Amgen reports 4.5% y/y revenue growth for Q2, led by sales in Enbrel and Neulasta

US biopharmaceutical firm Amgen has reported its second-quarter (Q2) financial results, with net revenues up by 4.5% year-on-year (y/y) to USD4.7 billion, mainly led by growth of Enbrel (etanercept), Neulasta (pegfilgrastim), Xgeva (denosumab), and Prolia (denosumab). Product sales increased 9.4% y/y, to USD4.6 billion. Both US and international sales increased 9% y/y to USD3.6 billion and USD1.0 billion, respectively. However, other revenues declined 70% y/y due to a one-time payment of USD193 million made in the second quarter 2012 from Takeda (Japan).

In terms of expenditure, cost of sales grew at 4.4% y/y to USD785 million, whereas research and development (R&D) costs rose to 17% y/y, primarily driven by late-stage clinical development programmes including investigational cholesterol-lowering drug AMG 145. Selling, general, and administrative (SG&A) expenses were up 2% y/y due to higher Enbrel profit share expenses that increased 15% y/y to USD425 million. Net income remained relatively the same y/y at USD1.26 billion, with increased revenues offset by increased R&D expenditure. Generally accepted accounting principles' earnings per share (EPS) for the quarter were USD1.65.

Product performance was strong for the quarter, but certain products like anaemia drugs Aranesp (darbepoetin alpha) and Epogen (epoetin alpha) both saw a 2% and 4% y/y decline, respectively, as revenues were impacted by Medicaid rebate adjustments. Neupogen (filgrastim) sales also declined 2% y/y in the second quarter due to a smaller number of units sold. However, revenues from Neulasta (pegfilgrastim) increased 10% y/y to USD1.1 billion due to price increases, expansion in wholesaler inventory, and the Medicaid rebate adjustment that offset a decline in volume. Enbrel increased 9% y/y to USD1.2 billion, mainly as a result of price increases. Sensipar (cinacalcet) sales grew by 12% y/y due to increased unit demand. Xgeva and Prolia continued to demonstrate strong growth this quarter at 39% y/y and 57% y/y, respectively, driven mainly by increased market segment share and seasonality.

Amgen's pipeline notably includes investigational melanoma treatment talimogene laherparepvec and ovarian cancer candidate trebananib that recently met its primary endpoint in a Phase III study with overall survival data anticipated to mature in mid-2014 (see United States: 13 June 2013: Amgen's trebananib meets primary endpoint in Phase III ovarian cancer study). AMG 145 is also currently in late-stage development for the treatment of elevated LDL-cholesterol with results expected in the first quarter of 2014.

Outlook and implications

Overall, Amgen's second-quarter financial performance was solid, with a 9% y/y increase in product sales led by blockbuster products, such as Neulasta used to treat chemotherapy-induced neutropaenia and Enbrel indicated for rheumatoid arthritis, and psoriasis. However, Neupogen will probably keep losing market share as Neulasta, a pegylated version of the same active ingredient, increases in sales. Amgen's anaemia drugs Aranesp and Epogen also both saw modest y/y declines in the second quarter, potentially being weighed down by the declining trend in demand triggered by the boxed warning of serious cardiovascular events, chronic renal failure, and cancer added by the US FDA for the erythropoiesis-stimulating agents drug class. Outside the United States, Aranesp might be facing competition from biosimilar versions of epoetin alpha, which is marketed by Johnson & Johnson (J&J, US) as Eprex under licence from Amgen. Notably, strong growth was seen again this quarter, with osteoporosis treatment Prolia and Xgeva, used to prevent bone fractures and other skeletal conditions in bone cancer patients, and Amgen will expect to see continued growth, particularly with Xgeva as its indication was recently expanded in the US for giant-cell tumours (see United States: 17 June 2013: US FDA approves Amgen's Xgeva for giant-cell tumour of bone treatment).

Amgen continued to expand its footprint in China and Japan by fostering collaborations in the region this quarter, notably partnering with Zhejiang Beta (China), Cytokinetics (US), and Astellas (Japan) in joint ventures to commercialise or develop drugs in those markets (see United States - China: 10 May 2013: Amgen forms JV with Zhejiang Beta for Vecitibix in China; United States - Japan: 29 May 2013: Amgen partners with Astellas on five pipeline drugs, to form Japanese JV; and United States - Japan: 13 June 2013: Amgen pays USD25 mil. to Cytokinetics to expand heart failure drug development deal to Japan).

The firm has reiterated its 2013 financial guidance, with revenues anticipated to range between USD17.8–18.2 billion, and adjusted earnings per share ranging from USD7.30 to USD7.45. With several late-stage candidates in the pipeline, Amgen will probably continue to demonstrate solid performance in the future.