1. Amgen 3rd-quarter profit tops Wall Street view on cost cutting

Amgen 3rd-quarter profit tops Wall Street view on cost cutting

Amgen Inc on Thursday reported higher-than-expected third-quarter profit on lower research and manufacturing costs and onetime payments, and the world's largest biotechnology company raised its full-year earnings forecast for the third successive quarter.

By: | Updated: October 28, 2016 5:14 AM
Excluding items, Amgen posted adjusted earnings of .02 per share, topping analysts' average expectations by 23 cents. (Reuters) Excluding items, Amgen posted adjusted earnings of .02 per share, topping analysts’ average expectations by 23 cents. (Reuters)

Amgen Inc on Thursday reported higher-than-expected third-quarter profit on lower research and manufacturing costs and onetime payments, and the world’s largest biotechnology company raised its full-year earnings forecast for the third successive quarter.

It now expects 2016 adjusted earnings of $11.40 to $11.55 per share, up from its prior view of $11.10 to $11.40. Amgen slightly raised the low end of its revenue forecast and now expects $22.6 billion to $22.8 billion. The previous low end had been $22.5 billion.

Excluding items, Amgen posted adjusted earnings of $3.02 per share, topping analysts’ average expectations by 23 cents, according to Thomson Reuters I/B/E/S.

A significant reduction in late stage clinical trial expenses and a milestone payment for Japanese approval of the multiple myeloma drug Kyprolis contributed to the earnings beat.

Cowen and Co analyst Eric Schmidt called the quarter very solid. “I think they’ve now beaten in six out of the last seven quarters,” Schmidt said. “The cost controls were very good.”

While sales of Amgen’s most important medicines came in in-line or slightly below Wall Street expectations, investors may have been disappointed by a lack of growth for the two biggest products, and shares slipped about 1 percent.

Sales of the rheumatoid arthritis drug Enbrel were flat at $1.45 billion despite a 10 percent price increase taken in July, due to intense competition and inventory stocking issues.

Sales of infection fighter Neulasta slipped 5 percent to $1.2 billion due to lower demand, roughly in line with analysts’ expectations of about $1.16 billion.

The older Neupogen saw sales plunge 36 percent to $183 million due to competition from a cheaper biosimilar from Novartis.

The related drugs Prolia for osteoporosis and XGeva for preventing fractures when cancer has spread to the bones also had sales that fell short of Wall Street estimates.

With health insurers waiting for evidence that Amgen’s potent but expensive new cholesterol fighter Repatha can reduce heart attacks before agreeing to pay for it, sales remained constrained at just $40 million for the quarter.

Eagerly-awaited results that could loosen those purse springs are expected in the first quarter of 2017.

Revenue rose 2 percent to $5.81 billion, edging past Wall Street estimates of $5.73 billion.

Net profit rose to $2.02 billion, or $2.68 per share, from $1.86 billion, or $2.44 per share, a year ago.

Amgen shares slipped to $158.90 in extended trading from a Nasdaq close at $160.57.

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