) continued its strong performance in 2012 with second quarter
earnings coming in at $1.82 per share, 31 cents above the Zacks
Consensus Estimate and 34.8% above the year-ago period. Higher
revenues and a lower share count contributed to the year-over-year
increase in earnings.
Total revenue increased 13% to $4,477 million in the second
quarter of 2012. Revenues comfortably surpassed the Zacks Consensus
Estimate of $4,082 million. However, second quarter 2012 revenues
included $206 million recognized by Amgen under its amended
agreement with Takeda for oncology candidate, motesanib.
The Quarter in Detail
Second quarter total product sales increased 8% to $4,200
million (US: $3,255 million, ex-US: $945 million).
Revenues of Amgen's erythropoiesis-stimulating agent (ESA)
Aranesp fell 8% to $536 million (US: $215 million, down 11%; ex-US:
$321 million, down 7%).
US sales were down mainly due to a decline in demand that was
partially offset by a price increase and a change in accounting
estimates. International sales were affected by a decline in
average net sales price.
Revenues of Amgen's other ESA, Epogen, fell 3% to $525 million.
The decrease in demand was mainly due to lower dose utilization.
The decline reflected the impact of the implementation of the ESRD
bundling strategy in 2011 and label changes in June 2011. However,
Epogen sales increased 18% on a sequential basis mainly due to
customer and wholesaler buying patterns. Amgen reported 2% growth
in underlying unit demand.
We note that a new competitor,
) Omontys (peginesatide), has entered the dialysis market. Amgen
said that the impact of new competition on Epogen sales was
limited. Epogen sales, however, are expected to remain volatile due
to the overall market dynamics.
Worldwide revenues of Neulasta and Neupogen grew 2% to $1,347
million in the second quarter. An increase in average net sales
price and unit demand boosted US revenues to $1,062 million, up 6%.
International revenues, however, continued to decline with sales
coming in at $285 million, down 13%. Sales were impacted by lower
average net sales price and a decline in Neupogen units due to
competition from biosimilars.
Enbrel, which is facing increased competition in the dermatology
market, posted revenues of $1,058 million, up 11%. Higher average
net sales price, increase in unit demand and wholesaler inventories
drove the upside. The company said that over the last one year, it
has been increasing its share among bio-naïve (patients new to
biologics) patients. Enbrel's competitors include
Johnson & Johnson's
) Remicade and Johnson & Johnson's Stelara among others.
With Amgen and
) collaboration for Enbrel set to expire in late 2013, Amgen has
completed the consolidating of US field sales activities under its
wing. The consolidated sales force is targeting both the
rheumatology and dermatology segments. Amgen has also expanded DTC
advertising and is working on ensuring appropriate access.
Second quarter 2012 Prolia sales came in at $120 million, up
from first quarter 2012 sales of $88 million. Sales were driven by
increased segment share as well as growth in the overall
skeletal-related events segment. Amgen launched a DTC TV campaign
this year which should drive sales further.
Meanwhile, Xgeva, which gained FDA approval in November 2010,
delivered second quarter 2012 sales of $179 million, up from the
$153 million, $134 million, and $100 million reported in the last
three quarters. Sales were driven by overall segment growth. Xgeva
gained EU approval in July 2011.
Sensipar/Mimpara revenues increased 17% to $232 million in the
reported quarter. Higher demand helped drive Vectibix revenues to
$90 million during the quarter, up 11%.
While second quarter 2012 R&D expenses remained flat,
SG&A expenses increased 8%. SG&A spend increased due to
higher Enbrel profit share expenses and expansion of international
Amgen is currently conducting phase III studies with AMG 785 for
the treatment of postmenopausal osteoporosis and expects to
commence phase III studies with AMG145 (LDL cholesterol reduction)
early next year.
Based on its strong performance in the first half of 2012
results, Amgen raised its guidance for 2012. The company now
expects earnings in the range of $6.20 - $6.35 per share on
revenues of $16.9 - $17.2 billion. Earlier, the company had guided
towards earnings of $5.90 - $6.15 per share on revenues of $16.1 -
$16.5 billion. The Zacks Consensus Estimate stands well below the
new guidance at $6.08 per share. The Zacks Consensus Revenue
Estimate of $16.4 billion is also below the new guidance range.
Earnings guidance reflects the up-front and milestone payments
received from Takeda,
) and Astellas Pharma in the first half of 2012. Meanwhile, the
company expects R&D costs to increase in the second half of the
year as it accelerates its late-stage development plans for AMG 785
and AMG 145.
Amgen repurchased about 17 million shares for $1.2 billion in
the second quarter of 2012.
We are encouraged by the company's first half 2012 performance.
Enbrel should continue performing well and Xgeva/Prolia should
continue responding positively to the company's increased marketing
efforts like DTC advertising. Amgen's late-stage pipeline is also
We currently have a Neutral recommendation on Amgen, which
carries a Zacks #3 Rank (short-term 'Hold' rating).
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