After spending the previous couple of years watching its
financial results barely inch forward and its stock price go
) has found a higher gear in 2012.
The world's largest biotech company grew earnings at least 20%
during the first two quarters of the year, ending a run of four
straight quarters of low single-digit gains. It posted a
double-digit rise in second-quarter sales -- the first time in
years that's happened.
Meanwhile, Amgen's stock price spiked to its highest
point since November 2005 after the company reported Q2 results
in late July. Shares have continued to rise since then and
currently trade near 83, just a couple dollars off the all-time
high set seven years ago.
All in all, it's been a pretty nice comeback for a company
that hasn't grown annual sales or earnings in double digits since
"The overall business is doing better than expected and we see
several possible levers to pull to continue the turnaround," said
Citibank analyst Yaron Werber.
Amgen discovers, develops, manufactures and markets drugs that
treat cancer, nephrology and inflammation.
The company's top-selling drug during the second quarter was
its Enbrel treatment for inflammatory conditions, which notched
$1.06 billion in sales.
Neulasta, which is used to reduce the risk of infection in
cancer patients who receive chemotherapy, also produced more than
$1 billion in global sales during the quarter.
Other leading products include anemia treatments Aranesp and
Epogen, both of which delivered Q2 sales in excess of $500
All but Neulasta beat second-quarter sales projections, a big
reason Amgen managed to deliver a much better than expected
In a note, JPMorgan analyst Geoff Meacham said the biggest
upside surprises during the quarter came from Epogen and
"For Epogen, there were a number of factors that led to the
beat," Meacham said. "The most important takeaways were ... low
single-digit volume growth, and dosing appears to be stabilized
over the last several months."
He attributed Enbrel's outperformance to "price increases and
increases in inventory and demand."
The outlook for Enbrel should be helped on a couple of fronts.
In February, the drug won a patent extension to 2029, meaning it
won't have to worry about generic competition for another 17
years. In addition, a profit-sharing deal on Enbrel withPfizer (
) is due to end in October 2013.
While Enbrel faces increasing competition from products made
byAbbott Labs (
) andJohnson & Johnson (
), it still managed to post an 11% rise in second-quarter
"(Amgen management) said that over the last year, Enbrel has
been increasing its share among bio-naive patients, or those who
are new to biologics," Zacks Equity Research noted in a
Amgen's overall revenue during the quarter rose 13% from the
prior year to $4.48 billion, easily surpassing views for $4.08
billion. Earnings gained 34% to $1.83 a share, well above
estimates for $1.54 a share.
The company raised its full-year earnings forecast to a range
of $6.20 to $6.35 a share, up from previous guidance of $5.90 to
$6.15 a share. It expects revenue of $16.9 billion to $17.2
billion, above views for $16.4 billion.
The quarter represented a good start for new Chief Executive
Robert Bradway, who took over the post in May after previously
serving as Amgen's chief operating officer.
"I am very pleased with the performance of the business,"
Bradway said in a statement. "I am excited about the growth
opportunities in our research and development pipeline,
particularly our biologic AMG 145 for (high blood
Much of the excitement surrounding AMG 145 centers on a study
released in March showing monthly injections of the drug cut
levels of cholesterol by up to an additional 66% in patients
already taking statins.
Those results could make AMG 145 a strong potential rival to a
similar drug, dubbed REGN 727, being developed byRegeneron
During its Q2 conference call, Amgen announced that AMG 145
will enter Phase 3 development early next year.
Much of the company's research and development spending over
the near term will be devoted to AMG 145 as well as AMG 785, a
treatment for postmenopausal osteoporosis that is already in
Phase 3 trials.
Although most observers are upbeat about AMG 145's sales
potential, the drug also faces challenges. In a report, analyst
Alex To of Cross Current Research said the two biggest wild cards
are how many patients will be willing to take an injectable drug
to manage cholesterol, and how long it will take AMG 145 to get
on the market.
Under one scenario, he says, Amgen won't be able to file for
regulatory approval for AMG 145 until the second half of
"Under the best of circumstances the Food and Drug
Administration and European Medicines Agency approve the drug on
its first pass. (In that case) AMG 145 will reach the marketplace
at the end of 2019," To noted. "How much valuation can we ascribe
today to a drug that will launch at the very end of the
Regardless of how that pans out, most watchers see solid
growth for Amgen, at least over the near term. Analysts polled by
Thomson Reuters expect the company to grow its annual earnings
19% this year, 9% in 2013 and 16% in 2014.