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Apr-25-20083rd UPDATE:Amgen 1Q Net Up On Cost Cuts As Anemia Sales Miss(topic overview)
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Amgen reported net income of $1.14 billion ($1.04 per share), up 2 percent from $1.11 billion (94 cents) in the same period a year ago. Sales for the Thousand Oaks-based biotech fell 2 percent to $3.6 billion ' hurt by declining sales of its once top-selling anemia drugs, Aranesp and Epogen, which decreased in the quarter 25 percent and 11 percent, respectively. [1] Sales of Aranesp and Epogen decreased to $6.1 billion in 2007. That was more than 40 percent of the company's revenue. Roche is attempting to launch its own anemia drug Mircera in the U.S., although the drug violates patents held by Amgen. A court injunction prevented the launch, but in March, Roche said it would accept a judge's recommendations and pay royalties to Amgen on sales.[2]
Amgen's total revenue was $3.61 billion, down from $3.68 billion in the same quarter last year, matching analysts' predictions. Sales of the company's top-selling anemia drugs fell as warning labels on the drugs were expanded to limit their recommended use to patients with incurable cancers.[3] Analysts had been expecting sales of $604 million in the quarter, Aberman said. In July, the Centers for Medicare and Medicaid Services changed its policy so that it would pay only for lower-than- recommended doses of anemia drugs for cancer patients.[4]
Global sales of Aranesp, which is prescribed for the treatment of chronic kidney disease as well as anemia in cancer patients undergoing chemotherapy, plunged 25% to $761 million in the first quarter of 2008 from $1,020 million in the year-earlier quarter, mainly due to decline in U.S. demand.[5] Worldwide sales of Aranesp(R) (darbepoetin alfa) decreased 25 percent to $761 million in the first quarter of 2008 versus $1,020 million during the first quarter of 2007. This decline was principally driven by U.S. Aranesp sales, which were $405 million in the first quarter of 2008 versus $654 million in the first quarter of the prior year, a decrease of 38 percent. This decline reflects the negative impact on demand, primarily in the supportive cancer care setting, of ongoing regulatory and reimbursement changes that were principally realized in the second half of 2007. This decline was partially offset by a slight benefit from a change in accounting estimates related to sales return reserves.[6] Sales of EPOGEN(R) (Epoetin alfa) decreased 11 percent to $554 million in the first quarter of 2008 versus $625 million in the first quarter of 2007. This decline was primarily driven by a reduction in dose / utilization due to ESA label changes and Erythropoietin Monitoring Policy (EMP) implementation, as well as unfavorable revised estimates of dialysis demand (primarily spillover) for prior quarters and unfavorable wholesaler inventory changes.[6]
Sales of Enbrel(R) (etanercept) increased 30 percent in the first quarter to $951 million versus $730 million during the same period in 2007. This increase includes wholesaler inventory loading of approximately $120 million resulting from the shift to wholesaler distribution in the first quarter of 2008. This increase also reflects higher demand due to increases in both patients and average net sales price. Sales growth continued in both rheumatology and dermatology, and ENBREL continues to maintain a leading position in both segments. ENBREL sales growth in the first quarter was affected by slight share declines in the U.S. in both segments versus the first quarter of 2007 due to increased competitive activity.[6] Combined sales of Neulasta and NEUPOGEN in the U.S. were $792 million in the first quarter of 2008 versus $777 million in the first quarter of 2007, an increase of 2 percent primarily reflecting an increase in demand for Neulasta, partially offset by unfavorable wholesaler inventory changes.[6] Combined international sales increased 22 percent to $294 million in the first quarter of 2008 versus $241 million for the same quarter in the prior year. This growth reflects changes in foreign exchange which positively impacted first quarter 2008 combined international sales by approximately $28 million, as well as increased demand driven by the continued conversion from NEUPOGEN to Neulasta.[6] Worldwide sales of Sensipar(R) (cinacalcet HCl) increased 27 percent to $133 million in the first quarter of 2008 versus $105 million during the first quarter of 2007. This growth was principally driven by demand, primarily due to segment penetration.[6] Combined worldwide sales of Neulasta(R) (pegfilgrastim) and NEUPOGEN(R) (Filgrastim), increased 7 percent to $1,086 million in the first quarter of 2008 versus $1,018 million for the first quarter of 2007, driven by increased demand for Neulasta.[6]
Cost of sales decreased 3 percent to $542 million in the first quarter of 2008 versus $559 million in the first quarter of 2007. This decrease was primarily driven by lower sales volume.[6] International Aranesp sales decreased 3 percent to $356 million versus $366 million in the first quarter of 2007, reflecting continued ESA (erythropoiesis stimulating agent) dosing conservatism and pricing pressure, partially offset by changes in foreign exchange which positively impacted first quarter 2008 sales by approximately $35 million.[6]
Aranesp sales fell 25 percent to $761 million, down from $1.02 billion during the first quarter of 2007. That decline included a 38 percent drop in U.S. demand, the company reported.[3] Aranesp sales fell 25.0% in the first quarter to $761 million, below Wall Street's already-reduced estimate of $771 million and significantly below the previous quarter's $827 million. This was Aranesp's fifth successive quarterly decline.[7] The erosion of the anemia franchise continued unabated as worldwide sales of the red blood cell booster Aranesp -- long seen as Amgen's most important product -- fell 25 percent to $761 million in the quarter. That was below Wall Street's diminished estimate of $771 million and well below the previous quarter's $827 million, marking the fifth successive quarterly decline.[8]
