Published: Monday, 27 Jul 2009 | 5:19 PM ET

Text Size

Amgen reported much better-than-expected second-quarter earnings, helped by a rebound in sales of its rheumatoid arthritis drug and a tax benefit, and the company raised its full-year profit forecast.

Amgen

AMGN loading...

Quote  |  Chart  |  News  |  Profile

[AMGN  Loading...      ()   ], whose shares rose 3 percent, also announced that it has a deal with GlaxoSmithKline

GSK loading...

Quote  |  Chart  |  News  |  Profile

[GSK  Loading...      ()   ] under which the British drugmaker will commercialize Amgen's eagerly awaited experimental osteoporosis drug denosumab in Europe and emerging markets.

The quarterly results beat analysts' average expectations by 12 cents, which should come as a huge relief to investors in Amgen after it missed Wall Street profit targets in the first quarter with most key drugs falling well short of expectations.

"These are surprisingly strong results," said Sanford Bernstein analyst Geoffrey Porges. "It suggests that the American consumer, who appeared to be getting tired of using expensive biologic drugs, has worked through some of the co-payment issues and is back on track."

Sales of the expensive rheumatoid arthritis drug Enbrel rose 7 percent to $899 million, sailing past Wall Street expectations of $825 million and the previous quarter's disappointing $758 million.

The world's largest biotechnology company posted a net profit of $1.27 billion, or $1.25 per share, compared with a profit of $906 million, or 84 cents per share, a year ago. The net profit was helped by a $115 million tax benefit.

Once denosumab is approved, Glaxo will sell the drug in emerging markets for both postmenopausal osteoporosis and oncology and help Amgen market the drug in Europe for osteoporosis.

Amgen will retain full rights to the drug in North America and for oncology uses in Europe. Under the deal, Amgen will receive an initial payment and near-term commercial milestone payments totaling $120 million, and receive royalties on sales.

Porges said the denosumab European distribution deal was something investors had been waiting for.

Video: CNBC's Mike Huckman discusses Amgen's second quarter results.

"The upfront payment is encouraging for investors," he said. "It's going to be a good day for Amgen's stock."

Amgen's shares were already up nearly 20 percent since late May, primarily on positive clinical denosumab news. The Thousand Oaks, Calif.-based biotech company raised its 2009 earnings forecast to $4.80 to $4.95 per share, excluding items, from its prior view of $4.55 to $4.75 per share, and said total revenue was trending toward the upper end of its forecast range of $14.4 billion to $14.8 billion.

Worldwide sales of Amgen's once top-selling anemia drug Aranesp, which have seen more than two years of decline over safety concerns and reimbursement restrictions, fell another 16 percent to $693 million. But that easily topped Wall Street's diminished expectation of $653 million and the $626 million in first-quarter sales, suggesting the franchise may be stabilizing.

Sales of Epogen, an older version of its Aranesp red blood cell booster used primarily in kidney patients, rose 3 percent to $638 million, also easily beating analysts' expectations of $615 million.

Combined global sales of the white blood cell boosters Neulasta and Neupogen fell 4 percent to 1.16 billion, roughly in line with estimates of $1.17 billion.

• Get after-hour Amgen quotes by clicking here.

"They had strong sales of most of their drugs, especially Enbrel," said Morgan Joseph analyst Shiv Kapoor. He also said expenses appear to be lower than expected.

"The quarterly results were very strong," Kapoor said.

Amgen shares, which closed Monday at $60.76, rose about 3 percent in extended trading.

Print

Email

Text Size