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Amgen (AMGN) Q3 Earnings Top, Sales View Tightened, Stock Down

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Amgen AMGN reported third-quarter 2021 earnings of $4.67 per share, which beat the Zacks Consensus Estimate of $4.22. Earnings rose 11% year over year due to lower costs

Total revenues of $6.71 billion marginally beat the Zacks Consensus Estimate of $6.70 billion. Total revenues rose 5% year over year as higher volumes offset lower net selling prices of several drugs.

Total product revenues rose 4% from the year-ago quarter to $6.32 billion (U.S.: $4.56 billion; ex-U.S.: $1.76 billion). Volumes rose 8%, driven by strong demand for Prolia, Blincyto, Evenity and Repatha. Net selling prices declined 7% as prices for some drugs remained under pressure. Sales in the quarter also benefitted from $147 million of favorable changes to estimated sales deductions.

Other revenues of $386 million rose 21% year over year heled by shipments to Eli Lilly LLY under a collaboration for the manufacture of COVID-19 antibodies.

Performance of Key Drugs

Prolia revenues came in at $803 million, up 15% from the year-ago quarter driven by double-digit volume growth as new and repeat patient volumes continued to recover from the impact of the pandemic.

Xgeva delivered revenues of $517 million, up 7% from the year-ago quarter driven by volume growth, which offset the impact of lower prices.

Kyprolis recorded sales of $293 million, up 13% year over year due to higher volumes.

Repatha generated revenues of $272 million, up 33% year over year, as higher volume was partially offset by lower prices due to an increase in Medicare Part D patients receiving Repatha and entering the coverage gap (donut hole).

Evenity recorded sales of $149 million in the quarter, up more than 100% year over year driven by strong volume growth in the United States due to growing demand trends in new patients.

Vectibix revenues came in at $200 million, up 4% year over year. Nplate sales rose 29% to $273 million. Blincyto sales increased 40% from the year-ago period to $125 million.

Parsabiv recorded sales of $61 million, down 67% due to changes in reimbursement rules for the drug, which hurt its volumes.

Aimovig recorded sales of $79 million in the quarter, down 25% year over year due to lower net selling price.

Sales of Otezla were $609 million in the quarter, up 13% due to volume growth and favorable adjustment to estimated sales deductions, which offset the impact of lower selling prices. Otezla was purchased by Amgen from Celgene in November 2019 as the latter had to divest the drug in order to complete its merger with Bristol-Myers BMY.

Amgen’s newly approved drug, Lumakras (sotorasib) recorded sales of $36 million in the quarter. The KRAS inhibitor was approved for the treatment of patients with KRAS G12C-mutated locally advanced or metastatic non-small cell lung cancer (NSCLC) following at least one prior systemic therapy in May.

In biosimilars, sales of Kanjinti (Amgen’s biosimilar of Roche’s [RHHBY] Herceptin) was $116 million, down 31% year over year due to lower pricing as a result of increased competition, which offset the impact of higher volumes. Sales of Mvasi (biosimilar of Roche’s Avastin) were $274 million in the quarter, up 19% year over year. Amjevita (biosimilar of AbbVie’s Humira) sales were $111 million in the quarter, up 39% year over year.

However, sales of mature drugs like Enbrel, Aranesp, Epogen and Neulasta declined due to an array of branded and generic competitors. Enbrel revenues of $1.29 billion declined 3% year over year due to lower volumes, inventory and price.

Aranesp revenues rose 3% from the prior-year quarter to $396 million. Revenues of the other ESA, Epogen, declined 7% to $138 million. Neulasta revenues declined 25% from the year-ago period to $415 million.

Operating Margins Rise

Adjusted operating margin rose 250 basis points (bps) to 54.6% due to lower operating costs. Adjusted operating expenses were almost flat at $3.25 billion. SG&A spend declined 5% to $1.26. R&D expenses declined 4% year over year to $997 million.

2021 Guidance

Amgen lowered the top end of its revenue guidance range for 2021 from $25.8 billion-$26.6 billion to $25.8 billion-$26.2 billion. However, the adjusted earnings per share guidance was raised from the range of $16.00 to $17.00 per share to $16.50 to $17.10.

In 2021, other revenues are expected to be in the range of $1.5 billion to $1.7 billion compared with 1.4 billion to 1.5 billion expected previously.

Adjusted operating costs are expected to increase at the rate of 3-4% from last year compared with 6-7% previously. While R&D costs are expected to increase in a mid-single-digit percentage range, SG&A expenses are expected to decline. The adjusted tax rate is expected in the range of 13% to 14% versus 13.5% to 14.5% previously.

Amgen plans to spend approximately $900 million for capital expenditures in 2021. The company expects to buy back shares at the upper end of the previously issued range of $3 billion to $5 billion through the year.

Our Take

Amgen’s third-quarter results were better-than-expected as it beat estimates for both earnings and sales. Volume-driven growth of Repatha, Prolia, and Evenity and some biosimilar drugs drove the top line in the quarter. However, the lingering effects of COVID-19 and increased competitive pressure on some drugs continued to hurt sales.

Despite the better-than-expected results, Amgen’s stock was down 1.5% in after-hours trading on Tuesday due to lowering of the the sales guidance. Amgen’s stock has declined 6.8% this year so far compared with a decrease of 8.9% for the industry.

Zacks Investment Research
Zacks Investment Research

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Though the company continues to see a recovery in patient visits and diagnoses rates, new patient starts remain suppressed due to a gap in doctor office visits amid the pandemic

The launch of Lumakras, a first-in-class lung cancer treatment, is off to an excellent start while its label expansion studies are progressing rapidly.

Amgen currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Amgen Inc. Price, Consensus and EPS Surprise

Amgen Inc. Price, Consensus and EPS Surprise
Amgen Inc. Price, Consensus and EPS Surprise

Amgen Inc. price-consensus-eps-surprise-chart | Amgen Inc. Quote


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