) reported fourth quarter earnings per share of $1.19, 5 cents
below the Zacks Consensus Estimate. Earnings, however, increased
3.5% from the year-ago period. A lower tax rate, lower share count
and higher revenues contributed to the year-over-year increase in
Total revenue increased 3% to $3,973 million in the fourth
quarter of 2011. Revenues also missed the Zacks Consensus Estimate
of $3,894 million.
Full year 2011 earnings came in at $5.26 per share, 2.7% above
the year-ago period but 3 cents below the Zacks Consensus Estimate.
Revenues increased 4% from the year-ago period to $15,582 million
in 2011. Full year revenues were just above the Zacks Consensus
Estimate of $15, 503 million.
The Quarter in Detail
Fourth quarter total product sales increased 4% to $3,907
million. US product revenues increased 5% during the quarter to
$3,007 million. Meanwhile, international product revenues increased
1% to $900 million. Foreign exchange (Fx) fluctuation pulled down
revenues by $28 million during the fourth quarter.
Revenues of Amgen's erythropoiesis-stimulating agent (
) Aranesp fell 15% to $538 million (US: $223 million, down 22%;
ex-US: $315 million, down 9%).
US sales were down mainly due to a decline in demand that was
partially offset by a price increase. The decline reflected segment
contraction due to changes in the product label and the
reimbursement environment. International sales were affected by an
overall decline in the segment and unfavorable currency fluctuation
Revenues of Amgen's other ESA Epogen fell 18% to $486 million,
reflecting a decline in demand. The decrease in demand was mainly
due to lower dose utilization despite a growth in patient
population. The decline reflected the impact of the implementation
of the ESRD bundling strategy in 2011. Revenues were also impacted
by label changes in June 2011 and reimbursement changes proposed by
the Centers for Medicare & Medicaid Services.
Amgen, however, reported a sequential improvement in sales of
2%, reflecting dose stabilization.
Worldwide revenues of Neulasta and Neupogen grew 7% to $1,319
million in the fourth quarter. An increase in average net sales
price and favorable changes in wholesaler inventories boosted US
revenues to $1,021 million, up 12%. International revenues,
however, fell 8% to $298 million. Sales were impacted by a decline
in Neupogen units due to competition from biosimilars and
unfavorable foreign currency fluctuations ($10 million).
Enbrel, which is facing increased competition in the dermatology
market, posted revenues of $945 million, up 1%. A low single-digit
percentage point unit growth was offset by unfavorable changes in
wholesaler inventories. Enbrel's competitors include
Johnson & Johnson's
) Remicade and Johnson & Johnson's Stelara among others.
Fourth quarter Prolia sales came in at $81 million, up from
third quarter sales of $51 million and second quarter sales of $44
million. Amgen reported new as well as repeat patient growth. Amgen
intends to launch DTC TV campaigns later this year which should
drive sales further. Amgen is also looking to get Prolia approved
for increasing bone mass in men with osteoporosis at high risk for
fracture. A response from the FDA should be out by Sept. 20,
Meanwhile, Xgeva, which gained FDA approval on November 18,
2010, is off to a strong start with sales coming in at $134
million, up from the $100 million and $73 million reported in the
third and second quarters of 2011, respectively. Sales were driven
by overall segment growth and increased segment share. Xgeva gained
EU approval on July 15, 2011. Amgen is currently seeking FDA
approval for Xgeva for treating bone metastases in
castrate-resistant prostate cancer patients - a response from the
agency should be out by April 26, 2012. However, prior to that, the
application will be reviewed by the Oncologic Drugs Advisory
Committee (ODAC) on Feb. 8, 2012.
Sensipar/Mimpara revenues increased 15% to $216 million in the
reported quarter. Global demand helped drive Vectibix revenues to
$87 million during the quarter, up 10%.
While Amgen recorded a 2% increase in R&D expenses during
the quarter, SG&A expenses increased 5%. Costs increased due to
the impact of the US Healthcare Reform Excise Fee, Xgeva launch
efforts, higher Enbrel profit share expenses, expansion of
international operations and phase III clinical programs.
Amgen provided better-than-expected guidance for 2012. The
company expects earnings in the range of $5.90 - $6.15 per share on
revenues of $16.1 - $16.5 billion. The company intends to continue
repurchasing shares in 2012 - Amgen currently has $5 billion
remaining under its current share buyback program. The Zacks
Consensus Estimate currently stands at $5.93 per share, towards the
lower end of the guidance range provided by Amgen.
Micromet Acquisition Will Strengthen Oncology
Besides announcing fourth quarter and full year 2011 results,
Amgen announced its intention to acquire biotech company,
). The companies signed a definitive merger agreement under which
Amgen will acquire Micromet for $11 per share in cash or
approximately $1.16 billion. The deal has been approved by the
Boards of both companies and is scheduled to close in the first
With this acquisition, Amgen is looking to expand its oncology
portfolio. The company will not only gain access to Micromet's
pipeline, it will also acquire Micromet's proprietary BiTE
(Bispecific T cell Engager) antibody technology. The lead candidate
at Micromet is blinatumomab, a BiTE antibody, currently in phase II
development for acute lymphoblastic leukemia (
). The candidate is also being developed for the treatment of
non-Hodgkin's lymphoma (NHL) and has the potential to be developed
for other hematologic malignancies. Solitomab, another candidate in
Micromet's pipeline, is in phase I studies for patients with
advanced solid tumors.
We currently have a Neutral recommendation on Amgen, which
carries a Zacks #3 Rank (short-term Hold rating).
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