Amgen (AMGN) Q4 Earnings Best Estimates, Product Sales Slump

Amgen AMGN reported earnings of $4.36 per share in the fourth quarter of 2021, which beat Zacks’ consensus estimate of $4.14. Earnings up 26% year-over-year on higher revenue and lower share count

Total revenue of $6.85 billion missed Zacks consensus estimate of $6.91 billion. Total revenue increased 3% year-over-year, driven by higher other revenue from Eli Lily LLY collaboration, which compensated for the drop in product sales.

Total product revenue decreased 1% from the prior year quarter to $6.27 billion (US: $4.45 billion; non-US: $1.82 billion). Higher volumes were offset by lower selling prices for several drugs and lower inventory levels. Volumes increased 7% in the quarter.

Other income of $575 million was up 92% year over year, driven by deliveries to Eli Lilly. Amgen had signed a collaboration with Eli Lilly in 2020 for the manufacture of COVID-19 antibodies which the latter is currently developing.

Performance of key drugs

Prolia revenue was $873 million, up 17% from the prior year quarter, driven by double-digit volume growth as new and repeat patient volumes continued to recover from the impact of the pandemic. However, spikes in Omicron-related infection rates late in the fourth quarter led to volatility in recovery rates, which Amgen says could hurt sales in 2022.

Evenity reported sales of $143 million in the quarter, up 59% year-over-year.

Xgeva generated revenues of $545 million, up 9% from the prior year quarter, driven by volume growth, which offset the impact of lower prices.

Kyprolis recorded sales of $284 million, up 4% year-on-year.

Repatha generated revenue of $273 million, up 8% year-over-year as higher volume was partially offset by lower prices due to an increase in patients Medicare Part D receiving Repatha and entering the coverage gap (doughnut hole).

Vectibix revenue was $243 million, up 10% year-over-year. Nplate sales increased 24% to $282 million. Blincyto sales increased 28% from the previous year to $132 million.

Aimovig reported sales of $90 million in the quarter, down 13% year-over-year due to lower net selling price.

Otezla sales were $630 million in the quarter, up 2% as volume growth offset the impact of lower selling prices and lower inventory . In December, the FDA approved Otezla for the treatment of adults with plaque psoriasis who are candidates for phototherapy or systemic therapy. The expanded approval increases the eligible patient population for Otezla, which may benefit sales in 2022.

Amgen’s newly approved drug, Lumakras (sotorasib), had sales of $45 million in the quarter compared to $36 million in the prior quarter. The KRAS inhibitor was approved for the treatment of patients with locally advanced or metastatic mutated non-small cell lung cancer (NSCLC) with KRAS G12C in the US in May 2021 and in the EU in January 2022

In biosimilars, sales of Kanjinti (biosimilar from Amgen rockit is [RHHBY] Herceptin) was $139 million, down 12% year-on-year due to lower volumes and prices due to increased competition, which was partially offset by favorable changes in deductions from estimated sales.

Sales of Mvasi (a biosimilar to Roche’s Avastin) were $304 million in the quarter, up 9% year-on-year on volume growth. Sales of Amjevita (a biosimilar to Humira) were $115 million in the quarter, up 12% year-on-year, driven by volume growth.

However, total sales of mature drugs like Enbrel, Parsabiv, Neupogen, Aranesp, Epogen and Neulasta were down 27% in the quarter due to a range of branded and generic competitors. Enbrel’s revenue of $1.08 billion was down 13% year-over-year due to lower volumes, inventory and prices.

Increase in operating margins

Adjusted operating margin increased by 470 basis points (bps) to 47.8%. Adjusted operating expenses decreased 1% to $3.85 billion. SG&A expenses fell 19% to $1.43 billion. R&D spending rose 11% year-over-year to $1.32 billion due to higher spending related to Amgen’s recent research collaborations with Generate Biomedicines and Arrakis Therapeutics.

2021 results

Full-year 2021 sales rose 2% to $26.0 billion, slightly missing Zacks’ consensus estimate of $26.05 billion. Sales were within the guided range of $25.8 billion to $26.2 billion. Sales were up 2% year over year.

Adjusted earnings for 2021 were $17.10 per share, which beat Zacks consensus estimate of $16.85 and was at the upper end of the guided range of $16.50 to 17.10 $. Revenue increased 6% year over year.

Our opinion

Amgen’s fourth-quarter results were mixed as it beat estimates for earnings while missing the same for sales. Volume-driven growth of Repatha, Prolia and Evenity and certain biosimilars and higher revenue from Eli Lilly drove sales in the quarter. However, pricing pressure and increased competition continue to hurt sales of some drugs.

The recovery seen in patient visits and diagnosis rates in previous quarters continued into the fourth. However, the spike in Omicron-related infection rates towards the end of the year has caused some delay in healthcare procedures and variability in demand patterns, which could hurt sales in 2022.

Amgen’s stock is down 0.7% this year so far, compared to a 13.6% drop for the industry.

Image source: Zacks Investment Research

Amgen has not announced its financial expectations for 2022. It will host a virtual business review on February 8 in which it plans to provide financial guidance for 2022 and longer-term financial guidance through 2030.

Zacks Rank and Stock to Consider

Amgen currently has a Zacks rank of #3 (Hold). You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Amgen Inc. Price, Consensus and EPS Surprise

Amgen Inc. Price, Consensus and EPS Surprise

Amgen Inc. price-consensus-eps-surprise-chart | Quote from Amgen Inc.

A top-ranked major drugmaker is Pfizer PFE, which has a Zacks rank of 1.

Pfizer shares are up 57.7% over the past year. Pfizer’s revenue estimates for 2022 have risen from $4.59 to $6.41 in the past 60 days.

Pfizer’s earnings performance has been mixed, with the company beating earnings expectations in three of the past four quarters while missing one. PFE has a four-quarter earnings surprise of 10.85% on average.

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