$AMGN on Q2 Earnings & Revenues, Raises Outlook – Analyst Blog

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Amgen Beats on Q2 Earnings & Revenues, Raises Outlook – Analyst Blog

Biotech major, Amgen AMGN, reported second quarter 2015 earnings of $2.57 per share, soaring above the Zacks Consensus Estimate of $2.43 and the year-ago earnings of $2.37. Earnings were driven by higher revenues and lower operating expenses.

Amgen Inc. – Earnings Surprise | FindTheBest

Total revenues increased 4% to $5,370 million in the second quarter of 2015, beating the Zacks Consensus Estimate of $5,320 million.

Including one-time items, second quarter earnings grew 7% to $2.15 per share.

The Quarter in Detail

Total product revenues increased 6% from the year-ago quarter to $5,225 million (U.S.: $4,105 million, ex-U.S.: $1,120 million) with products like Enbrel, Kyprolis, 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 2.5 percentage point negative impact on top-line growth.

Revenues of Amgen’s erythropoiesis-stimulating agent (ESA) Aranesp declined 7% from the year-ago quarter to $479 million (U.S.: $223 million; ex-U.S.: $256 million) reflecting unfavorable currency movement and positive Medicaid rebate estimate adjustment in the year-ago quarter. This was partially offset by higher unit demand, including the shift from Epogen.

Revenues of Amgen’s other ESA, Epogen, declined 4% to $491 million, reflecting a shift in dialysis customer purchases to Aranesp as well as the impact of competition. This was partially offset by price.

Worldwide revenues of Neulasta and Neupogen declined 1% from the year-ago period to $1,414 million. While Neulasta revenues grew 2% from the year-ago period mainly due to price, Neupogen recorded a 14% decline in revenues reflecting branded short-acting competition in the U.S. The On-body Injector for Neulasta is performing well and has already achieved 8% market share of the Neulasta business in its first full quarter on the market.

We note that Sandoz, Novartis’ NVS generic arm, gained approval for Zarxio, its biosimilar version of Neupogen. Sandoz expects to launch its product after Sep 3 and Amgen expects more biosimilars to enter the market next year. 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 $1,348 million, up 8% from the year-ago quarter, benefiting from price increases, partially offset by competition. Amgen reported that segment growth remains strong in both rheumatology and dermatology which grew 23% and 28%, respectively. However, the company recorded a 1% sequential decline in dermatology market share (26%) while rheumatology market share remained at 29%.

Prolia revenues came in at $340 million, up 29% 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 and has resulted in unit share gains in the U.S. as well as Europe.

Meanwhile, Xgeva delivered revenues of $331 million, up 11% from the year-ago quarter due to higher demand. The sequential decline in the U.S. resulted from a customer buy-in in the first quarter. Amgen said that it gained expanded access for patients in France, one of the largest ex-U.S. markets.

Sensipar/Mimpara revenues increased 15% from the year-ago quarter to $344 million due to higher demand and price growth. Vectibix revenues came in at $160 million during the quarter, up 21% from the year-ago quarter reflecting higher unit demand. Label expansion into earlier lines of therapy in metastatic colorectal cancer in both the U.S. and Europe drove growth. The second quarter was also positively impacted by timing of shipments to Amgen’s Japanese partner.

Kyprolis posted sales of $119 million, up 10.2% sequentially and 53% from the year-ago period reflecting higher demand. The recent U.S. approval in relapsed or second-line multiple myeloma expands the patient population significantly.

While R&D expenses (including stock-based compensation expense) declined 6.3% from the year-ago period, SG&A spend (including stock-based compensation expense) grew 1.6%. Total operating expenses declined 1.5% from the year-ago period. Going forward, quarterly expenses are slated to increase in line to or 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 recently gained EU approval for Repatha (dyslipidemia) and expects the launch in the third quarter. U.S. approval could come by Aug 27.

Meanwhile, Amgen is currently seeking marketing approval for T-Vec (metastatic melanoma) and intends to file for U.S. and EU approval of AMG 416 (secondary hyperparathyroidism) in the third quarter of 2015.

Ups 2015 Guidance

Based on strong second quarter results, Amgen upped its previously issued guidance for 2015. The company now expects to earn $9.55 – $9.80 per share on total revenues of $21.1 billion to $21.4 billion (old guidance: $9.35 – $9.65 per share on total revenues of $20.9 billion – $21.3 billion). The Zacks Consensus Estimate for earnings and revenues are $9.61 per share and $21.1 billion, respectively. Unfavorable currency movement will impact 2015 revenues by almost $400 million or 2% and earnings by about 11 cents per share.

Amgen, which purchased shares worth $0.5 billion during the quarter, has $2.9 billion left in its buyback program.

Our Take

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

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