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Amgen (AMGN) Stock Down Despite Q2 Earnings & Sales Beat
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Amgen (AMGN - Free Report) reported second-quarter 2024 adjusted earnings of $4.97 per share, which beat the Zacks Consensus Estimate of $4.93. Earnings declined 1% year over year due to higher operating costs and higher interest expenses.
Total revenues of $8.39 billion beat the Zacks Consensus Estimate of $8.31 billion. Total revenues rose 20% year over year.
Total product revenues increased 20% from the year-ago quarter to $8.04 billion. Higher volumes were partially offset by lower selling prices of several drugs. Volumes rose 26% in the quarter while prices declined 3%.
Other revenues were $347 million in the quarter, up 14.5% year over year.
Performance of Key Drugs
General Medicine
Prolia revenues came in at $1.17 billion, up 13% from the year-ago quarter, driven by volume growth. Prolia sales beat the Zacks Consensus Estimate of $1.1 billion as well as our model estimate of $1.08 billion.
Evenity recorded sales of $391 million in the quarter, up 39% year over year, driven by solid volume growth in and outside the United States. Evenity sales beat the Zacks Consensus Estimate of $367.0 million as well as our model estimate of $349.0 million.
Repatha generated revenues of $532 million, up 25% year over year. Repatha volumes rose 46% due to expanded formulary coverage in the United States. The volume growth was partially offset by lower prices due to higher rebates to support expanded access. Repatha sales beat the Zacks Consensus Estimate of $531.0 million and our model estimate of $521.1 million.
Hematology-Oncology
Xgeva delivered revenues of $562 million, up 6% year over year, driven by higher net selling prices. Xgeva sales beat the Zacks Consensus Estimate of $547.0 million while slightly missing our model estimate of $567.6 million.
Kyprolis recorded sales of $377 million, up 9% year over year, driven by volume growth in outside U.S. markets. Vectibix revenues came in at $270 million, up 9% year over year, driven by higher net selling price and volume growth.
Nplate sales rose 12% to $346 million. Blincyto sales increased 28% from the year-ago period to $264 million, driven by volume growth as the drug benefited from broad prescribing for patients with B-cell precursor acute lymphoblastic leukemia (ALL).
Lumakras/ Lumykras recorded sales of $85 million in the quarter, up 10% from the year-ago period.
Imdelltra (tarlatamab), approved for pre-treated advanced small cell lung cancer (ES-SCLC) in May 2024, recorded sales of $12 million in the second quarter.
Inflammation
Sales of Otezla were $544 million in the quarter, down 9% due to lower selling price and unfavorable changes to estimated sales deductions, which offset the benefit from volume growth of 2%. Otezla sales missed the Zacks Consensus Estimate of $594.0 million as well as our estimate of $544.8 million.
Enbrel revenues of $909 million declined 15% year over year due to lower selling price. Enbrel sales missed the Zacks Consensus Estimate of $949.0 million as well as our estimate of $963.5 million.
Asthma drug Tezspire (tezepelumab) recorded sales of $234 million in the quarter, up 76% year over year, driven by volume growth. Tezspire volumes benefited from the uptake of the new self-administered, pre-filled, single-use pen formulation of the drug.
Amgen has a partnership with AstraZeneca (AZN - Free Report) for Tezspire. Amgen and AstraZeneca share costs and profits equally after AstraZeneca pays a mid-single-digit inventor royalty to Amgen. While AstraZeneca leads development, Amgen leads manufacturing.
Rare Disease
Amgen closed the acquisition of Horizon Therapeutics for $27.8 billion on Oct 6, 2023, which added several rare disease drugs like Tepezza, Krystexxa and Uplizna to AMGN’s portfolio.
Tepezza, Krystexxa and Uplizna generated sales of $479 million, $294 million and $92 million, respectively, in the second quarter.
Ultra-rare products acquired from Horizon generated revenues of $187 million in the quarter.