'We continue to be encouraged by the lasting effects of our cost management efforts. For its main products, Amgen (nasdaq: AMGN - news - people ) disclosed worldwide sales of Aranesp fell 25% year-over-year to $761 million, sales of Epogen declined 11% to $554 million, sales of Neulasta rose 7% to $1.09 billion, sales of Enbrel jumped 30% to $951 million, and sales of Sensipar increased 27% to $133 million.[9]
Amgen Inc. Notes to Reconciliation of GAAP Earnings to "Adjusted" Earnings (In millions, except per share data) (Unaudited) (a) To exclude the impact of stock option expense recorded in accordance with Statement of Financial Accounting Standards ("SFAS") No. 123R. For the three months ended March 31, 2008 and 2007, the total pre-tax expense for employee stock options in accordance with SFAS No. 123R was $28 million and $50 million, respectively. Substantially all related amounts have been incurred. (e) To exclude the ongoing, non-cash amortization of acquired product technology rights, primarily ENBREL, related to the Immunex Corporation acquisition. (f) To exclude merger related expenses incurred due to the Abgenix acquisition, primarily related to incremental costs associated with recording inventory acquired at fair value which is in excess of our manufacturing cost. (g) To exclude the impact of writing-off the cost of a semi-completed manufacturing asset that will not be used due to a change in manufacturing strategy. (h) To exclude the pro rata portion of the deferred financing and related costs that were immediately charged to interest expense as a result of certain holders of our convertible notes due in 2032 exercising their March 1, 2007 put option and the related convertible notes being repaid in cash. (i) To reflect the tax effect of the above adjustments for 2008, excluding certain of the restructuring charges (see (b) above). (j) To reflect the tax effect of the above adjustments for 2007, excluding the write-off of the cost of a semi-completed manufacturing asset (see (g) above). (k) The following table presents the computations for GAAP and "Adjusted" diluted earnings per share, computed under the treasury stock method.[6] Amgen ( NASDAQ:AMGN ) reported adjusted earnings per share (EPS), excluding stock option expense and certain other expenses, of $1.12 for the first quarter of 2008, an increase of 4 percent compared to $1.08 for the first quarter of 2007.[6] Amgen's investigational drug Nplate is under review for the treatment of thrombocytopenia in adult patients with chronic immune (idiopathic) thrombocytopenic purpura and the FDA is expected to decide on the approvability of the drug by July 23, 2008. Looking ahead to 2008, excluding stock option expense and certain other items, Amgen backed its adjusted per share earnings outlook in the range of $4.00 to $4.30.[5]
"Adjusted" earnings per share presented below excludes stock option expense: Three Months Three Months Ended Ended March 31, 2008 March 31, 2007 GAAP "Adjusted" GAAP "Adjusted" Income (Numerator): Net income for basic and diluted EPS $1,136 $1,218 $1,111 $1,270 ====== ========== ====== ========== Shares (Denominator): Weighted-average shares for basic EPS 1,089 1,089 1,167 1,167 Effect of dilutive securities 3 2(A) 10 5(A) Weighted-average shares for diluted EPS 1,092 1,091 1,177 1,172 ====== ========== ====== ========== Diluted earnings per share $1.04 $1.12 $0.94 $1.08 ====== ========== ====== ========== (A) Dilutive securities used to compute "Adjusted" diluted earnings per share for the three months ended March 31, 2008 and 2007 were computed exclusive of the methodology used to determine dilutive securities under SFAS No. 123R.[6]
Adjusted net income, excluding stock option expense and certain other expenses, decreased 4 percent to $1,218 million in the first quarter of 2008 compared to $1,270 million in the first quarter of 2007.[6] Worldwide cash and marketable securities were $8.6 billion and debt was $11.2 billion at the end of the first quarter of 2008. The Company reaffirmed its 2008 Revenue guidance range of $14.2 billion to $14.6 billion and its 2008 adjusted EPS guidance range of $4.00 to $4.30 excluding stock option expense and certain other expenses.[6] Excluding stock options and other one-time expenses, the company said, it would have earned $1.22 billion, or $1.12 a share.[3]
The stock has dropped 31 percent in the past 12 months. Profit excluding certain costs such as employee stock options was $1.12 a share, beating the $1.05 average estimate of 19 analysts surveyed by Bloomberg.[10]
NEW YORK (Thomson Financial) - Amgen Inc. Thursday reported first-quarter adjusted earnings of $1.22 billion, or $1.12 a share, ahead of the mean estimate of analysts polled by Thomson Reuters for a profit of $1.04 a share in the March period.[9] Analysts' estimated sales of $604 million. Amgen reaffirmed its 2008 forecast for adjusted earnings of $4.00 to $4.30 per share and revenue of $14.2 billion to $14.6 billion.[7] Sales of Neulasta and Neupogen, which are used to prevent infections in patients receiving chemotherapy, had combined sales of $1.09 billion, up 7% and slightly below expectations. The company affirmed its January forecast for earnings per share of $4 to $4.30 on revenue of $14.2 billion to $14.6 billion.[11]
