$AMGN Analyst Blog


Amgen Beats on Q1 Earnings & Revenues, Ups Earnings View – Analyst Blog

Biotech major, Amgen AMGN, reported first quarter 2015 earnings of $2.48 per share, soaring above the Zacks Consensus Estimate of $2.07 and the year-ago earnings of $1.86. Earnings were driven by higher revenues and lower operating expenses.

Total revenues increased 11.3% to $5,033 million in the first quarter of 2015, beating the Zacks Consensus Estimate of $4,923 million.

Amgen Inc. – Earnings Surprise | FindTheCompany


Including one-time items, first quarter earnings grew 50.7% to $2.11 per share.

The Quarter in Detail

First quarter total product revenues increased 11.9% from the year-ago quarter to $4,874 million (U.S.: $3,771 million, ex-U.S.: $1,103 million) with products like Enbrel, Epogen, Sensipar, Prolia and Xgeva driving growth. Unit demand was mainly responsible for growth with price also contributing to the same. Unfavorable currency movement had a 2 percentage point negative impact on top-line growth.

Revenues of Amgen’s erythropoiesis-stimulating agent (ESA) Aranesp grew 4% from the year-ago quarter to $480 million (U.S.: $189 million; ex-U.S.: $291 million) reflecting higher demand in ex-U.S. markets.

Revenues of Amgen’s other ESA, Epogen, grew 16% to $534 million, mainly driven by price increase and to a lesser extent by higher demand.

Worldwide revenues of Neulasta and Neupogen remained flat at $1,380 million in the first quarter. While Neulasta revenues grew 4% from the year-ago period mainly due to price and inventory changes, Neupogen recorded a 15% decline in revenues reflecting branded short-acting competition in the U.S. We note that Sandoz, Novartis’ NVS generic arm, gained approval for Zarxio, its biosimilar version of Neupogen. Amgen’s experience in handling biosimilar competition in Europe should come in handy in dealing with biosimilars in the U.S.

Enbrel delivered revenues of $1,116 million, up 13% from the year-ago quarter, benefiting from price increases. Amgen reported that segment growth remains strong in both rheumatology and dermatology which grew 23% and 30%, respectively. However, Enbrel lost 5 points of value share over the last year in dermatology due to intensifying competition. Enbrel sales declined 17% sequentially reflecting normal inventory destocking.

First quarter 2015 Prolia revenues came in at $272 million, up 39% from the year-ago quarter due to higher demand. The response to a new DTC campaign, launched last year, remains strong and has resulted in an increase in patient awareness.

Meanwhile, Xgeva delivered first quarter 2015 revenues of $340 million, up 22% from the year-ago quarter due to higher demand.

Sensipar/Mimpara revenues increased 24% from the year-ago quarter to $334 million due to higher demand, favorable changes in inventory levels and price growth. Vectibix revenues came in at $122 million during the quarter, up 18% from the year-ago quarter reflecting higher unit demand.

Kyprolis posted sales of $108 million, up 18.7% sequentially and 59% from the year-ago period reflecting higher demand. Amgen is currently looking to expand Kyprolis’ label in the U.S. and EU into relapsed multiple myeloma.

Blincyto (leukemia – approved in Dec 2014) delivered sales of $15 million in the first quarter of 2015.

While R&D expenses declined 14% in the first quarter of 2015 from the year-ago period, SG&A spend increased 1%. Total operating expenses declined 3% from the year-ago period and 22% sequentially reflecting the combination of the first quarter being typically the lowest expense level during the year as well as a share of the $400 million of incremental savings expected in 2015 from Amgen’s transformation initiative. Going forward, quarterly expenses are slated to increase in line to modestly above historical trends as the company invests in product launches and continues to progress with the pipeline.

Amgen continues to progress with its pipeline. The company is currently seeking marketing approval for Repatha (evolocumab – dyslipidemia) and T-Vec (metastatic melanoma). Meanwhile, Corlanor (chronic heart failure) gained FDA approval earlier this month. An FDA advisory panel will be meeting on Apr 29 to discuss the T-Vec Biologics License Application (BLA). Amgen intends to file for U.S. and EU approval of AMG 416 (secondary hyperparathyroidism) in the second half of 2015.

Ups 2015 Earnings Guidance

Based on strong first quarter results, Amgen upped its previously issued earnings guidance for 2015 and raised the lower end of its revenue guidance. The company now expects to earn $9.35 – $9.65 per share on total revenues of $20.9 billion – $21.3 billion (old guidance: $9.05 – $9.40 per share on total revenues of $20.8 billion – $21.3 billion). The Zacks Consensus Estimate for earnings and revenues are $9.37 per share and $21 billion, respectively. Unfavorable currency movement will impact 2015 revenues by more than $300 million or 2% and earnings by about 12 cents per share.

Amgen, which purchased shares worth $0.5 billion during the quarter, intends to continue buying back shares at a stepped up level in 2015.

Our Take

Amgen’s first quarter results were once again strong with the company beating on all fronts. We are positive on the company’s restructuring plan which should make it leaner and more cost-efficient. This will be an important year on the pipeline and regulatory front as well. However, the company does have some competitive challenges in store for 2015 including the entry of biosimilar competition for Neupogen.

Amgen is a Zacks Rank #1 (Strong Buy) stock. Other equally well-ranked biotech stocks include Biogen BIIB and Osiris Therapeutics OSIR.


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