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Drugmaker Amgen sees 25% drop in Q1 earnings, records lower Enbrel demand


By Rachel Landen
Posted: April 22, 2014 - 6:45 pm ET
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Biopharmaceutical firm Amgen missed Wall Street's earnings expectations for its first quarter 2014 as rising costs outpaced the company's revenue improvement and sales of its flagship arthritis drug Enbrel fell.

The Thousand Oaks, Calif., maker of drugs that include arthritis injectable Enbrel, reported Tuesday after market-close that its first-quarter income fell 25% to $1.07 billion from $1.43 billion in the same period last year. The drop in earnings comes despite a 7% boost to revenues for the quarter, from $4.24 billion a year ago to $4.52 billion in the latest quarter.

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Increased cost of sales and more dollars going to research and development, mostly attributable to Amgen’s acquisition of Onyx Pharmaceuticals, cut into Amgen’s revenue. Earnings were impacted by a first quarter 2013 tax gain that wasn’t repeated in the first quarter this year.

In advance of Tuesday’s earnings release, analysts had forecasted total revenue of $4.76 billion, with sales of Enbrel as one of the main drivers. But lower unit demand for the drug resulted in a 5% year-over-year decrease in sales, according to a company release.

Meanwhile, sales of Amgen’s Neulasta, a drug designed to help prevent or treat low white blood cell counts during chemotherapy, increased 5% year over year. In November, Amgen competitor Teva Pharmaceutical Industries withdrew an application to sell its biosimilar anti-infection drug in the U.S.

In a February note to investors, Cowen and Co. analyst Eric Schmidt acknowledged the threat of heightened competition for some of Amgen’s products, but pointed out that “90% of Amgen’s revenue is derived from biologics, which are unlikely to experience generic competition for the foreseeable future.”

In October, Amgen paid $9.7 billion for cancer-drug maker Onyx Pharmaceuticals, which has been generating buzz for its drug Kyprolis, designed for treatment of patients with multiple myeloma. Amgen also has been testing a cholesterol drug called evolocumab that performed well in phase three studies last month.

“Strong underlying demand for our products and growth in adjusted operating income make us confident in our full-year growth outlook,” Robert Bradway, Amgen chairman and CEO, said in the release. “We continue to advance our robust late stage pipeline and expect to submit global filings for evolocumab in 2014.”

Following the release of its first-quarter earnings, Amgen management maintained its 2014 earnings guidance, anticipating total revenues for the year between $19.2 billion and $19.6 billion, with adjusted earnings per share of $7.90 to $8.20.

The company’s NASDAQ-traded shares were down in after-hours trading.

Follow Rachel Landen on Twitter: @MHrlanden


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