Amgen's $4.5B in Q1 sales lags estimates, thanks to slow-selling Enbrel


Amgen ($AMGN)'s first-quarter earnings were a mixed bag. Sales were up year over year, but still fell about $230 million short of consensus estimates. The culprit? Amgen attributes it to sluggish sales of Enbrel.

In its first quarter since purchasing Onyx Pharmaceuticals last fall, Amgen's total revenue grew 7% to $4.52 billion over the same period last year. Product sales growth of 5% was driven by Amgen's bone drugs Xgeva and Prolia and its white blood cell stimulator Neulasta. Kyprolis, Onyx's new multiple myeloma drug, pitched in as well with $68 million in quarterly sales. However, sales of the company's anti-inflammatory drug Enbrel decreased 5% year over year, and its Aranesp dug for kidney patients also faltered, with sales dropping 2% on lower unit demand.

But while Enbrel sales didn't meet expectations, it delivered for Amgen's bottom line. The company's adjusted operating income grew 18% to $1.86 billion, thanks to an increase in profits on Enbrel, Amgen said in a statement. Research and development expenses also increased 17% in the first quarter of 2014, primarily due to the addition of Onyx programs.

It has been a busy year for the Thousand Oaks, CA-based company. In 2013, CEO Robert Bradway orchestrated one of the year's biggest M&A deals, grabbing Onyx Pharmaceuticals for a cool $10.4 billion--and helping the company gain access to Kyprolis. Analysts predict that the product could hit $2 billion to $2.4 billion in peak sales by 2019, and potentially reach $3 billion in annual sales in the future. The company's sales jumped 10% following its Onyx acquisition, and net income bumped up its earnings projection in response.

However, a growing biosimilar market could put a damper on Amgen's growth. The company's Neulasta is one of the most sought-after prototypes for biosimilar copies and faces a new wave of competition in Europe and Asia. Expanding Kyprolis sales into a larger market could be exactly what Amgen needs to counter sluggish sales elsewhere.

"The key to the trading action at Amgen over the next 6 months is probably data on Kyprolis," ISI Group analyst Mark Schoenebaum noted in a video seen by Bloomberg earlier this year. "That's very important because the stock kind of took it on the chin late last year with concerns around this drug."  

Still, the company expects substantial growth in the year ahead. Amgen said total revenues should range from $19.2 billion to $19.6 billion, and it forecasts earnings between $7.90 and $8.20 per share.

"Strong underlying demand for our products and growth in adjusted operating income make us confident in our full-year growth outlook," Bradway said. "We continue to advance our robust late stage pipeline and expect to submit global filings for evolocumab in 2014."

- read the release

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