Earnings Preview: Amgen to report on research

Biotech drugmaker Amgen's 2Q report to focus on sales trends, recent research, expansion plan

Associated Press

TRENTON, N.J. (AP) -- Biotech drugmaker Amgen Inc. will review sales of key drugs and lots of recent research results, both for experimental drugs and one already on the market, when it reports second-quarter results after the stock market closes Tuesday.

WHAT TO WATCH FOR: Amgen executives likely will note a new approval for an existing drug, discuss their strategy to expand overseas sales and give updates on testing of drugs including trebananib for ovarian cancer and TVEC. That's short for the tongue twister talimogene laherparepvec, a promising drug for melanoma.

The company, based in Thousand Oaks, Calif., will note that in June, the Food and Drug Administration approved a new use for its bone drug Xgeva — for treating giant cell tumors in bone when surgery isn't practical. The rare condition usually affects people aged 20 to 40, often causing fractures, severe pain, deformity or amputation.

Amgen, the world's biggest biotech company by revenue, is looking to get even bigger, announcing plans in February to expand its operations in Japan, China and other key markets. Japan is the world's second-biggest market for prescription drugs, after the U.S., and the expanding middle class in China has made it a key growth target for virtually all drugmakers.

Amgen, which makes Prolia for osteoporosis, two months ago said it started a strategic alliance with Japanese drugmaker Astellas Pharma Inc. They plan to jointly test and then sell in Japan five of Amgen's experimental drugs, treatments for cancer and heart and bone diseases.

The first might hit the market by 2016. The companies plan for Astellas to become a wholly owned subsidiary of Amgen as soon as 2020.

Meanwhile, in May Amgen said it was forming a joint venture with Zhejiang Beta Pharma Co. to sell Amgen's Vectibix, for advanced colorectal cancer, in China.

While Amgen has mainly specialized in medicines for cancer and bone and immune disorders, it appears it's now trying to become a player in the huge market for heart drugs.

Earlier this month, Amgen announced a collaboration with French drugmaker Servier that includes plans to get approval and then sell two of Servier's cardiac medicines in the U.S.

And in June, Amgen and Cytokinetics Inc. said they're expanding their collaboration on a drug going into human testing for heart failure called omecamtiv mecarbil. The deal adds the Japanese market, so it now includes worldwide licensing rights. The companies have been working together since 2006, and this is the most advanced drug they've developed.

Analysts likely will ask about rumors and news reports that Amgen is trying to acquire cancer drugmaker Onyx Pharmaceuticals Inc. Amgen so far has declined to comment.

WHY IT MATTERS: Unlike most big pharmaceutical companies, Amgen has not been hurt by generic competition cutting into sales of its products. That's because all but one of its medicines are biologic drugs produced by living cells, rather than pills that are easy to copy. But regulatory changes spelling out what companies need to do to get approval of "biosimilar" versions of these pricey drugs mean Amgen is likely to face such competition in a couple years.

In the meantime, it's been trying to broaden its product portfolio by advancing its experimental drugs and arranging some acquisitions and partnerships.

In addition, investors have been watching to see whether Pfizer Inc.'s new rheumatoid arthritis pill, Xeljanz, has begun to crimp sales of Enbrel, an injection for the crippling immune disorder. Along with being the leading biologic drug for both rheumatology and dermatology disorders, Enbrel is Amgen's No. 2 product, with annual sales of around $4 billion.

WHAT'S EXPECTED: Analysts polled by FactSet, on average, expect earnings per share of $1.74, excluding one-time items, on sales of $4.49 billion.

LAST YEAR'S QUARTER: Amgen reported net income of $1.27 billion, or $1.61 per share, and revenue of $4.48 billion.

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Follow Linda A. Johnson at http://twitter.com/LindaJ_onPharma

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