On an adjusted basis, the company's per share earnings for the quarter were up 4% over last year and topped analysts' mean estimate by 8 cents a share. The company backed its profit and revenue outlook for the full year of 2008.[5] Bancorp Rhode Island (BARI:NASDAQ) the parent company of Bank Rhode Island, yesterday reported first-quarter net income of $2.3 million, or 50 cents per diluted share, up 7 percent from $2.2 million, or 44 cents per diluted share, in last year's first quarter.[10] The Thousand Oaks-based company posted net income of $1.14 billion, or $1.04 cents a share, for the quarter ended March 31, compared with $1.11 billion, or 94 cents per share, a year earlier.[3] The world's largest biotechnology company said net profit rose to $1.14 billion, or $1.04 per share, from $1.11 billion, or 94 cents per share, a year ago.[8] Net income rose to $1.14 billion, or $1.04 a share, from $1.11 billion, or 94 cents, a year earlier, the Thousand Oaks, Calif. -based company said in a statement.[10]
On a GAAP basis, the company earned $1.13 billion, or 94 cents a share, in the first quarter, compared to $1.11 billion, or 94 cents a share, a year ago.[12] Amgen (nasdaq: AMGN - news - people ) shares rose 0.5%, or 20 cents, to $42.60 in after-hours trading. Chairman and Chief Executive Kevin Sharer said that he was confident that revenues for the year will be within the company's previously announced guidance. He also said Amgen will continue to invest substantially in research and development, although R&D; spending was down 18.0% in the first quarter.[7]
Enbrel, a treatment for rheumatoid arthritis and psoriasis, generated $951 million in revenue in the first quarter, a 30 percent increase from a year earlier. That beat the $868 million that analysts were expecting, said Michael Aberman, an analyst with Credit Suisse in New York, in a note to clients.[4] Total revenue decreased 2 percent during the first quarter of 2008 to $3,613 million versus $3,687 million in the first quarter of 2007.[6] Research & Development (R&D;) expenses decreased 18 percent to $661 million in the first quarter of 2008 versus $803 million in the first quarter of 2007. This decrease was primarily driven by lower staff-related costs and other expense reductions resulting from the previously announced restructuring plan, cost recoveries derived from licensing transactions with Daiichi Sankyo and Takeda in Japan and lower clinical trial costs.[6] Selling, General & Administrative (SG&A;) expenses increased 15 percent to $862 million in the first quarter of 2008 versus $748 million in the first quarter of 2007.[6]
Sales in the U.S. totaled $2,788 million, a decrease of 3 percent versus $2,884 million in the first quarter of 2007.[6] U.S. Aranesp sales for the recent first quarter were $405 million, a decline of 38% from last year.[5] International Aranesp sales for the recent first quarter decreased 3% to $356 million from $366 million last year, reflecting continued ESA dosing conservatism and pricing pressure.[5]
Total product sales were off about 1 percent to $3.54 billion compared with last year's first quarter, the company said.[3] During the first quarter of 2008, total product sales decreased 1 percent to $3,537 million from $3,565 million in the first quarter of 2007.[6]
Total product sales for the quarter decreased 1% to $3,537 million from $3,565 million in the same period prior year, with sales of ESA (erythropoiesis stimulating agent) franchise taking a hit because of the ongoing regulatory and reimbursement changes and reduction in dose limit.[5]
Amgen's colon cancer drug - Vectibix notched up sales of $34 million for the recent first quarter, compared to $51 million in the same period a year before.[5] Worldwide sales of Aranesp decreased 25% to $761 million in the first quarter of 2008.[13]
"But it is not necessarily an accurate snapshot of what is going on inside the company." Reddoch believes that 40% of Aranesp could be at risk when the new restrictions on the drug are finalized for its label and he project sales will drop to $316 million for the fourth quarter and stay at that level. He notes that the earnings growth in the quarter largely came from a reduction in research and development expenses.[11] Sales of rheumatoid arthritis drug Enbrel for the quarter totaled $951 million, a 30% increase over the year-ago quarter. The company attributed the increase in sales to a higher demand due to increases in both patients and net sales price.[5]
The older anemia treatment Epogen, used primarily in kidney dialysis patients, saw sales fall 11 percent to $554 million, missing analyst estimates of $604 million. The class of anemia medicines known as erythropoiesis stimulating agents have been under a cloud for more than a year since data showed they could raise the risk of death in cancer patients. Restrictions have been placed on their use, and the reimbursement climate has become much tougher.[14] Profit excluding certain costs beat analysts' estimates. Amgen dropped 32 percent in Nasdaq trading last year after its top-selling anemia drugs, Aranesp and Epogen, were linked to increased risk of heart attack, stroke and death at high doses.[10] NEW YORK, April 24 (Reuters) - Amgen Inc (AMGN.O: Quote, Profile, Research ) reported higher first-quarter profit on Thursday, topping estimates, as cost cutting helped offset declining sales of its anemia drugs hit by safety concerns and reimbursement restrictions.[8] April 24 (Bloomberg) -- Amgen Inc., the world's largest biotechnology company, said first-quarter profit climbed 2 percent as demand for the arthritis treatment Enbrel offset a decline in anemia drug sales.[4] Amgen Inc., the giant biotechnology company that has a manufacturing plant in West Greenwich for the drug Enbrel, said yesterday that first-quarter profit climbed 2 percent as demand for the arthritis treatment offset a decline in anemia-drug sales.[10]
SAN FRANCISCO (AP) — Amgen Inc., the world's largest biotech company in sales, reported first-quarter profits Thursday that topped Wall Street expectations, though they were nearly flat as sales of Amgen's embattled anemia drugs plunged.[3] Amgen Inc.' s first-quarter net income rose 2.3% despite a revenue drop as sales of the company's anemia drugs were below analysts' expectations.[15]
