By Tess Stynes
Amgen Inc. said its earnings, excluding restructuring charges,
increased more than expected in the third quarter, driven by strong
growth of key drugs such as cancer therapy Krypolis and
osteoporosis treatment Prolia.
The strong results helped prompt Amgen to raise its guidance for
the year.
Once a biopharmaceutical pioneer, Amgen as been facing
challenges more typical for traditional drug makers, such as
slowing sales of older drugs and the threat of low-cost
competition. In July, Amgen also joined the ranks of major
pharmaceutical companies that have been cutting jobs and closing
plants. Amgen's restructuring plans included a 12% to 15% reduction
in its global workforce and the closure of plants in two
states.
Amgen said during a conference call with investors and analysts
that it had finished the reorganization and exceeded its target of
eliminating 2,900 jobs.
Amgen plans to provide details on its long-term growth strategy,
restructuring efforts and drug pipeline at its business review
meeting in New York on Tuesday.
The company also recently came under pressure from activist
investor Dan Loeb, whose Third Point LLC has built a stake in the
company and called for a potential split into two separate
businesses. The New York hedge-fund noted its stock trades at a
significant discount to peers, even though Amgen has a "compelling
mix" of established and new products. Third Point urged Amgen to
increase the efficiency of its research and development process,
make deeper cost cuts and suggested most of the company's recent
deals would produce "mediocre returns."
In all, Amgen reported a profit for the quarter of $1.24
billion, or $1.61 a share, down from $1.37 billion, or $1.79 a
share, a year earlier. Excluding restructuring- and
acquisition-related charges and other items, earnings rose to $2.30
from $1.94. Revenue increased 6% to $5.03 billion.
Analysts polled by Thomson Reuters expected a per-share profit
of $2.11 and revenue of $4.96 billion.
Last year, Amgen bought Onyx Pharmaceuticals Inc. for $10.4
billion, gaining its flagship product, Kyprolis. The drug was
approved in the U.S. in 2012 as a treatment for a blood cancer
known as multiple myeloma.
In the third quarter, Kyprolis sales were $94 million, an
increase of 21% from $78 million in the second quarter.
Sales of Amgen's osteoporosis drugs also improved thanks to
stronger volume. Prolia sales surged 43% from a year earlier to
$255 million, while Xgeva sales grew 22% to $318 million.
Combined sales of Neulasta and Neupogen, both of which are used
to prevent infections in patients receiving chemotherapy, fell 6.7%
to $1.49 billion. Neulasta sales increased 5% to $1.19 billion,
mostly driven by pricing. However, Neupogen sales fell 36%, which
Amgen mainly attributed to a $155 million order in the year-earlier
period from the U.S. government.
Neupogen is facing generic competition in the U.S. from Teva
Pharmaceutical Industries Ltd., which launched similar treatment
Granix late last year. Amgen said underlying demand for both drugs
was slightly hurt by competition.
As for the year, Amgen now expects earnings of $8.45 to $8.55 on
revenue of $19.8 billion to $20 billion, up from its previous
estimate for a per-share profit of $8.20 to $8.40 on revenue of
$19.5 billion to $19.7 billion.
Jonathan D. Rockoff contributed to this article.
Write to Tess Stynes at tess.stynes@wsj.com
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