--Amgen's sales beat expectations after a positive $185 million
adjustment to Medicaid rebates
--Company raises full-year earnings per share guidance and
high-end of revenue guidance range
--Company doesn't address reports of it pursuing acquisition of
Onyx Pharmaceuticals Inc.
(Updated throughout with details and company guidance.)
By Joseph Walker and Tess Stynes
Amgen Inc. (AMGN) said its second-quarter earnings edged lower
on increased research and development costs, as executives sought
to assure investors that the company would be judicious in any
acquisition discussions.
"As we look at opportunities, we will remain disciplined and
committed to growing our dividend and maintaining our solid
investment grade credit rating," Chairman and Chief Executive
Robert A. Bradway said.
Amgen is thought to be pursuing acquisitions to fuel future
growth. Last month, Onyx Pharmaceuticals Inc. (ONXX) said it had
rejected a roughly $8.7 billion acquisition offer from the company.
Amgen executives declined to discuss the Onyx matter during a
conference call with Wall Street analysts on Tuesday.
Amgen is in a transitional period as it looks to expand further
into international markets, gain approvals for new experimental
drugs, and increase sales of its arthritis and osteoporosis drugs.
Many of the company's core products face the potential of new
competition as they lose patent protection in the coming years.
For the year, the company raised its per-share earnings
projection to $7.30 to $7.45, from its previous view for above the
midpoint of $7.05 to $7.35, and now expects revenue at the upper
end of its previous projected range of $17.8 billion to $18.2
billion.
In the second quarter, the company benefited from
lower-than-expected Medicaid rebate claims, which added $185
million to its top-line. Medicaid rebate claims are quarterly
payments made by drug manufacturers to states and the federal
government in exchange for access to the government-insured
patients.
Chief Financial Officer Jonathan M. Peacock said that the
company had set aside cash in recent years to cover the payments,
but that the "claims coming in over that period were coming in
lower than the reserves we'd set," leading to the $185 million
adjustment.
Overall, sales increased 4.5% to $4.68 billion, exceeding
analysts expectations.
Some of the company's largest franchises, including the drug
Neulasta, continued to suffer from unit sale declines, which were
offset in part with price increases. Sales of arthritis drug Enbrel
were up 9%, mostly owing to higher prices. The company's
osteoporosis drugs, Xgeva and Prolia, reported sales growth of 39%
and 57%, respectively.
Amgen reported a profit of $1.26 billion, down from $1.27
billion a year earlier. On a per-share basis, earnings rose to
$1.65 from $1.61 on fewer shares outstanding. Excluding
acquisition- and restructuring-related impacts and other items,
adjusted per-share earnings increased to $1.89 from $1.83 in the
prior year, and exceeded analysts' projections.
Research-and-development expenses soared 17% as the company
continued development of its new drug pipeline, most notably the
cholesterol drug AMG-145. Amgen said it expected data needed to
gain regulatory approval for the drug in the first quarter of
2014.
Amgen shares fell 1.5% to 109.50 in after-hours trading. Through
the close, the stock is up 29% this year.
Write to Joseph Walker at joseph.walker@wsj.com and Tess Stynes
at tess.stynes@wsj.com
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