New drug Tavneos generated $71 million in sales in the second quarter compared with $51 million in the previous quarter. The drug’s 39% sequential growth was driven by new patient volume growth. Tavneos, approved for the treatment of patients with ANCA-associated vasculitis, a severe systemic autoimmune disease, was added to Amgen’s portfolio with the 2022 acquisition of ChemoCentryx.
Established Products
Total sales of established products, which include Epogen, Aranesp, Parsabiv and Neulasta, decreased 21% year over year in the quarter to $591 million.
Cost and Margin Discussion
Adjusted operating margin declined 4.4 percentage points to 48.2% in the quarter.
Adjusted operating expenses increased 30% to $4.52 billion. R&D expenses rose 30% year over year to $1.42 billion. SG&A spending rose 36% to $1.69 billion.
2024 Guidance
Amgen tightened its revenue guidance from a range of $32.5 billion to $33.8 billion to $32.8 billion to $33.8 billion.
Adjusted earnings guidance was also tightened from a range of $19.00 to $20.20 per share to $19.10 to $20.10 per share.
R&D costs are expected to increase more than 25% in 2024 compared to the prior expectation of approximately 25%. Adjusted operating margin is expected to be roughly 47% in 2024, with margin in the third quarter expected to be lower than the second-quarter level.
The adjusted tax rate is expected to be in the range of 15.0% to 16.0%. Amgen raised its target for capital expenditures to approximately $1.3 billion from the previous expectation of $1.1 billion as it invests in manufacturing capacity for its obesity candidate, MariTide. Amgen expects to buy back shares worth not more than $500 million in 2024.
Our Take
Amgen’s second-quarter results were strong as it beat estimates for earnings as well as for sales. Twelve products, including Prolia, Repatha, Blincyto, Tezspire and Evenity, achieved double-digit volume growth in the quarter. Rare disease drugs, mostly Horizon’s products, added $1.1 billion in sales in the quarter. Excluding the contribution from Horizon, product sales grew 5% while volumes rose 10%. However, margins were weak in the quarter as costs rose.
Amgen also lowered the upper end of its EPS guidance range for the year as it expects R&D costs to increase and operating margins to be lower in the second half of the year. This pushed the stock down around 1.7% in after-market hours on Tuesday.
So far this year, Amgen’s stock has gained 14.2% against the industry‘s 4.8% decline.
Image Source: Zacks Investment Research
Amgen’s old medicines like Evenity, Repatha and Prolia, as well as newer medicines like Tavneos and Tezspire, are driving sales, more than offsetting declining revenues from oncology biosimilars and legacy established products such as Enbrel. The addition of Horizon products boosted revenue growth in the first half of the year. However, weakness in some key brands like Otezla and Lumakras is a headwind.
Amgen has some key pipeline assets in obesity and inflammation, which have a large market opportunity.
Investors are particularly interested in the progress of Amgen’ GLP-1 receptor candidate, MariTide (maridebart cafraglutide), for obesity. Top-line 52-week data from the phase II study on MariTide in adults with overweight or obesity is expected in late 2024. Amgen is planning to conduct a comprehensive phase III program on the candidate across obesity, obesity-related conditions and type-II diabetes. Amgen plans to begin a phase II study on the candidate in type II diabetes in late 2024.
The GLP-1 segment is an important class of drugs for multiple cardiometabolic diseases and is gaining significant popularity.
Some popular GLP-1 receptor drugs available in the market are Eli Lilly’s (LLY - Free Report) tirzepatide medicines, diabetes drug Mounjaro and weight loss medicine, Zepbound and Novo Nordisk’s (NVO - Free Report) semaglutide, approved as Ozempic pre-filled pen and Rybelsus oral tablet for type II diabetes and as Wegovy injection for weight management. While Eli Lilly will report Mounjaro and Zepbound sales tomorrow with its second-quarter results, Novo Nordisk reported its second-quarter results on Wednesday. While Ozempic sales rose 30%, Wegovy sales rose 53% at a constant exchange rate in the second quarter.
