With biosim threats looming, Amgen hikes prices to fuel Q2 beats


Editor's note: The story was updated with analyst comments.

With billions in sales under biosimilar threat and facing investor pressure to make M&A moves, Amgen on Wednesday posted revenue and earnings beats for the second quarter. The results, boosted by pharma’s much-maligned price increases, were enough for the California biotech to raise its guidance following a solid first half.

Amgen ($AMGN) reported Enbrel sales growth of 10% to $1.48 billion in the second quarter, a rise driven by price increases that were offset somewhat by competition, executives explained on a conference call. Amgen raised Enbrel's price by 28% last year and another 9.9% as of July 1, the Wall Street Journal said last month, citing an analyst report.

The outperformance from Enbrel underlines the danger biosimilars pose to Amgen's top line. And Enbrel is among the bigger targets for biosimilar developers: Earlier this month, a knockoff version from Novartis' Sandoz unit captured a recommendation from an FDA panel of experts, paving the way for an agency approval. Sandoz will have to survive any patent challenges before launching, however.

Amgen's total second-quarter revenue of $5.69 billion bested consensus by about $100 million, while EPS of $2.84 beat consensus by 12 cents. With the results, Amgen raised its revenue guidance for 2016 to between $22.5 billion and $22.8 billion, up from previous guidance of between $22.2 billion and $22.6 billion. The company bumped its expected EPS up to between $11.10 and $11.40 from a previous range of $10.85 to $11.20.

In a note titled “Price Is A Man’s Best Friend,” Leerink Partners analyst Geoffrey Porges said Amgen had a “nice quarter,” but the biotech “appears to be benefiting from price and demand tailwinds in the near-term, despite competition and healthcare cost debates.” He added that Amgen “is challenged by increasing competitive risks and uncertainties, with limited pipeline upside to offset them.”

And pipeline concerns are exactly what’s created M&A pressure for Amgen and some peers. On Wednesday, Amgen CFO David Meline said the company is looking at deals that would bring in meds ranging from early to late stages.

“We've got a number of pretty interesting prospects that we think could come to closure including still this year,” he said.

Aside from Enbrel, the California biotech posted sizable sales gains for the multiple myeloma drug Kyprolis, rare leukemia therapy Blinctyo and bone drug Prolia, each up more than 30% on the period.

Even though Kyprolis sales grew 45% versus last year, Evercore ISI analyst Mark Schoenebaum said in a note that the performance looked “somewhat weak." Doctors might be prescribing Johnson & Johnson's ($JNJ) new rival med Darzalex, approved to treat patients who've failed on three prior treatments, off-label for patients who've relapsed after just one regimen, Schoenebaum suggested.

Under biosimilar attack from the first approved U.S. biosim in Sandoz’s Zarxio, Amgen’s Neupogen sales fell 23% to $196 million on the period, though executives pledged to continue competing “account by account” by emphasizing the med’s track record and reliable supply. Porges said Neupogen sales “eroded quicker than anticipated,” missing consensus estimates by 8%.

Having just won an FDA committee backing for its own biosimilar of AbbVie ($ABBV) megablockbuster Humira, Amgen offered no new details about its launch plans. CEO Bob Bradway said the company would wait for an FDA approval before outlining further launch plans.

Sandoz's own panel nod for biosim Enbrel came just one day after Amgen's Humira biosim cruised through a committee vote earlier this month.

- here’s the release

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