Earnings Preview: Amgen to report 4Q Wednesday

Biotech leader Amgen's 4Q report to focus on late-stage testing for 6 drugs, deCODE purchase

Associated Press

TRENTON, N.J. (AP) -- Biotech drugmaker Amgen Inc. should focus on a strategic acquisition and testing of six potential new drugs when it reports fourth-quarter results after the stock market closes Wednesday.

WHAT TO WATCH FOR: The world's biggest biotech company has three cancer drugs and two other experimental drugs in late-stage patient testing, plus a sixth drug for reducing bad cholesterol that's just completed mid-stage testing. Executives of the Thousand Oaks, Calif., company will discuss their plans to start late-stage patient studies on that drug, known as AMG 145, early this year. That's after four mid-stage studies, reported at a November medical conference, showed it significantly reduced LDL, or bad cholesterol.

The company expects sometime this year to have new research data from late-stage patient studies of trebananib for treating ovarian cancer and talimogene laherparepvec, TVEC for short, for the deadly skin cancer melanoma. The other three drugs now in late-stage testing are rilotumumab for gastric cancer, romosozumab for postmenopausal osteoporosis and brodulumab for psoriasis. All three use antibodies cloned repeatedly in living cells — monoclonal antibodies — to deliver an attached medicine to the disease site.

Last month, Amgen agreed to pay $762 million to resolve federal criminal and civil liability over its marketing of certain drugs, including promoting anemia drug Aranesp and other medicines for unapproved uses.

According to the Justice Department, it's the largest criminal and civil whistleblower case settlement involving a biotech company in U.S. history. Amgen also signed a corporate integrity agreement allowing the federal government to closely scrutinize its marketing practices.

Amgen CEO Robert A. Bradway likely will discuss the mid-December purchase of Iceland's deCODE Genetics for $415 million. It's a leader in human genetics research and analytics. DeCODE has a huge database of genetic and medical information on Iceland's population that could help researchers better understand whether new drugs will work in individual patients with particular genetic characteristics.

Bradway and other executives will discuss sales trends for Amgen's drugs, including Neulasta and Neupogen for fighting infection in cancer patients.

Management will note that two newer drugs, which have the same active ingredient at different doses, have reached a combined sales rate of $1 billion per year after barely two years on the market. Those are Prolia for osteoporosis and Xgeva for preventing fractures in cancerous bones.

Executives also should forecast Amgen's revenue and profit for 2013.

And they'll discuss plans to build their first Asian manufacturing plant, in Singapore, and continuing efforts to reward stockholders with another $2 billion worth of share buybacks and a 31 percent increase in Amgen's quarterly dividend, to 47 cents a share.

WHY IT MATTERS: Sales of what had been Amgen's top sellers, anemia treatments Aranesp and Epogen, have been falling amid safety concerns and federal health program limits on dosing and reimbursement levels.

Meanwhile, in mid-January the company announced that a late-stage study meant to get approval for an additional use of Aranesp didn't work out. It showed that in patients with heart failure and anemia, Aranesp did not delay the time until patients were admitted to a hospital or died.

Those issues make it crucial that drugs in late-stage patient testing get approved.

Meanwhile, UBS Securities analyst Matthew Roden wrote in a report that he expects sales to come in lower than Wall Street estimates for several key products, including Neulasta, Epogen and immune disorder treatment Enbrel.

He added that Amgen's fourth-quarter and 2012 results could miss Wall Street's consensus forecast because some analysts have not updated their figures since Bradway's Jan. 8 comment that earnings per share will be reduced by a dime because an annual federal research and development tax credit wasn't renewed in 2012. It was delayed until early 2013 amid the fiscal cliff debate in Washington.

WHAT'S EXPECTED: Analysts polled by FactSet, on average, expect earnings per share of $1.44, excluding one-time items, and sales of $4.37 billion.

LAST YEAR'S QUARTER: Amgen reported profit of $934 million, or $1.08 per share. Revenue was $3.97 billion.

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Linda A. Johnson can be followed at http://twitter.com/LindaJ_onPharma

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