Image: Shutterstock
Amgen (AMGN) Stock Down Despite Q2 Earnings & Sales Beat
Amgen (AMGN - Free Report) reported second-quarter 2024 adjusted earnings of $4.97 per share, which beat the Zacks Consensus Estimate of $4.93. Earnings declined 1% year over year due to higher operating costs and higher interest expenses.
Total revenues of $8.39 billion beat the Zacks Consensus Estimate of $8.31 billion. Total revenues rose 20% year over year.
Total product revenues increased 20% from the year-ago quarter to $8.04 billion. Higher volumes were partially offset by lower selling prices of several drugs. Volumes rose 26% in the quarter while prices declined 3%.
Other revenues were $347 million in the quarter, up 14.5% year over year.
Performance of Key Drugs
General Medicine
Prolia revenues came in at $1.17 billion, up 13% from the year-ago quarter, driven by volume growth. Prolia sales beat the Zacks Consensus Estimate of $1.1 billion as well as our model estimate of $1.08 billion.
Evenity recorded sales of $391 million in the quarter, up 39% year over year, driven by solid volume growth in and outside the United States. Evenity sales beat the Zacks Consensus Estimate of $367.0 million as well as our model estimate of $349.0 million.
Repatha generated revenues of $532 million, up 25% year over year. Repatha volumes rose 46% due to expanded formulary coverage in the United States. The volume growth was partially offset by lower prices due to higher rebates to support expanded access. Repatha sales beat the Zacks Consensus Estimate of $531.0 million and our model estimate of $521.1 million.
Hematology-Oncology
Xgeva delivered revenues of $562 million, up 6% year over year, driven by higher net selling prices. Xgeva sales beat the Zacks Consensus Estimate of $547.0 million while slightly missing our model estimate of $567.6 million.
Kyprolis recorded sales of $377 million, up 9% year over year, driven by volume growth in outside U.S. markets. Vectibix revenues came in at $270 million, up 9% year over year, driven by higher net selling price and volume growth.
Nplate sales rose 12% to $346 million. Blincyto sales increased 28% from the year-ago period to $264 million, driven by volume growth as the drug benefited from broad prescribing for patients with B-cell precursor acute lymphoblastic leukemia (ALL).
Lumakras/ Lumykras recorded sales of $85 million in the quarter, up 10% from the year-ago period.
Imdelltra (tarlatamab), approved for pre-treated advanced small cell lung cancer (ES-SCLC) in May 2024, recorded sales of $12 million in the second quarter.
Inflammation
Sales of Otezla were $544 million in the quarter, down 9% due to lower selling price and unfavorable changes to estimated sales deductions, which offset the benefit from volume growth of 2%. Otezla sales missed the Zacks Consensus Estimate of $594.0 million as well as our estimate of $544.8 million.
Enbrel revenues of $909 million declined 15% year over year due to lower selling price. Enbrel sales missed the Zacks Consensus Estimate of $949.0 million as well as our estimate of $963.5 million.
Asthma drug Tezspire (tezepelumab) recorded sales of $234 million in the quarter, up 76% year over year, driven by volume growth. Tezspire volumes benefited from the uptake of the new self-administered, pre-filled, single-use pen formulation of the drug.
Amgen has a partnership with AstraZeneca (AZN - Free Report) for Tezspire. Amgen and AstraZeneca share costs and profits equally after AstraZeneca pays a mid-single-digit inventor royalty to Amgen. While AstraZeneca leads development, Amgen leads manufacturing.
Rare Disease
Amgen closed the acquisition of Horizon Therapeutics for $27.8 billion on Oct 6, 2023, which added several rare disease drugs like Tepezza, Krystexxa and Uplizna to AMGN’s portfolio.
Tepezza, Krystexxa and Uplizna generated sales of $479 million, $294 million and $92 million, respectively, in the second quarter.
Ultra-rare products acquired from Horizon generated revenues of $187 million in the quarter.
New drug Tavneos generated $71 million in sales in the second quarter compared with $51 million in the previous quarter. The drug’s 39% sequential growth was driven by new patient volume growth. Tavneos, approved for the treatment of patients with ANCA-associated vasculitis, a severe systemic autoimmune disease, was added to Amgen’s portfolio with the 2022 acquisition of ChemoCentryx.
