Q3 beats on sales, earnings ready Amgen for biosimilar attack

Amgen ($AMGN) is steeling itself against biosimilar competition to some of its top meds, with a biosimilar of its best-selling cancer drug Neupogen hitting the market in September and threatening to take a bite out of sales. But the company hasn't hit the eye of the storm just yet, as older products delivered Street-beating sales in the third quarter and new drugs showed potential in helping Amgen shore up its defenses.

Pharma sales rang in at $5.5 billion for the quarter, topping analysts' estimates of $5.1 billion. The company also beat on EPS, with $2.72 compared with the Street's prediction of $2.37.

Amgen can partly thank "minimal initial impact" from Zarxio, an FDA-approved biosimilar of Neupogen from Novartis' ($NVS) Sandoz unit, for that win "given its late launch in the quarter," Evercore ISI analyst Mark Schoenebaum said in a note to investors. Neupogen brought in $218 million, beating analysts' estimates of $184 million. The drug in combination with Amgen's chemo med Neulasta raked in $1.2 billion in sales for the quarter, topping the Street's prediction of $1.1 billion.

The Thousand Oaks, CA-based company could breathe easy for a while on the biosimilar front, as it "does not assume any new additional biosimilars launching" until the second half of 2016, Schoenebaum said in his note. Meanwhile, Amgen "will defend against increase in competition to our mature franchises," executive VP of global commercial operations Tony Hooper said during the company's Q3 earnings call.

Part of that plan involves focusing on developing its own biosimilars and beefing up sales for new products. Amgen is preparing to file a biosimilar of AbbVie's ($ABBV) blockbuster rheumatoid arthritis med Humira, saying last year that it would launch its version of the drug in 2017--even though AbbVie doesn't think that timeline is possible, Schoenebaum pointed out.

Amgen is staying mum about its exact plans for the med, declining to comment on a potential launch during its Q3 earnings call. "We recognize that there is intellectual property here that needs to be respected but we will continue to advance our molecule and continue to assess the intellectual property that's in place," CEO Bob Bradway said during the company's earnings call.

The company is also expecting big things from its PCSK9 cholesterol-fighter Repatha, which was approved in September and will compete with Sanofi ($SNY) and Regeneron's ($REGN) rival med Praluent. It's still too early to tell how Repatha will perform against rivals. But the response to its recent launch has been "extremely encouraging," Hooper said during the earnings call. And Amgen will likely chalk up more Repatha sales in the U.S. during Q4 once payer negotiations come through, he added.

Amgen's executive VP of global commercial operations Tony Hooper

Older products delivered in the quarter, with osteoporosis med Prolia bringing in $205 million and beating the Street's expectations of $204 million. Bone cancer drug Xgeva tallied $273 million in sales, topping analysts' predictions of $252 million.

"For them to be growing now in the third quarter of these products at the 19% revenue level, especially when you take a little haircut on the currency on the sales outside the United States, those are impressive numbers," Smead Capital Management CEO Bill Smead told Bloomberg.

But multiple myeloma med Kyprolis stumbled a bit, with sales of $137 million that missed the Street's prediction of $141 million. Still, Amgen could be set to reap more from the drug in the future after winning in July a new myeloma indication for Kyprolis to treat relapsed multiple myeloma in combination with Revlimid and chemo drug dexamethasone (KRd).

With mostly positive numbers in tow, Amgen is expecting more progress in the months ahead. The company raised its EPS forecast for the year to $9.95 to $10.10 from $9.55 to $9.80, with projected revenues of $21.4 billion to $21.6 billion. In 2016, Amgen predicts earnings of $10.35 to $10.75 per share with revenues of $21.7 billion to $22.3 billion, a "pretty conservative" estimate, Cowen and Co. analyst Eric Schmidt told Reuters.

- here's Amgen's earnings statement
- get the call transcript from Seeking Alpha (reg. req.)
- read the Bloomberg story
- here's Reuters' take

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