Cost-cutting saved Amgen from excessive damage from anemic sales in its first quarter. On Thursday after the bell, the biotechnology company reported better than expected earnings in a quarter in which its franchise anemia drugs were hit by safety concerns and reimbursement restrictions.[7]
Amgen (AMGN) adjusted earnings per share of $1.12 for the first quarter of 2008, an increase of 4 % compared to $1.08 for the first quarter of 2007.[13] WHAT'S AHEAD: In January, Amgen forecast full-year adjusted profit of $4 to $4.30 per share on revenue of $14.2 billion to $14.6 billion, not including certain items, compared with adjusted profit of $4.29 per share and revenue of $14.77 billion in 2007.[2] Analysts, who typically exclude special items, expect a profit of $4.18 per share on $14.51 billion in sales. Jefferies' Walsh said Amgen's early stage pipeline and its osteoporosis drug candidate denosumab are critical to its success.[2]
Excluding items, Amgen earned $1.12 per share, beating analysts' average expectations by 8 cents, according to Reuters Estimates.[8] Excluding items, the company's earnings were $1.12 cents a share, beating expectations of $1.04 cents a share, according to Thomson Reuters.[11]
The Thousand Oaks, Calif., biotechnology company reaffirmed an outlook for adjusted earnings of $4 to $4.30 a share for fiscal 2008 with revenue ranging from $14.2 billion to $14.6 billion.[9] Wall Street analysts had expected adjusted earnings of $1.05 a share on revenue of $3.624 billion.[12] Wall Street's current consensus estimates are for earnings of $4.18 a share for the year on revenue of $14.5 billion.[9]
Total revenue fell 2 percent to $3.61 billion for the quarter, in line with Wall Street estimates.[8] With some help of lower-than-expected operating expenses -- $2.07 billion vs. the $2.2 billion Wall Street consensus -- Amgen beat on profit, but revenue fell slightly shy of Wall Street views, decreasing 2% to $3.613 billion, from $3.687 billion in the year-ago quarter.[12] Total revenue fell 2.0% to $3.6 billion for the quarter, in line with Wall Street estimates.[7]
The product's revenue fell to $761 million, a 25 percent decline from $1.02 billion a year earlier. That missed analysts' expectations of $771 million, Aberman said.[4] "Though first quarter product sales were mixed, based on current trends and expectations, we are confident that revenues for the year will be within our previously announced guidance," said Kevin Sharer, chairman and CEO. "We continue to be encouraged by the lasting effects of our cost management efforts. These combined with our revenue and expense expectations place us solidly within our adjusted EPS guidance for the year.[6] 'Though first quarter product sales were mixed, based on current trends and expectations, we are confident that revenues for the year will be within our previously announced guidance,' said Kevin Sharer, the company's chairman and chief executive officer.[9]
"We continue to be encouraged by the lasting effects of our cost-management efforts," said Chief Executive Kevin Sharer in a statement, conceding that product sales were mixed for the quarter. The company backed its 2008 earnings and revenue guidance, citing its confidence in managing expenses.[11]
During 2007, the company's revenues rose 4% to $14.77 billion from $14.27 billion in 2006. A slowdown in sales led Amgen in August 2007, to embark on a restructuring plan for the first time in its 27-year history. The company announced that it is slashing its 20,000-person workforce by 12% - 14%, or 2,200 - 2,600 jobs.[5] Anemia drugs Epogen and Aranesp generate half of the company's $4.1 billion of sales.[7] Net income was 1.14 billion dollars, compared to 1.11 billion dollars a year earlier, the Thousand Oaks, California-based company said in a statement. Amgen's troubles with its anemia drugs, Aranesp and Epogen, pulled down its performance.[16]
Sales of its anemia drugs were below Wall Street expectations and arthritis treatment Enbrel got a boost from a one-time inventory shift. The Thousand Oaks, Calif., biotechnology giant's results come as growth of its anemia franchise, Aranesp and Epogen, has evaporated since early last year after studies showed the drugs may be overused and increase cardiovascular risks and fuel certain kinds of cancer.[11] The new rules of Medicare will cover the anemia drugs to a maximum of eight weeks after completion of chemotherapy. The new Medicare rule of payment limits for anemia drugs as well as FDA's decision to slap its strongest warning label on the anemia drugs have hurt the sales of Amgen's Aranesp and Epogen.[5]
The drug, which competes with Abbott Laboratories' Humira and Johnson & Johnson's Remicade, lost U.S. market share in the quarter, Amgen said. An FDA advisory panel voted last month to keep Amgen's anemia drugs, and Johnson & Johnson's Procrit, on the market, although with new restrictions on its use for breast cancer patients and those with early stage disease. The FDA has said it's developing the new limits to put in the drugs' prescribing information.[4] The trouble may continue after a U.S. Food and Drug Administration advisory panel in March called for new limits on certain cancer patients' use of anemia drugs made by Amgen and Johnson & Johnson (JNJ). "They look a little bit better than I was expecting them to be," said analyst Jim Reddoch with Friedman Billings Ramsey, referring to the earnings as a whole.[11]
