) continued its strong performance in 2012 with third quarter
earnings coming in at $1.66 per share, 23 cents above the Zacks
Consensus Estimate and 19.4% above the year-ago period. Higher
revenues, cost discipline and a lower share count contributed to
the year-over-year increase in earnings.
Total revenue increased 9.5% to $4,319 million in the third
quarter of 2012. Revenues comfortably surpassed the Zacks
Consensus Estimate of $4,199 million. Key growth drivers included
Enbrel, Xgeva, Sensipar, Vectibix and Nplate. Third quarter 2012
revenues included a milestone payment received on the initiation
of a phase III psoriasis study for rilotumumab.
The Quarter in Detail
Third quarter total product sales increased 8.4% to $4,201
million (US: $3,248 million, ex-US: $953 million).
Revenues of Amgen's erythropoiesis-stimulating agent (ESA)
Aranesp fell 17% to $497 million (US: $178 million; ex-US: $319
million). Amgen reported a 3% sequential decline in unit demand
resulting from a loss of share in the US oncology segment.
Revenues of Amgen's other ESA, Epogen, increased 3% to $491
million. Lower customer discounts and a favorable change in
accounting estimates contributed to the increase despite a
reduction in dose utilization. However, sales declined 6%
sequentially due to customer buying patterns and competition. We
note that a new competitor,
) Omontys (peginesatide), has entered the dialysis market.
Worldwide revenues of Neulasta and Neupogen grew 1% to $1,355
million in the third quarter.
Enbrel, which is facing increased competition in the
dermatology market, posted revenues of $1,079 million, up 17%.
Higher average net sales price and increase in unit demand drove
revenues. The company said that it has been increasing its share
among bio-naïve (patients new to biologics) patients. Enbrel's
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 consolidation 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
Third quarter 2012 Prolia sales came in at $110 million, down
from second quarter 2012 sales of $120 million. Sales were
affected by unfavorable wholesaler inventory and lower demand due
Meanwhile, Xgeva, which gained FDA approval in November 2010,
delivered third quarter 2012 sales of $201 million, up from the
$179 million, $153 million, and $134 million reported in the last
three quarters. Sales were driven by overall segment growth.
Xgeva gained EU approval in July 2011 and has a 25% share in EU
markets where the company has access. However, with
) Zometa slated to lose patent protection, there could some
choppiness in the market with the entry of generic competition
and reimbursement considerations.
Sensipar/Mimpara revenues increased 18% to $243 million in the
reported quarter. Vectibix revenues came in at $88 million during
the quarter, up 11%.
While third quarter 2012 R&D expenses increased 11%,
SG&A expenses remained flat. Higher Enbrel profit share
expenses were offset by favorable changes to the estimated US
healthcare reform federal excise fee and foreign exchange
Amgen is currently conducting phase III studies with
romosozumab (AMG 785) for the treatment of postmenopausal
osteoporosis and expects to commence phase III studies with
AMG145 (LDL cholesterol reduction) early next year.
Amgen bought back 10 million shares during the reported
quarter for $800 million.
Guidance Up Again
Encouraged by the strong business momentum, Amgen raised its
guidance once again for 2012. The company now expects earnings in
the range of $6.50 - $6.60 per share on revenues of $17.2 billion
- $17.3 billion. Earlier, Amgen had guided towards earnings of
$6.20 - $6.35 per share on revenues of $16.9 - $17.2 billion.
We currently have a Neutral recommendation on Amgen, which
carries a Zacks #3 Rank (short-term 'Hold' rating). We are
encouraged by the company's performance so far in 2012. Enbrel
should continue performing well. Amgen's late-stage pipeline is
also moving along.
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