When the biopharmaceutical company, Amgen Inc.(AMG, Financial), reported its first quarter numbers on April 21, all analysts and investors following the stock were excited with the boost of 51% in earnings which clearly surpassed all the Street estimates. Analysts were speculating on the sales growth due to the impressive product portfolio of Amgen and many were waiting to see how the multiple myeloma drug Kyprolis performed during the quarter as it is one of the blockbuster drugs in Amgen’s portfolio. Let’s quickly take a peek into the major highlights of the first quarter of the fiscal year 2015 and also have a brief understanding on the future outlook projected by the management going forward.
Sales of blockbuster drugs on the roll
The company achieved mixed sales reports, with respect to its blockbuster drugs. Combined sales of Neulasta and Neupogen, both used for treatment of patients receiving chemotherapy were flat at $1.38 billion. While Neulasta sales drove higher by 4% to $1.13 billion, the sales of Neupogen faced the heat of intense competition in the U.S. and declined 15% to $246 million. In fact, the competition from biosimilar drugs in the wake of the U.S. FDA’s recent approval of Novartis AG’s (NVS, Financial) biosimilar drug for Amgen’s Neupogen treatment is posing a threat for the latter unless it creates a new strategy to protect the decline in the drug’s sales witnessed during the quarter.
Meanwhile, the osteoporosis drugs of Amgen saw a climb in sales, thanks to the higher volumes. Prolia sales grew 39% to $272 million, while XGeva sales rose 22% to $340 million. Driven by higher prices, the sales of arthritis drug Enbrel jumped 13% to $1.12 billion. As all eyes were expecting, sales of Kyprolis surged 59% in the quarter to $108 million mainly driven by higher sales volume.
All these drugs’ combined sales led to the revenue surge of 11% year-over-year to $5.03 billion. In fact, foreign-exchange rates had a negligible impact on Amgen’s revenue since about three fourth of the total sales of Amgen’s drugs happens in the U.S. However, the strong dollar impacted sales by around two percentage points in the quarter.
It is notable that the revenue for the quarter surpassed the Street estimates of $4.91 billion by almost a huge margin.
Profits on the rise as operating costs well under control
Amgen reported a profit of $1.62 billion, or $2.11 a share, well above the analysts’ estimate of $2.10 a share. Barring the impact of acquisition related costs, per-share earnings rose to $2.48 a share from $1.87 a share reported a year ago for the same quarter.
It is to be noted that the operating costs during the quarter, excluding items, went down by almost 3% year-over-year, which included the 14% drop in R&D expenses. This seems to be streamlined to the plan-of-action shared by the management last October when they had spoken on the aim of generating as much as $1.5 billion in annual cost savings by 2018.
Future guidance remains highly upbeat
Since the product sales rose almost 12% year-over-year in the first quarter and the company remains optimistic on the future regulatory filings, the top brass have increased their full-year revenue guidance from $20.8-$21.3 billion to $20.9-$21.3 billion. For the earnings per share, the guidance has also been increased to $9.35-$9.65 per share for the entire fiscal year from $9.05-$9.40 per share estimated earlier.
The company shared its plans to file for the regulatory approval of AMG 416 treatment for secondary hyperparathyroidism in the U.S. and Europe by the second half of 2015. Additionally, Amgen also holds plans to initiate a late-stage study of its AMG 334 treatment for episodic migraine.
Parting thoughts
While the biopharmaceutical giant based in California has generated really great numbers in the first quarter, investors are still waiting for the details regarding the anticipated introduction of the first cardiovascular drug Corlanor into the market which would surely drive Amgen’s revenue further upwards in the forthcoming quarters. As on date, the company’s stock does look to be a lucrative investment option, and Amgen’s financials seem to be in great shape.