Amgen AMGN reported mixed results after the market close Thursday, with a variety of factors -- reimbursement, demand, stocking and foreign exchange -- affecting sales in what one analyst dubbed a "strange" quarter. Those quarterly details, however, aren't the only things on investors' minds. In a wait-and-see position, Amgen is postponing its upcoming analyst meeting (originally planned for June 6) because it doesn't yet have the data to answer key shareholder questions related to its bone drug denosumab, pending litigation with Roche, and the label changes to its anemia drug franchise resulting from its meeting with the Food and Drug Administration's ODAC panel earlier in the quarter. Looking to appease investor uncertainty, the company relayed confidence multiple times in its first-quarter conference call Thursday.[12] Amgen Inc. on Thursday said that its profits climbed in the first-quarter because staff reductions and other cost-cutting measures helped offset sales declines of its anemia drugs.[1]
New York - Amgen Inic, the world's largest biotechnology company, Thursday reported a 2 per cent increase in first quarter profits compared to the same period last year, helped by the arthritis treatment Enbrel. [16] On a reported basis and calculated in accordance with United States (U.S.) Generally Accepted Accounting Principles (GAAP), Amgen's GAAP EPS were $1.04 in the first quarter of 2008, an 11 percent increase compared to $0.94 in the same quarter last year.[6] Total deposits grew $23.5 million in the first quarter to $1.04 billion, up 2 percent from $1.01 billion at year-end 2007. Total assets reached $1.49 billion in the first quarter of this year, up from $1.48 billion on Dec. 31.[10] Nonperforming loans on March 31 totaled $8.6 million, or 0.58 percent of total assets, up from $4.1 million, or 0.28 percent of total assets at year-end 2007. Net charge-offs for the first quarter of this year were $311,000, or 0.08 percent (annualized) of total assets.[10] GAAP net income increased 2 percent to $1,136 million in the first quarter of 2008 from $1,111 million in the first quarter of 2007.[6]
Global sales of Sensipar, a calcimimetic agent, increased 27% to $133 million in the first quarter of 2008 from $105 million in the year-ago quarter.[5] Combined global sales of Neupogen, an erythropoietin and a white blood cell booster to treat a side effect of chemotherapy, and Neulasta, a long lasting version of Neupogen increased 7% to $1,086 million in the recent first quarter from $1,018 million in the year-ago quarter, driven by increased demand for Neulasta.[5]
Vectibix(R) (panitumumab) sales for the first quarter were $34 million compared to $51 million in the first quarter of 2007. This decline in sales was driven primarily by demand.[6] Changes in foreign exchange positively impacted first quarter 2008 international sales by $72 million.[5]
The bank's commercial-loan portfolio increased by $3.3 million to $577.0 million in that same period. This represents a 1-percent increase over $574 million in the fourth quarter of last year, and an 8-percent increase over $532.5 million in the first quarter of last year.[10] Non-interest expense was $9.5 million in the first quarter, down $51,000 from $9.5 million in the first quarter of last year.[10]
Excluding Wyeth profit share, SG&A; expenses in the first quarter of 2008 increased 6 percent versus the first quarter of 2007. This increase is due to timing of spend and is not incremental for the year.[6] Stock option expense on a per share basis totaled 2 cents and 3 cents for the first quarter of 2008 and 2007, respectively.[6] The company expects the per share impact of stock option expense to be in the range of $0.06 to $0.08 in 2008, compared to $0.12 in 2007.[5]
On average, 20 analysts polled by Thomson FirstCall expected the company to earn $1.04 per share.[5] On a GAAP basis, the company expects earnings to range between $3.66 and $4.01 per share.[5]
Before the earnings announcement, Amgen shares closed down 29 cents, or less than 1 percent, to $42.40.[1] Including discontinued operations, net income rose 15 percent to $398 million, or 92 cents a share, from $346 million, or 76 cents a year earlier.[10] Profit from continuing operations climbed to $400 million, or 93 cents a share, from $324 million, or 71 cents, a year earlier, Raytheon said in a statement.[10]
On a per-share basis, the company reported adjusted profit of $1.12 a share, compared to $1.08 a share in the year-ago quarter.[12] Profit, excluding some expenses, will be $4 to $4.30 a share, the company has said.[4] Consistent with previously issued guidance, the Company expects 2008 adjusted SG&A; expense dollars excluding Wyeth profit share expenses to be similar to 2007.[6]
Full year 2008 adjusted R&D; expense dollars are expected to be similar to 2007 as the Company will record a $100 million upfront payment as an R&D; expense in the second quarter of 2008 for the recent Kyowa Hakko collaboration and will initiate several new clinical trials in the second half of the year. [6] First-quarter Epogen sales fell 11 percent to $554 million after bringing in $625 million during the same quarter a year earlier.[3] Sales of Epogen fell 11 percent to $554 million from $625 million a year earlier because of declining use and lower doses, the company said.[4]
Sales of products in the U.S. declined 3% to $2,788 million from $2,884 million in the same period a year before.[5] In sharp contrast, International sales increased 10% to $749 million from $681 last year.[5]
Worldwide sales of Aranesp dropped 25% to $761 million, following a 25% drop in the fourth quarter, and came in below expectations of $787 million, as compiled by MDRx Financial, a health-care market research firm.[11] Epogen sales for the quarter also declined 11% to $554 million from $625 million in the year-ago period.[5] Epogen sales reported an 11% decline to $554 million, below expectations of $608 million.[11] Sales of Enbrel, a treatment for rheumatoid arthritis and psoriasis, jumped 30.0% to $951 million, beating analysts' expectations of $868 million.[7]
