Amgen Inc. (AMGN) reported a 40% rise in second-quarter profits
and offered a brighter outlook for 2009 on better-than-expected
sales of its key drugs.
Amgen "had a substantial recovery from the first quarter in
terms of revenue," Chief Executive Kevin Sharer said in an
interview.
The Thousand Oaks, Calif., drug maker also announced a deal with
GlaxoSmithKline PLC (GSK) that allows the European drug giant to
sell Amgen's experimental bone drug denosumab - expected to get a
u.s. Food and Drug Administration marketing decision in October -
to osteoporosis patients in Europe and other overseas markets.
In after-hours trading, Amgen shares rose 3.5% to $62.84.
For the three months ended June 30, Amgen reported net income of
$1.27 billion, or $1.25 a share, up from year-ago earnings of $906
million, or 84 cents a share. Excluding items, earnings were $1.29
a share, well above the average analyst estimate of $1.16,
according to Thomson Reuters.
Revenue dipped 1% to $3.71 billion but surpassed the average
Street estimate of $3.58 billion.
"Concerns we had about the pressure of the recession on health
care have moderated," Sharer said. "They're certainly not gone, but
they have moderated compared to the first quarter."
Enbrel sales, in particular, came back strong, he said, after
concerns that the job losses and other effects of the recession had
damped earlier patient demand for the rheumatoid arthritis
medicine.
Sales of Enbrel - sold in North America by Amgen and distributed
elsewhere by Wyeth (WYE) - rose 7% to $899 million for the quarter,
beating the average analyst estimate of $863 million, according to
MDRx Financial, a health-care market research firm.
Despite the stronger performance, Enbrel sales were driven by a
"high single digit [percentage] increase" in the price of the drug,
Amgen said, while the number of units sold dropped due to
market-share declines.
Look forward, Amgen raised its 2009 per-share earnings
expectations, excluding items, to between $4.80 and $4.95, from a
previous view of $4.55 to $4.75. Wall Street currently expects
$4.57 a share.
The company also expects full-year revenue to be at the upper
end of its previous projection of $14.4 billion to $14.8 billion.
Analysts, in general, had been pessimistic of that range; their
average estimate was $14.33 billion.
Wall Street's focus, though, remains on Amgen's lead pipeline
candidate denosumab, on which the company is depending to return it
to its high-growth biotech roots.
Sharer said the GlaxoSmithKline accord "is an important
strategic move" that will develop the global market for the drug
more effectively than Amgen could do alone.
The deal includes an initial payment and near-term milestones
totaling $120 million, along with ongoing royalties.
The companies will co-promote denosumab to treat post-menopausal
osteoporosis in Europe, Australia, New Zealand and Mexico, assuming
the drug is approved in those countries. In those areas, the
companies will split marketing and profits, after expenses, in
order to provide incentives for maximum growth.
Glaxo will commercialize the drug in such countries as China,
Brazil, India and South Korea, where Amgen currently lacks a
commercial presence, the company said.
Amgen keeps exclusive marketing of the drug in the U.S. and
Canada. The company also is retaining all rights to denosumab for
cancer indications.
"Cancer we're not partnering anywhere," Sharer said. "We're
keeping that to ourself."
Earlier this month, Amgen reported data showing denosumab's
superiority to an already marketed Novartis AG (NVS) drug in
preventing complications related to the spread of cancer to bones.
The news sent Amgen shares surging 14% in the past month, as
investors expect the data to reflect an additional
multibillion-dollar opportunity for the drug.
In a conference call Monday, the company gave some additional
details on cases of osteonecrosis of the jaw in the study. The side
effect, a serious problem that has been connected to
bisphosphonates like Zometa in the past, occurred in 20 denosumab
patients and 14 Zometa patients.
The company stressed that the difference wasn't statistically
significant and will present additional details on the cases in the
future. The condition hadn't appeared in any previous studies of
denosumab.
An FDA advisory committee will review Amgen's marketing
application for the drug on Aug. 13 and give its recommendation to
the agency. However, that approval is for treating only
osteoporosis and bone loss caused by hormone treatment in patients
with breast or prostate cancer. After additional studies, Amgen
expects to file for approval in the cancer-related uses.
In the second quarter, sales of anemia treatment Aranesp dropped
16% to $693 million but still surpassed the Wall Street consensus
estimate of $648 million, according to MDRx Financial.
The drop in sales came from label changes in the drug last
summer that restricted the drug's use in cancer patients, the
company said.
Sales of Epogen, an earlier version of Aranesp, rose 3% to $638
million, also beating expectations of $600 million. The increase
was driven by patient growth, as well as a price increase.
Combined second-quarter sales of Neulasta and Neupogen, used to
prevent infections in patients receiving chemotherapy, dropped 4%
to $1.16 billion, falling short of Wall Street expectations of
$1.18 billion.
-By Thomas Gryta, Dow Jones Newswires; 212-416-2169;
thomas.gryta@dowjones.com