenues of $417 million, up 25% year over year, as volume growth of 35% was partially offset by lower prices due to new formulary coverage by CVS in July for commercial patients. Repatha sales missed the Zacks Consensus Estimate of $428 million and our model estimate of $426.5 million.
Hematology-Oncology
Xgeva delivered revenues of $527 million, up 9% year over year, driven by higher net selling prices.
Kyprolis recorded sales of $350 million, up 8% year over year, and Vectibix revenues came in at $251 million, up 5% year over year, both driven by volume growth.
Nplate sales declined 18% to $386 million due to the unfavorable timing of an order from the United States government. Blincyto sales increased 47% from the year-ago period to $241 million, driven by volume growth as the drug benefited from broad prescribing for patients with B-cell precursor acute lymphoblastic leukemia (ALL).
Lumakras/ Lumykras recorded sales of $77 million in the quarter, up 8% from the year-ago period. Lumakras/Lumykras sales missed the Zacks Consensus Estimate of $90 million, as well as our model estimate of $92.2 million.
Inflammation
Sales of Otezla were $629 million in the quarter, up 2%, due to favorable changes to estimated sales deductions, which offset the impact of lower pricing and lower inventory levels. On the fourth-quarter conference call, Amgen said that it is seeing a reduced impact of the free drug programs launched by new competitors in the United States, which had hurt sales in the past few quarters. Otezla sales beat the Zacks Consensus Estimate of $618.0 million as well as our estimate of $606.4 million.
Enbrel revenues of $1.02 billion declined 8% year over year due to unfavorable changes to estimated sales deductions and lower pricing, which offset the impact of slightly improved volumes. Enbrel sales missed the Zacks Consensus Estimate as well as our model estimate of $1.06 billion.
Newly approved asthma drug Tezspire (tezepelumab) recorded sales of $177 million in the quarter, up 10% 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. The pen formulation helped expand coverage with major pharmacy benefit managers, which led to higher new patient growth in 2023.
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.
Rare Disease
Amgen closed the acquisition of Horizon Therapeutics for $27.8 billion on Oct 6, 2023, which added several rare disease drugs like Tepezza, Krystexxa and Uplizna to AMGN’s portfolio.
Tepezza, Krystexxa, and Uplizna generated sales of $448 million, $272 million and $65 million from Oct 6 to Dec 31, 2023.
New drug Tavneos generated $44 million in sales in the fourth quarter compared with $37 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 10% year over year in the quarter.
Cost and Margin Discussion
Adjusted operating margin rose 0.8 percentage points to 46.7% in the quarter. Adjusted operating expenses increased 18% to $4.54 billion. Excluding the impact of Horizon, adjusted operating expenses increased 3%.
R&D expenses rose 16% year over year to $1.49 billion. SG&A spending rose 20% to $1.76 billion.
2023 Results
Full-year 2023 sales rose 7% to $28.2 billion, which slightly beat the Zacks Consensus Estimate of $28.1 billion. Sales were within the guided range of $28.0 billion to $28.4 billion.
Adjusted earnings for 2023 were $18.65 per share, up 5% year over year. Earnings beat the Zacks Consensus Estimate of $18.61 per share and were within the guided range of $18.20 to $18.80.
2024 Guidance
In 2024, the company expects to record revenues in the range of $32.4 billion to $33.8 billion. The Zacks Consensus Estimate is pegged at $32.4 billion.
Adjusted earnings are expected in the range of $18.90 to $20.30. The Zacks Consensus Estimate is pegged at $19.81 per share.
R&D costs are expected to increase approximately 20% in 2024. Adjusted SG&A costs are expected to be between 21% and 22% of product sales in 2024. Adjusted operating margin is expected to be approximately 48% in 2024, lower than 49.7% in 2023 due to dilution from the Horizon acquisition.
The adjusted tax rate is expected to be in the range of 16.0% to 17.0%, while capital expenditures are expected to be approximately $1.1 billion. Amgen expects to buy back shares worth not more than $500 million in 2024.
Pipeline Update
Along with the earnings release, the company announced that enrollment had been completed in a phase II study on its GLP-1 receptor candidate, maridebart cafraglutide, for obesity. Top-line data from the study is expected in late 2024. The company recently added another part to this study to explore the candidate’s ability to achieve durable weight loss beyond 52 weeks. Amgen is planning to conduct a comprehensive phase III program on the candidate across multiple indications.
The GLP-1 segment is an important class of drugs for multiple cardiometabolic diseases and is gaining significant popularity.
Some popular GLP-1 receptor drugs available in the market are Eli Lilly’s (LLY - Free Report) Zepbound and Novo Nordisk’s (NVO - Free Report) Wegovy. Eli Lilly’s Zepbound, which was approved in November 2023 and launched in December, recorded sales of $175.8 million in the fourth quarter.
Sales of Novo Nordisk’s Wegovy rose 311% at a constant exchange rate in the fourth quarter to DKK 9.6 billion as a second contract manufacturer for Wegovy initiated production in April 2023 to meet the increasing demand for the drug.
Initial top-line data from the phase I study on AMG 786, Amgen’s small molecule obesity candidate, is expected in the first half of 2024. AMG 786 is not an incretin-based therapy and has a different target than maridebart cafraglutide.
Our Take
Amgen’s fourth-quarter results were strong as it beat estimates for earnings as well as for sales. Products like Prolia, Repatha, Blincyto and Evenity achieved double-digit volume growth in the quarter. Horizon’s products added $954 million in sales in the quarter. Excluding the contribution from Horizon, product sales grew 5% while volumes rose 9%.
Shares were down 2.7% in after-market hours on Tuesday, probably as the 2024 earnings guidance fell short of investor expectations.
In the past year, Amgen’s stock has gained 29.4% against the industry‘s 14.9% decline.
Image Source: Zacks Investment Research
In 2023, Amgen’s top line 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.
In 2024, Amgen expects continued volume-driven growth in brands like Evenity, Repatha, Blincyto Tezspire and Prolia. The addition of Horizon products should further boost revenue growth in 2024, which is likely to be accretive to earnings.
In 2023, Amgen achieved impressive enrollment goals in key programs, setting up 2024 as the year with significant data readouts including from the obesity programs on maridebart cafraglutide and AMG 786. The data readouts could prove to be important catalysts for the stock.
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 and Consensus
Amgen Inc. price-consensus-chart | Amgen Inc. Quote