Amgen trounces Street views with 39 pct. jump in 4Q profit

TRENTON, N.J. – Capping an enviable year, Amgen’s fourth-quarter profit soared 39 per cent, as the biologic drugmaker posted higher revenue for nearly all its medicines. The company’s results trounced analyst expectations for the fifth-straight quarter, and Amgen boosted its 2016 financial forecast.

The world’s biggest biotech drugmaker benefited from new products, reduced operating expenses and lower restructuring charges, compared with the year-ago quarter.

The Thousand Oaks, California-based company said Thursday that its net income was $1.8 billion, or $2.37 per share, up from $1.29 billion, or $1.68 per share.

Adjusted net income was $1.99 billion, or $2.61 per share. Analysts surveyed by FactSet were expecting $2.29 per share, on average.

Revenue grew 4 per cent to $5.54 billion, led by sales of Enbrel for rheumatoid arthritis and other immune disorders, Neulasta and Aranesp for anemia, and osteoporosis injection Prolia.

Enbrel sales jumped 8 per cent, to $1.44 billion, while Neulasta brought in $1.16 billion and Aranesp $499 million. Prolia, which is touted by actress Blythe Danner in TV commercials, had sales of $380 million. Prolia and four other drugs had sales jump by 10 per cent or more.

Amgen has been on quite a roll. Since December 2014, it’s won FDA approval for four new medicines, an improved version of a fifth and an additional use for a sixth.

In addition, the restructuring program it began in late in 2014 has helped rein in expenses, reducing them by about 10 per cent in 2015’s fourth quarter and freeing up cash to fund launches of the new products.

Given the very high prices for biologic drugs, which are “manufactured” in living cells rather than made by mixing chemicals, most of Amgen’s recently approved products are likely to be blockbusters — with annual revenue exceeding $1 billion.

The four new drugs include Corlanor, the first new heart failure medication in a dozen years; Repatha, for people with sky-high cholesterol uncontrollable by standard medicines; Blincyto, for a rare leukemia in patients with a particular genetic variation, and Imlygic, a first-of-a-kind drug that uses a virus to infiltrate and destroy skin cancer tumors that can’t be removed surgically.

Multiple myeloma drug Kyprolis got approval in combination with other drugs for patients who have failed prior therapy, and Amgen also got approval for an injector kit attached to patients’ bodies for its Neulasta, which prevents infections in patients getting certain cancer drugs.

On Thursday, Amgen hiked its 2016 financial forecasts slightly, to earnings per share of $10.60 to $11 and revenue of $22 billion to $22.5 billion.

The company’s first forecast for this year, issued in October, was for earnings per share in the range of $10.35 to $10.75 and for revenue of $21.7 billion to $22.3 billion. Analysts surveyed by FactSet were expecting earnings per share of $10.67, on average, and revenue of $22.3 billion.

Executives said the revised forecast was due to expectations that biosimilar competition to Neulasta in the U.S, where Amgen gets nearly 80 per cent of its revenue, won’t come until year’s end, instead of midyear. Biosimilars are near-copies of biologic drugs whose patents have expired.

Currently, the only biosimilar medicine approved in the U.S. is Novartis AG’s Zarxio, which has been competing with Amgen’s Neupogen since September. While generic pills often cost about 85 per cent less than brand-name ones, biosimilar drugs are only a little cheaper than the original.

“While Amgen is making progress in its pipeline of new drugs, the company is facing significant patent expirations for its current biologic drug portfolio,” noted analyst Evans, who has a “Hold” rating on Amgen. “However, Amgen is working on its own portfolio of biosimilar drugs, which should help make up for lost sales.”

For all of 2015, Amgen reported net income of $6.94 billion, or $9.06 per share. That was up 35 per cent from $5.16 billion, or $6.70 per share, in 2014. Revenue totalled $21.66 billion, up 8 per cent from $20.06 billion a year before.

In after-hours trading — after the results were released — Amgen shares dipped 79 cents to $147.56.


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