Revenue fell 2% to $3.61 billion, just slightly below analyst expectations of $3.62 billion. In the conference call, Sharer said the company is postponing its planned June 6 analyst meeting because it will not have all the data needed to answer questions about its anemia franchise, its late-stage osteoporosis treatment denosumab or its long-term outlook.[11] Wall Street analysts expect the company to report revenue of $14.51 billion.[5] Wall Street analysts had a consensus revenue estimate of $3.62 billion.[5]
Total revenue of $3.61 billion fell short of analysts' estimates of $3.63 billion, according to the Bloomberg survey.[10]
Revenue totaled $3.61 billion for the latest quarter, in line the average analysts' view, and down 2% from $3.69 billion in the same period a year earlier.[9] Amgen's quarterly revenue decreased 2% to $3,613 million from $3,687 million in the comparable quarter a year before.[5]
Adjusted net income decreased 4 % to $1.218 billion in the first quarter of 2008 compared to $1.270 billion in the first quarter of 2007.[13] Adjusted EPS and adjusted net income for the first quarter 2008 and 2007 exclude, for the applicable periods, stock option expense, certain expenses related to acquisitions, restructuring charges and certain other items. These expenses and other items are itemized on the attached reconciliation tables.[6]
Adjusted EPS leverage of 6 percentage points for the first quarter was principally driven by fewer shares used in the computation of adjusted diluted EPS partially offset by higher interest expense and a higher adjusted tax rate due to the expiration of the federal R&D; tax credit.[6] Average diluted shares for adjusted EPS in the first quarter of 2008 were 1,091 million versus 1,172 million in the first quarter of 2007.[6]
Capital expenditures for the first quarter of 2008 were approximately $170 million versus $325 million in the first quarter of 2007.[6] Wholesalers also stockpiled $120 million worth of Enbrel in the first quarter, the company said.[10] Spending on research and development dropped 18 percent to $661 million in the first quarter.[4]
Enbrel, a treatment for rheumatoid arthritis and psoriasis, generated 951 million dollars in the first quarter, a 30 per cent increase from a year earlier.[16] Net interest margin for the first quarter was 2.97 percent, relatively unchanged from 2.98 percent for the fourth quarter of last year and identical to that in the first quarter of last year.[10] During the first quarter of 2008, adjusted EPS grew 4 percent while revenue decreased 2 percent.[6] The biotech company beats on profit, but revenue falls shy of Wall Street views for the first quarter.[12]
For more product information or the full prescribing information, please refer to the Amgen Web site at www.amgen.com. As previously announced, the Company has posted in the Investors section of the Company's Web site (www.amgen.com/investors) a slide presentation related to its first quarter financial results conference call, scheduled for 2 p.m. Pacific Time today.[6] In the first quarter, domestic product sales fell 3%, while international sales climbed 10%, all due to the weaker dollar.[11] Excluding the impact of foreign exchange, combined worldwide sales increased 4 percent and combined international product sales increased 10 percent.[6] Excluding the impact of foreign exchange, total product sales decreased 3 percent and international product sales decreased 1 percent.[6]
Excluding the impact of foreign exchange, worldwide Aranesp sales decreased 29 percent and international Aranesp sales decreased 12 percent.[6]
Although the panel did not completely reject use of the anemia drugs, analysts said Aranesp sales could drop sharply if the FDA follows the panel's recommendations. They're probably losing about a third of their market in cancer patients, said Mike King, an analyst at Rodman and Renshaw.[7] The following is a summary of key developments and analyst commentary for the period ended March 31. OVERVIEW: Amgen stock has been hit hard by concerns about the safety of its drugs Epogen and Aranesp, which treat anemia caused by chemotherapy. Studies showed the drugs sped up the growth of certain tumors, and linked them to greater risks of blood vessel blockage and death. The warning labels on the drugs were expanded in March, limiting their recommended use to patients with incurable cancers.[2]
Amgen's anemia drugs "still may have a ways to go before hitting bottom,'' said Christopher Raymond, an analyst with Robert W. Baird in Chicago, in a note to clients April 15. "We see dramatic category deterioration, Aranesp market share loss, and potentially new payer pressures all deleteriously impacting this franchise for the foreseeable future.''[4]
Amgen shares were up 54 cents in early after-hours trading after closing down 29 cents at $42.40 on the Nasdaq Stock Market before the results were announced.[3] Earlier, shares fell 29 cents, or less than 1 percent, to $42.40 in Nasdaq Stock Market composite trading.[4]
STOCK PERFORMANCE: The stock fell 10 percent, to end the quarter at $41.78. Shares dropped as far as $39.16 during the period, their lowest value since September 2002.[2]
Earlier, shares fell 29 cents, or less than 1 percent, to $42.40 in Nasdaq composite trading.[10]
The biotechnology giant recorded net income of $1.14 billion, or $1.04 a share, compared with $1.11 billion, or 94 cents a share, in the prior-year period.[15]
The missile-systems group, the company's largest, increased sales to $1.31 billion, from $1.14 billion.[10] Raytheon chief executive officer William Swanson has focused the company on military and government customers by exiting the business-jet market. In November, he sold the flight options unit, which offered partial ownership in private jets, for an undisclosed sum. That followed the March 2007 sale of Raytheon's business-jet unit to Onex Corp. and Goldman Sachs Group Inc. for $3.3 billion. That former unit is now Hawker Beechcraft Corp.[10]
