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Amgen (AMGN) Q4 Earnings & Sales Top, 2021 Outlook Dull

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  • AMGN

Amgen AMGN reported fourth-quarter 2020 earnings of $3.81 per share, which beat the Zacks Consensus Estimate of $3.36. Earnings rose 5% year over year driven by higher revenues, which offset the impact of higher operating expenses.

Total revenues of $6.63 billion beat the Zacks Consensus Estimate of $6.57 billion. Total revenues rose 7% year over year.

Total product revenues rose 8% from the year-ago quarter to $6.3 billion (U.S.: $4.66 billion; ex-U.S.: $1.67 billion). Higher sales of Repatha, Otezla and biosimilar products were offset by the erosion of mature brands from biosimilar/new competition and COVID-19 related impact on some drugs. The company said that though it experienced continued recovery from peak impact of the COVID-19 pandemic as physician interaction and prescription trends improved, it was still below pre-COVID-19 levels.

Performance of Key Drugs

Product sales growth was mostly driven by higher volumes (up 13%) as prices were lower for several drugs.

Other revenues of $300 million declined 5% year over year.

Prolia revenues came in at $749 million, flat from the year-ago quarter. COVID-19 has caused a change in historical quarterly trends for Prolia. The drug witnesses higher revenues in the second and the fourth quarters of a year due to its six-month dosing regimen. Given the negative impact of the pandemic in the second quarter and the six-month dosing regimen of Prolia, year-over-year growth rates in the fourth quarter were lower than pre-COVID growth trends. However, the company did witness a positive trend in new patient starts.

Xgeva delivered revenues of $502 million, up 3% from the year-ago quarter driven by volume growth.

Kyprolis recorded sales of $272 million, up 2% year over year driven by new patient share helped by encouraging uptake for combination use of Kyprolis plus Darzalex and dexamethasone.

Repatha generated revenues of $253 million, up 27% year over year, as higher volume was partially offset by unfavorable changes to estimated sales deductions and lower prices due to Amgen’s efforts to improve access and affordability for the product.

Vectibix revenues came in at $221 million, up 21% year over year. Nplate sales rose 8% to $227 million. Blincyto sales increased 29% from the year-ago period to $103 million.

Parsabiv recorded sales of $172 million, down 4% due to changes in reimbursement rules for the drug.

Aimovig recorded sales of $104 million in the quarter, up only 6% year over year as COVID-19 hurt new patient starts.

New osteoporosis drug, Evenity recorded sales of $90 million in the quarter compared with $59 million in the previous quarter driven by volume growth.

Sales of Otezla were $617 million in the quarter driven by U.S. prescription volume growth. Please note that 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.

Biosimilar generated revenues of $541 million in the quarter driven by volume growth, which offset the impact of declines in net selling price. Sales of Kanjinti (Amgen’s biosimilar of Roche’s [RHHBY] Herceptin) and Mvasi (biosimilar of Roche’s Avastin) were $158 million and $280 million in the quarter, compared with $167 million and $231 million, respectively, in the previous quarter. Sales of Kanjinti declined sequentially as volume gains were offset by price declines and unfavorable changes to estimated sales deductions.

Amjevita (biosimilar of AbbVie’s [ABBV] Humira) sales were $103 million in the quarter, up 45% year over year.

However, all the mature drugs like Enbrel, Aranesp, Epogen, Neupogen and Neulasta declined due to an array of branded and generic competitors. Enbrel revenues of $1.27 billion declined 5% year over year due to lower demand and market share as well as slower growth pace in the rheumatoid arthritis market related to COVID-19.

Aranesp revenues declined 12% from the prior-year quarter to $375 million. Revenues of the other ESA, Epogen, declined 37% to $133 million. Neulasta revenues declined 19% from the year-ago period to $536 million. Neupogen recorded 26% increase in sales to $46 million in the quarter. Sensipar/Mimpara revenues declined 58% to $45 million.

Other product sales declined 13% to $76 million.

Operating Margins Decrease

Adjusted operating margin declined 150 basis points (bps) to 43.1%. Adjusted operating expenses rose 9% year over year in the quarter to $3.91 billion.

SG&A spend rose 17% to $1.76 billion due to Otezla and new products related commercial expenses. R&D expenses declined 8% year over year to $1.18 billion driven by lower spend on early-stage pipeline and cost recoveries from Amgen’s collaboration with China’s leading pharma company, BeiGene.

2020 Results

Full-year 2020 sales rose 9% to $25.4 billion, in line with the Zacks Consensus Estimate and within the guided range of to $25.1 billion-$25.5 billion. Sales rose 9% year over year.

Adjusted earnings for 2020 were $16.60 per share, which beat the Zacks Consensus Estimate of $16.13 and came ahead of the guided range of $15.80 to $16.15. Earnings rose 12% year over year.

2021 Guidance

Amgen guided revenues in the range of $25.8 billion-$26.6 billion. The Zacks Consensus Estimate stands at $26.2 billion. Adjusted earnings per share are expected in the range of $16.00 to $17.00 per share. The Zacks Consensus Estimate stands at $16.93 per share.

Adjusted operating costs are expected to grow at a rate similar of 7% recorded in 2020. Operating margin is expected to be roughly 50% in 2021. Adjusted tax rate is expected in the range of 13% to 14%. Amgen expects net selling prices for its drugs to decline in the mid-single digit range in 2021.

Amgen plans to spend approximately $900 million for capital expenditures in 2021. The company expects to buy back shares in the range of $3 billion to $4 billion through the year.

Our Take

Amgen’s fourth-quarter results were strong, as it beat estimates for both earnings and sales. However, its 2021 outlook was quite lukewarm and failed to encourage investors. Amgen’s stock was down 1.6% in after-hours trading on Tuesday. Amgen’s stock has risen 4.6% this year so far compared with an increase of 7.9% for the industry.

In 2021, Amgen expects volume growth from Prolia, Otezla Repatha, Evenity, Aimovig, and its biosimilars portfolio to be partially offset by biosimilar/generic competition for mature drugs and accelerating erosion in U.S. Parsabiv sales. Additionally, the company expects continued impact from COVID-19 with quarter-to-quarter variability in earnings and revenues. A recovery is expected in the latter part of the year depending on how the vaccine rollouts work out.

Meanwhile, Amgen is rapidly advancing its innovative pipeline, most notably sotorasib (KRAS inhibitor for cancer) and tezepelumab (severe asthma).

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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