Amgen juices up sales outlook amid high hopes for Celgene castoff Otezla

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Amgen expects to hire the 800 sales reps and support staff that have been marketing Otezla, the psoriasis drug it acquired after Bristol-Myers Squibb bought Celgene. (Amgen)

When Amgen said it would hand over $13.4 billion for Celgene’s hit psoriasis drug Otezla in August, analysts agreed it had overpaid by $2 billion. But they also predicted Amgen’s experience turning immunology med Enbrel into a $5 billion-per-year bestseller position it to reap a decent return on Otezla.

Now Amgen is providing a hint that it shares that optimism.

Amgen said Thursday it had wrapped up its Otezla buy just as Bristol-Myers Squibb closed its $74 billion purchase of Celgene earlier this week. And thanks to that purchase, Amgen's now projecting 2019 revenues of $23.1 billion to $23.3 billion, up several hundred million from the $22.8 billion to $23 billion range it had projected earlier.

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Amgen slightly lowered the high end of its earnings guidance, though—from $12.80 to $12.75 per share—because of acquisition-related charges.

Amgen also predicted—again—that Otezla would continue growing by double-digit percentages for the next five years. To make sure that happens, Amgen told FiercePharma in August that it expects to hire the more than 800 sales reps and support staff dedicated to the product at Celgene.

RELATED: Yes, Amgen overpaid for Otezla—but that doesn't make it a mistake: analysts

A recent third FDA approval, to treat oral ulcers associated with Behçet’s disease, will no doubt help. It's the drug's third indication, and Amgen is hoping the drug can rack up even more—in juvenile idiopathic psoriasis, scalp psoriasis and more.

Analysts at SVB Leerink predicted Otezla will hit $2.5 billion next year. And if Amgen wins the additional indications, the analysts say, sales could grow to $3.6 billion by 2023 and rack up double-digit growth not just for the next five years but until Otezla’s patent expires in 2028.

It won’t be easy, but if Amgen manages all of that, Otezla’s net present value would be $9 billion, SVB Leerink said in August—and the deal will end up looking a lot smarter than investors may think it is today.

There's no doubt Amgen needs Otezla to succeed. The company’s third-quarter revenues fell 3% to $5.7 billion after a similar decline the previous quarter. Patent losses on big hits like Sensipar and Neulasta are taking a toll, even as its own foray into biosimilars is starting to pay off with copycat versions of Roche’s Herceptin and AbbVie’s Humira.

RELATED: Hit by copycat meds, Amgen trims 172 more jobs, this time in operations, R&D and sales

Amgen could get a further boost from its oncology portfolio. Kyprolis and Blincyto scored double-digit growth in the most recent quarter, and analysts have high hopes for its investigational KRAS inhibitor AMG 510.

Analysts at Jefferies are so optimistic, particularly with Otezla in the bag, that they revised their five-year expectations for Amgen Thursday, predicting as much as 3% annual revenue growth, versus the flattening or declining sales they had forecast before.

Overall Amgen is becoming “'more pharma like,' given the company has become less reliant on a single product and instead become more diversified,” they said in a Thursday note to clients. Jefferies expects Amgen to turn in earnings-per-share growth of 8% to 10% per year over the next five years.

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