Wall Street's latest estimates were $4.18 and $14.5 billion, respectively. Amgen also noted that a Phase II study of its rheumatoid arthritis drug AMG 108 showed it was not comparable to the current standard of care for biologic therapies and it is evaluating other options for the development program.[11] Thousand Oaks, Calif. -based Amgen said it may sue Roche if it begins selling Mircera. In February, Amgen sold its Japanese business, along with the Japanese rights to 13 drug candidates, to Takeda Pharmaceuticals for $1.18 billion.[2]
Amgen had $8.2 billion in cash and investments and $11.2 billion in debt at the end of March, the company said.[4] Expenses for marketing and administration climbed 15 percent to $862 million, the company said.[4] Operating profit rose 14 percent to $137 million. Raytheon's air-defense capability had a high-profile test on Feb. 20 when the United States. successfully fired one of its Standard Missile-3 from a Navy ship to destroy a malfunctioning 5,000- pound U.S. spy satellite 153 miles over the Pacific Ocean.[10] Raytheon reaffirmed the current-year forecast it made in January for per-share profit from continuing operations of $3.65 to $3.80. The company was predicted to earn $3.87 this year, according to the Bloomberg survey. Even with the strong quarter, it's too soon to lift the full-year forecast, David Wajsgras, Raytheon's chief financial officer, said yesterday. "We feel good about the outlook," he said. "It's still early in the year.[10] Approximately three quarters of the increase was driven by higher Wyeth profit share expenses due to higher ENBREL sales.[6] "Strong sales at missiles added 1 cent to results versus our estimates." He rates the shares "market perform."[10]
The Company anticipates that full year 2008 Epogen sales will decline only slightly considering the full year dose effect will be partially offset by normal patient population growth of approximately 3 percent. Spillover is a result of the Company's contractual relationship with Johnson & Johnson. (Please refer to the Company's Form 10-K for a more detailed discussion of this relationship and a description of spillover).[6] No forward-looking statement can be guaranteed and actual results may differ materially from those we project. The Company's results may be affected by our ability to successfully market both new and existing products domestically and internationally, clinical and regulatory developments (domestic or foreign) involving current and future products, sales growth of recently launched products, competition from other products (domestic or foreign) and difficulties or delays in manufacturing our products.[6] Worldwide sales of Aranesp, the company's biggest product in 2007, led the decline.[4]
Amgen said that the decline in Aranesp sales reflects the negative impact on demand, primarily in the supportive cancer care setting, of ongoing regulatory and reimbursement changes that were principally realized in the second half of 2007.[5]
The sales included a one-time benefit of $120 million, representing 13 days of sales from wholesaler inventory loading because of a shift to wholesaler distribution. [11] AMGN closed Thursday's regular trade down $0.29 at $42.40 on a volume of 7.9 million shares.[5] Amgen's shares, which have dropped more than 30% in the past year, traded at $42.44 after hours, up slightly from Thursday's close of $42.40.[11] Shares of the Thousand Oaks, Calif. -based biotech company edged up 10 cents, or 0.2%, to $42.50 in after-hours trading.[12] Raytheon fell 14 cents to $66.09 in New York Stock Exchange composite trading.[10] Amgen rose 50 cents, or 1.2 percent at 4:30 p.m. New York time in extended trading after the release of the earnings statement.[4] On the same basis, Amgen's earnings beat the average estimate of analysts surveyed by Thomson Financial by 8 cents a share.[3]
Excluding acquisition-related and stock-compensation costs, earnings rose to $1.12 from $1.08. [15] Commenting on the results, Kevin Sharer, chairman and CEO said, 'We continue to be encouraged by the lasting effects of our cost management efforts. These combined with our revenue and expense expectations place us solidly within our adjusted EPS guidance for the year.[5] The company said the adjusted results exclude stock option expense and other items.[9] Adjusted EPS including the impact of stock option expense are also itemized in the notes to the attached reconciliation tables.[6]
For 2008, Amgen has said it expects revenue to drop to $14.2 billion to $14.6 billion. [4] The company continues to expect 2008 revenue to range between $14.2 billion and $14.6 billion.[5] In 2005, the company's total revenue jumped 18% to $12.4 billion from 2004.[5]
Raytheon's missile-systems business, which won a $1-billion order from Japan in February, increased revenue 15 percent during the period.[10]
Waltham, Mass. -based Raytheon Co., maker of the Tomahawk cruise missile, said yesterday that first-quarter profit rose 23 percent, beating analysts' estimates, as the United States and allied nations increased purchases of air-defense systems and combat gear.[10] The company joins U.S. defense contractors Lockheed Martin Corp., Boeing Co. and General Dynamics Corp., which all reported first-quarter profit that exceeded analysts' estimates in the past two days.[10]
