Several pharma companies have thrilled investors with their sunny predictions of how the new business-friendly tax package will boost investors’ fortunes this year—but not Amgen. Shares of the California biotech giant lost 3% of their value in after-hours trading last night, in the wake of disappointing fourth-quarter sales and earnings, falling to $179.83 per share.
Amgen reported revenues of $5.8 billion during the quarter, missing the average estimate of $5.86 billion as reported by Zacks, and adjusted earnings of $2.1 billion, or $2.89 per share—a full 15 cents below expectations. That completely overshadowed the news that Amgen is planning a boatload of new investments, including a U.S. manufacturing plant and additional $10 billion in share repurchases.
The problems ranged from unexpected expenses during the quarter—namely $79 million to recover from Hurricane Maria’s impact on manufacturing in Puerto Rico—to disappointing sales on a few key products. Among them was the cholesterol drug Repatha, which brought in just $98 million in sales during the fourth quarter, missing the consensus analyst estimate by $10 million. Leerink analyst Geoffrey Porges pointed out in a note to investors that unit demand for the two-year-old product grew 20% during the quarter, but that was flat compared to growth in the third quarter.
Amgen also turned in a negative surprise with its guidance for 2018. The company told investors to expect revenues between $21.8 billion and $22.8 billion. The midpoint of that range marks a 2% year-over-year drop, Porges noted, and falls short of the consensus estimate by 4%.
The problem, in a nutshell, is Amgen’s hyperparathyroidism treatment Sensipar. It was another laggard in the fourth quarter, missing estimates with sales of $413 million. It’s also expected to face generic competition, but the question is when that will come. The main patent expires in March, and four companies are ramping up generic rivals.
Amgen sued to try to block those companies in December based on a formulation patent that expires in 2026. Separately, Amgen is suing the FDA for denying a six-month extension of exclusivity in the pediatric market.
The FDA is planning a hearing on Amgen’s Sensipar complaint on February 5, but analysts aren’t so confident Amgen will prevail there—or in the patent proceedings. In fact, during a conference call with analysts after the earnings report, Amgen’s executives acknowledged that the billion-dollar gap between the low and high ends of the 2018 revenue guidance is largely driven by uncertainties surrounding Sensipar competition.
Amgen does have some opportunities to reverse its fortunes on the revenue front. In December, it won FDA approval to expand Repatha’s label. The company can now say the PCSK9 inhibitor prevents heart attacks and strokes in patients with established heart disease—a selling point that it wasted no time embracing.
During the conference call, Tony Hooper, Amgen’s chief of global commercial operations, said the approval came on a Friday, and by the following Thursday "we trained the entire sales force. By Saturday, we trained 250 cardiologists, speakers and by the next week, they had completed just over 200 speaker programs with an average of about 15 people attending each speaker program." Over the past two weeks, he added, new prescriptions for the medicine were 20% higher than they were in December.
Still, it hasn’t been easy to get payers on board with the $14,000-per-year product, Hooper conceded, even with rebates, value-based pricing and co-pay assistance. But he said he’s confident that Repatha access will improve over time, particularly with the new FDA blessing.
"I think more and more cardiologists and physicians are putting forward appropriate...
(All Rights Reserved)