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Amgen (AMGN) Tops Q2 Earnings & Revenues, Raises View

Biotech major, Amgen Inc.AMGN , reported second quarter 2016 earnings of $2.84 per share, well above the Zacks Consensus Estimate of $2.74 and up 11% from the year-ago period.

Amgen Inc. (AMGN) Street Actual & Estimate EPS - Last 5 Quarters | FindTheCompany

Total revenues increased 6% to $5.688 billion in the second quarter of 2016, beating the Zacks Consensus Estimate of $5.595 billion. Amgen's six growth products - Prolia, Xgeva, Vectibix, Nplate, Sensipar, and Enbrel - totaled $3 billion in revenues or more than half of second quarter product sales, growing 13% year over year.

Growth Products Perform Well

Total product revenues increased 5% from the year-ago quarter to $5.474 billion (U.S.: $4.317 billion, ex-U.S.: $1.157 billion) with products like Enbrel, Prolia, Kyprolis and Xgeva driving growth.

Revenues of Amgen's erythropoiesis-stimulating agent (ESA) Aranesp grew 5% from the year-ago quarter to $504 million reflecting higher unit demand in the U.S. given the shift in dialysis customer purchases from Epogen. This was partially offset by unfavorable changes in inventory and net selling price.

Revenues of Amgen's other ESA, Epogen, declined 33% to $331 million, reflecting a shift in dialysis customer purchases to Aranesp as well as the impact of competition. Fresenius FMS has moved about 80% of its patients to Mircera. Amgen does not expect Epogen biosimilars in the U.S. in 2016.

While Neulasta revenues declined 1% to $1.149 billion from the year-ago period, Neupogen recorded a 23% decline in revenues ($196 million) reflecting competition in the U.S.

Meanwhile, Neulasta was impacted by lower unit demand, offset partially by net selling price in the U.S. Sales were also negatively impacted by inventory stocking in the first quarter. Neulasta Onpro kit (on-body injector) continues to perform well, accounting for 40% of the Neulasta business in the U.S. at the end of the second quarter. Amgen said that it does not expect biosimilar competition for Neulasta in the U.S. in 2016.

Enbrel delivered revenues of $1.484 billion, up 10% from the year-ago quarter, benefiting from net selling price, offset partially by competition.

Prolia revenues came in at $441 million, up 30% from the year-ago quarter due to higher demand.

Meanwhile, Xgeva delivered revenues of $381 million, up 15% from the year-ago quarter mainly due to higher demand.

Sensipar/Mimpara revenues increased 13% from the year-ago quarter to $389 million due to higher demand and price. Vectibix revenues came in at $160 million during the quarter, unchanged from the year-ago quarter.

Kyprolis posted sales of $172 million, up 11.7% sequentially and 45% above the year-ago period reflecting higher demand. The U.S. approval in relapsed or second-line multiple myeloma has expanded the patient population significantly and should boost sales further.

Blincyto increased 76% from the year-ago period to $30 million reflecting higher demand. Repatha revenues came in at $27 million, up from $16 million in the first quarter.

While R&D expenses declined 4% from the year-ago period, SG&A spend grew 13% from the year-ago period.

Ups 2016 Guidance

Amgen upped its 2016 outlook again. The company now expects total revenues of $22.5 billion - $22.8 billion and earnings of $11.10 - $11.40 per share. Earlier, the company had guided towards total revenues of $22.2 billion - $22.6 billion and earnings of $10.85 - $11.20 per share. The Zacks Consensus Estimate for revenues and earnings is $22.55 billion and $11.20 per share, respectively.

Amgen bought back shares worth $591 million during the quarter and has $3.6 billion remaining under its buyback program. The company intends to buy back shares worth $2 billion - $3 billion in 2016.

Our Take

Amgen continues to impress by surpassing expectations yet again and raising its outlook. Higher revenues and higher operating margins drove second quarter results. While the company has some challenges in store given the presence of biosimilar competition and slowdown in mature products, contribution from new product launches should be meaningful. Meanwhile, the company's restructuring plan should make it leaner and more cost-efficient.

AMGEN INC Price

AMGEN INC Price | AMGEN INC Quote

Amgen is a Zacks Rank #3 (Hold) stock. Some better-ranked stocks in the health care sector include Innoviva, Inc. INVA and Biogen Inc. BIIB . While Innoviva is a Zacks Rank #1 (Strong Buy) stock, Biogen is a Zacks Rank #2 (Buy) stock.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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