Amgen (NASDAQ: AMGN): Q4 Earnings Preview 2010
Amgen Inc. (NASDAQ: AMGN), the world's largest independent biotech company, is scheduled to release its fourth-quarter financial results after the closing bell on Monday, January 24, 2011. Analysts, on average, expect the company to report earnings of $1.10 per share on revenue of $3.80 billion. In the year ago quarter, the company reported earnings of $1.05 per share on revenue of $3.81 billion.
Amgen Inc., a biotechnology medicines company, discovers, develops, manufactures, and delivers human therapeutics based on advances in cellular and molecular biology primarily in the United States, Europe, and Canada. The company markets primarily recombinant protein therapeutics in supportive cancer care, nephrology, and inflammation. Its principal products include Aranesp and EPOGEN erythropoietic-stimulating agents that stimulate the production of red blood cells; Neulasta and NEUPOGEN, which selectively stimulate the production of neutrophils, a type of white blood cell that helps the body fight infections; and Enbrel, an inhibitor of tumor necrosis factor that plays a role in the body's response to inflammatory diseases.
In the preceding third quarter, the Thousand Oaks, California-based company's net income was $1.24 billion, or $1.28 a share, compared to $1.39 billion, or $1.36 a share, in the prior-year quarter. On an adjusted basis, the company earned $1.36 a share in the latest quarter. Revenue rose slightly to $3.82 billion from $3.81 billion. Analysts, on average, expected the company to report earnings of $1.27 per share on revenue of $3.77 billion.
Recently, Amgen CEO Kevin Sharer said that 2010 earnings would be "somewhat above the middle" of its forecast range of $5.05 to $5.25 per share, while the cost of healthcare reform in 2011 could reach $500 million. The company previously said that earnings for last year would come in toward the low end of its forecast range. The CEO said the world's largest biotechnology company expects its earnings per share to increase in 2011, excluding the impact of the new health care reform excise fee. Amgen, which held about $17 billion in cash at the end of September, most of it outside of the United States, plans to continue buying back shares, return cash to shareholders and consider buying offshore companies, Sharer said. He said that Amgen is looking at opportunities in about 10 emerging market countries, and expects them to "play out over the next couple of years."
Amgen is seeking to increase the use of its bone drug denosumab and further its reach into the oncology market. In November, U.S. Food and Drug Administration approved Amgen's denosumab drug for the prevention and reduction of bone complications in cancer patients with solid tumors. Amgen plans to sell the drug under the Xgeva name. Denosumab marketed under the Prolia brand at a lower dose is already used to treat post-menopausal osteoporosis. Xgeva is the first bone-targeted therapy for cancer patients to be approved in nearly 10 year Last month, the company reported positive data from a trial of its cancer drug Xgeva. The company said that the drug helped prostate-cancer patients live longer without the disease spreading to their bones. If Amgen is able to gain approval for denosumab's use in prostate cancer it could add hundreds of million of dollars to the drug's potential sales, according to the analysts. The Densoumab franchise has been forecast to be worth over $5 billion a year from 2016, according to industry analysts at EvaluatePharma, and the additional indication could further boost the drug’s potential. Denosumab, which has been submitted to European regulators for approval, will be Amgen’s main focus for the immediate future, but the company has also begun late-stage testing on three new cancer drug candidates, said Sean Harper, Amgen’s chief medical officer
However, Harper insists that Amgen would also continue to research and develop drugs for immunology, cardiovascular disease and other indications and stressed that the company shouldn’t be thought of as just a cancer-treatment company. "There's no way we could grow Amgen just based on oncology," Harper said. "I feel very good about the fact that we haven't built an oncology-focused pipeline, it's a healthy proportion of our pipeline."
Early in January, Amgen announced a licensing agreement with privately held biotechnology firm, Xencor, to develop a monoclonal antibody that could aid in the treatment of autoimmune diseases, such as Addison's and Crohn's disease. The deal is said to be worth up to $500 million. Under the agreement, once Amgen completes all necessary test studies, it would have the option to license and market the treatment worldwide, including the opportunity to take charge of all future developments. Amgen also recently won a U.S. court ruling against Teva Pharmaceuticals ( NASDAQ: TEVA). The decision prevents Teva from selling a generic version of Amgens patented kidney drug, Sensipar, until 2016. During the first three quarters of last year, Amgens Sensipar generated $320 million in US sales. Sharer said he will invest the company’s cash in advancing new drugs and also consider “intelligent” acquisitions with a priority on early- stage medicines because they represent the greatest value.
In terms of stock performance, Amgen shares have gained nearly 4 percent since the beginning of the year.
Full Disclosure: None.
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