ANALYST TAKE: Jefferies analyst Adam Walsh said estimates for anemia drug sales may continue to fall, as the full impact of the newest restrictions might not become clear for several months.[2] In July 2007, the Centers for Medicare & Medicaid Services or CMS tightened the rules for prescribing anti-anemia medicines to cancer patients on Medicare. According to the new rules proposed by the CMS, cancer patients undergoing chemotherapy should be prescribed anemia drugs only if their red blood cell count falls below 10 milligrams per deciliter.[5] Scientists found that increasing red blood cell counts over 12.5 grams per deciliter in anemic kidney patients, compared to the FDA's recommended dosing level of 10 to 12, results in heart problems or death. Following the new findings, the FDA slapped a 'black-box" warning on Amgen's Aranesp and Epogen, and Johnson & Johnson's Procrit in March 2007, alerting doctors to rein in the use of these drugs by using the lowest dose of medication.[5] Aranesp and Epogen, which come under the class erythropoiesis stimulating agents or ESAs, are approved by the FDA to increase the number of red blood cells in cancer patients whose chemotherapy causes anemia and to avoid blood transfusions. Doctors have been prescribing these drugs to treat patients whose anemia stems from the cancer itself and to improve the quality of life of anemic patients by using them to stimulate creation of energy-boosting red blood cells.[5]
We also are pleased with our commercial loan activity. We booked approximately the same amount of new commitments this quarter as in the first quarter of 2007, but portfolio growth was offset by an increase in prepayments." [10] "Despite the Fed reducing interest rates by 200 basis points in the first quarter, our disciplined deposit pricing enabled us to grow our deposit base while maintaining our net-interest margin.[10]
Amgen also revealed that it is planning to close some facilities, which will result in a pretax restructuring charge of $600 million - $700 million. [5] Capital expenditures were also slashed to $170 million from $325 million a year ago.[7] The company guided for GAAP EPS for the year to be in a range of $3.66 to $4.01.[13] The Company believes that pronounced dose declines which have been observed in the quarter of EMP implementation will moderate in subsequent quarters, as has been observed with prior years' EMP changes.[6] The company blamed the decline in Epogen sales to reduction in dose / utilization due to ESA label changes and Erythropoietin Monitoring Policy implementation, as well as unfavorable revised estimates of dialysis demand.[5]
Sales of our products are affected by reimbursement policies imposed by third-party payors, including governments, private insurance plans and managed care providers and may be affected by regulatory, clinical and guideline developments and domestic and international trends toward managed care and health care cost containment as well as U.S. legislation affecting pharmaceutical pricing and reimbursement.[6] Total product sales actually dropped 3%, excluding foreign-exchange effects.[11]
Amgen executives credited previously announced cost-cutting measures with keeping profits level despite the sales drop.[3]
NEW YORK -- Amgen Inc., the world's largest biotechnology company, is scheduled to report its first-quarter results Thursday.[2] A biotechnology pioneer since 1980, Amgen was one of the first companies to realize the new science's promise by bringing safe and effective medicines from lab, to manufacturing plant, to patient.[6] Amgen is bracing for new restrictions on use of the medicines by the U.S. Food and Drug Administration, and is waging a legal battle to fend off competition from Roche Holding AG.[10]
When asked how Amgen plans to meet 2008 guidance, CEO Kevin Sharer responded, "We let revenue lead expenses -- I want to give investors confidence that we have a sophisticated and experienced team analyzing." Sharer said he's highly confident in Amgen's ability to project the numbers, later explaining, "Maybe that's a long-winded way of saying, 'Trust us.'"[12] Walsh nevertheless thinks Amgen will exceed Wall Street expectations due to lower operating expenses.[2]
Amgen therapeutics have changed the practice of medicine, helping millions of people around the world in the fight against cancer, kidney disease, rheumatoid arthritis and other serious illnesses.[6]
Clinical trial costs decreased as some of the Company's large clinical trials completed enrollment and the significant costs associated with site initiation and patient enrollment are no longer being incurred. [6] The Company provided updates on selected products and late-stage clinical programs including Aranesp, Nplate(TM) (romiplostim), denosumab, Vectibix and certain emerging clinical programs.[6]
SOURCES
1. Los Angeles Business Journal Online - business news and information for Los Angeles California
2. Earnings Preview: Amgen to report 1Q results Thursday | Chron.com - Houston Chronicle
3. The Associated Press: Amgen first-quarter profits nearly flat on declining sales
4. Bloomberg.com: U.S.
5. Amgen Q1 Profit Rises On Cost Management Effort; ESA Franchise Continues To Face Challenges; Backs FY'08 Outlook [AMGN] - RTTNews, Today's Top Stories, Global Newswires, ToDay's Top News,Global Business news .
6. News: Amgen's First Quarter 2008 Adjusted Earnings Per Share Increased 4 percent to $1.12. Genetic Engineering & Biotechnology News - Biotechnology from Bench to Business
7. Cost Cuts Salvage Amgen's Quarter - Forbes.com
8. UPDATE 2-Amgen 1st-quarter profit rises on cost cutting | Markets | Markets News | Reuters
9. Amgen 1Q adj eps tops Wall St. view by 8c; co. reaffirms FY08 eps/rev outlook - Forbes.com
10. Amgen profit increases on Enbrel sales | Business | Rhode Island news | projo.com | The Providence Journal | Breaking news
11. 3rd UPDATE:Amgen 1Q Net Up On Cost Cuts As Anemia Sales Miss
12. Amgen to Investors: Trust Us | Biotech | AMGN GSK JNJ LGND - TheStreet.com
13. 24/7 Wall St.: Amgen's (AMGN) Modest Quarter
14. Amgen 1st-quarter profit rises on cost cutting | Markets | Markets News | Reuters
15. Free Preview - WSJ.com
16. Amgen net earnings climb 2 per cent, helped by arthritis med : US Business
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