Amgen Beats Revenue, Earnings Expectations

Revenue grew 8% Y-o-Y to $5.96 billion in Q4 FY16 on a 6% growth in product sales

Biotech giant Amgen Inc. (NASDAQ: AMGN) announced its Q4 FY16 and full year FY16 financial results on February 02nd, 2017.

The Thousand Oaks, California-based company discovers, develops, manufactures and delivers human therapeutics and operates under a single business segment – human therapeutics.

The Company’s marketed products portfolio includes Neulasta (pegfilgrastim); erythropoiesis-stimulating agents (ESAs), such as Aranesp (darbepoetin alfa) and EPOGEN (epoetin alfa); Sensipar/Mimpara (cinacalcet); XGEVA (denosumab); Prolia (denosumab); NEUPOGEN (filgrastim), and other marketed products, such as Vectibix (panitumumab), Nplate (romiplostim) and Corlanor (ivabradine). The Company focuses its R&D on human therapeutics for the treatment of illness in the areas of oncology/hematology, cardiovascular disease, inflammation, bone health, nephrology and neuroscience. Read more about Amgen’s financial results below.

Q4 FY16 financial highlights

During Q4 FY16, Amgen’s revenues grew 8% Y-o-Y to $5.96 billion versus $5.53 billion in the year-ago same period on the back of a 6% growth in product sales driven by Enbrel (etanercept), Prolia (denosumab), Repatha (evolocumab) and KYPROLIS (carfilzomib). Enbrel sales jumped 14% to $1.64 billion, helped by some inventory stocking in the quarter. Osteoporosis drug Prolia saw sales jump 22% to $463 million, exceeding estimates of about $425 million. On the other hand, sales of infection fighter Neulasta fell 3% to $1.12 billion. Of the total revenue, product sales accounted for $5.66 billion, while other revenues accounted for $302 million.

Amgen’s total operating expenses fell to $3.48 billion from $3.50 billion, with all expense categories reflecting savings from our transformation and process improvement efforts. As a result, GAAP operating income grew to $2.48 billion from $2.03 billion in Q4 FY15. Consequently, GAAP net income jumped to $1.94 billion, or $2.59 per share, from $1.8 billion, or $2.37 per share, a year earlier. Excluding items, Amgen earned $2.89 per share, topping analysts’ average expectations by 10 cents.

For the full year FY16, total revenues grew 6% to $23 billion, with 5% product sales growth to $21.89 billion. GAAP net income jumped to $7.72 billion, or $10.24 per share, from $6.93 billion, or $9.00 per share, a year earlier.

Product sales highlights

Enbrel (etanercept) sales jumped 14% to $1.64 billion versus the year ago comparable period, driven by net selling price and favorable changes in inventory levels, offset partially by the impact of competition. For FY16, sales grew 11% to $5.96 billion driven by net selling price and offset partially by the impact of competition.

Prolia sales jumped 22% to $463 million versus the year ago corresponding period, driven by higher unit demand. For FY16, sales grew 25% to $1.63 billion versus the prior year.

Neulasta (pegfilgrastim) sales fell 3% Y-o-Y to $1.11 billion versus $1.15 billion in Q4 FY15, driven by lower unit demand. For FY16, sales fell 1% to $4.64 billion versus the prior year.

Aranesp (darbepoetin alfa) sales grew 5% Y-o-Y to $526 million versus $499 million in the year-ago same period, driven mainly by higher unit demand due to a shift by some US dialysis customers from EPOGEN (epoetin alfa) to Aranesp, offset partially by unfavorable changes in net selling price. For FY16, sales grew 7% to $2.09 billion versus the prior year.

Sensipar/Mimpara sales grew 7% Y-o-Y to $411 million versus $384 million in Q4 FY15, driven by net selling price and higher unit demand. For FY16, sales grew 12% to $1.58 billion versus the prior year.

XGEVA sales grew 6% Y-o-Y to $376 million versus $356 million in the year ago comparable period, driven by higher unit demand. For FY16, sales grew 9% to $1.52 billion versus the prior year.

EPOGEN sales fell 8% Y-o-Y to $316 million versus $342 million in the year-ago same period, due to the impact of competition, abnormally high purchases by a large end customer in the year ago corresponding period and a shift by some US dialysis customers to Aranesp. For FY16, sales fell 31% to $1.28 billion versus the prior year.

KYPROLIS (carfilzomib) sales jumped 24% Y-o-Y to $183 million versus $148 million in Q4 FY15, driven by higher unit demand. For FY16, sales jumped 35% to $692 million versus the prior year.

Other highlights

Cash flow: During Q4 FY16, Amgen generated $2.9 billion of free cash flow versus $1.9 billion in the year-ago same period due primarily to the timing of tax and other payments, as well as higher net income. The Company generated $9.6 billion of free cash flow in 2016 versus $9.1 billion in 2015 due to higher net income.

Share buyback and dividend: Amgen’s board of directors declared a dividend of $1.15 per share on December 20th, 2016, that will be paid on March 08th, 2017, to all stockholders of record as of February 15th, 2017. During the reporting quarter, Amgen repurchased 6.7 million shares of common stock at a total cost of $1 billion. For the full year FY16, the Company repurchased 19.7 million shares of common stock at a total cost of $3 billion. At the end of 2016, the Company had $4.1 billion remaining under its stock repurchase authorization.

Major pipeline updates: Amgen announced that its Repatha cholesterol drug reduced the risk of heart attacks, strokes and cardiac death in a long-awaited study of patients with heart disease, sending its shares up nearly 3% on February 02nd, 2017.

The positive heart data is seen as necessary to unlocking the blockbuster sales potential of the expensive medicine, as health insurers and pharmacy benefit managers (PBMs) have been rejecting 75% of prescriptions written while awaiting concrete proof of the drug’s health benefits. Repatha, which dramatically lowers bad LDL cholesterol, had sales of $58 million in Q4 FY16.

In November 2016, Amgen entered into collaboration with Janssen Biotech Inc. to evaluate the combination of KYPROLIS and Janssen’s DARZALEX® (daratumumab) in multiple clinical studies in patients with multiple myeloma.

Also in November 2016, the FDA approved the supplemental Biologics License Application (BLA) for Enbrel for the expanded use to treat pediatric patients (ages 4-17) with chronic moderate-to-severe plaque psoriasis.

In December 2016, the FDA granted fast track designation to CNP520, a small molecule beta-site amyloid precursor protein-cleaving enzyme-1 (BACE) inhibitor for the potential treatment of Alzheimer’s disease.

Guidance for full year FY17

For FY17, Amgen expects total revenues in the range of $22.3 billion to $23.1 billion. On a GAAP basis, EPS is forecasted in the range of $10.45 to $11.31 and a tax rate in the range of 16% to 18%. On a non-GAAP basis, EPS is predicted in the range of $11.80 to $12.60 and a tax rate in the range of 18.5% to 19.5%. Capital expenditures are forecasted to be approximately $700 million and share repurchases of approximately $2.5 billion to $3.5 billion.

Stock Performance

Amgen’s stock stood at $166.82, gaining 0.14%, at the close on Tuesday, February 07th, 2017, having vacillated between an intraday high of $167.72 and a low of $165.60 during the session. The stock’s trading volume was at 3,582,972 for the day. The Company’s market cap was at $123.78 billion as of Tuesday’s close.

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