Established Products
Total sales of established products, which include Epogen, Aranesp, Parsabiv and Neulasta, decreased 21% year over year in the quarter to $591 million.
Cost and Margin Discussion
Adjusted operating margin declined 4.4 percentage points to 48.2% in the quarter.
Adjusted operating expenses increased 30% to $4.52 billion. R&D expenses rose 30% year over year to $1.42 billion. SG&A spending rose 36% to $1.69 billion.
2024 Guidance
Amgen tightened its revenue guidance from a range of $32.5 billion to $33.8 billion to $32.8 billion to $33.8 billion.
Adjusted earnings guidance was also tightened from a range of $19.00 to $20.20 per share to $19.10 to $20.10 per share.
R&D costs are expected to increase more than 25% in 2024 compared to the prior expectation of approximately 25%. Adjusted operating margin is expected to be roughly 47% in 2024, with margin in the third quarter expected to be lower than the second-quarter level.
The adjusted tax rate is expected to be in the range of 15.0% to 16.0%. Amgen raised its target for capital expenditures to approximately $1.3 billion from the previous expectation of $1.1 billion as it invests in manufacturing capacity for its obesity candidate, MariTide. Amgen expects to buy back shares worth not more than $500 million in 2024.
Our Take
Amgen’s second-quarter results were strong as it beat estimates for earnings as well as for sales. Twelve products, including Prolia, Repatha, Blincyto, Tezspire and Evenity, achieved double-digit volume growth in the quarter. Rare disease drugs, mostly Horizon’s products, added $1.1 billion in sales in the quarter. Excluding the contribution from Horizon, product sales grew 5% while volumes rose 10%. However, margins were weak in the quarter as costs rose.
Amgen also lowered the upper end of its EPS guidance range for the year as it expects R&D costs to increase and operating margins to be lower in the second half of the year. This pushed the stock down around 1.7% in after-market hours on Tuesday.
So far this year, Amgen’s stock has gained 14.2% against the industry‘s 4.8% decline.
Image Source: Zacks Investment Research
Amgen’s old medicines like Evenity, Repatha and Prolia, as well as newer medicines like Tavneos and Tezspire, are driving sales, more than offsetting declining revenues from oncology biosimilars and legacy established products such as Enbrel. The addition of Horizon products boosted revenue growth in the first half of the year. However, weakness in some key brands like Otezla and Lumakras is a headwind.
Amgen has some key pipeline assets in obesity and inflammation, which have a large market opportunity.
Investors are particularly interested in the progress of Amgen’ GLP-1 receptor candidate, MariTide (maridebart cafraglutide), for obesity. Top-line 52-week data from the phase II study on MariTide in adults with overweight or obesity is expected in late 2024. Amgen is planning to conduct a comprehensive phase III program on the candidate across obesity, obesity-related conditions and type-II diabetes. Amgen plans to begin a phase II study on the candidate in type II diabetes in late 2024.
The GLP-1 segment is an important class of drugs for multiple cardiometabolic diseases and is gaining significant popularity.
Some popular GLP-1 receptor drugs available in the market are Eli Lilly’s (LLY - Free Report) tirzepatide medicines, diabetes drug Mounjaro and weight loss medicine, Zepbound and Novo Nordisk’s (NVO - Free Report) semaglutide, approved as Ozempic pre-filled pen and Rybelsus oral tablet for type II diabetes and as Wegovy injection for weight management. While Eli Lilly will report Mounjaro and Zepbound sales tomorrow with its second-quarter results, Novo Nordisk reported its second-quarter results on Wednesday. While Ozempic sales rose 30%, Wegovy sales rose 53% at a constant exchange rate in the second quarter.
Zacks Rank
Amgen currently carries a Zacks Rank #3 (Hold).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Amgen Inc. Price and Consensus
Amgen Inc. price-consensus-chart | Amgen Inc. Quote