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HenryTo
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 Posted: Tue Jul 07, 2009 8:03 pm Post subject: Amgen (AMGN) |
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This is huge news. Not only does this provide a significant boost to Amgen's future revenue stream (and profitability) - this is also a great psychological boost for investors who were wondering what Amgen's or the biotech industry's "second act" would be.
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Amgen drug succeeds in cancer trial
Tue Jul 7, 2009 6:31pm EDT
*Shares surge almost 13 percent in after-hours trade
* Denosumab reduces or delays bone complications
(Adds trial results details, background on drug, shares, byline)
By Ransdell Pierson
NEW YORK, July 7 (Reuters) - Amgen Inc (AMGN.O) said its experimental osteoporosis drug reduced or delayed serious bone complications among patients with advanced breast cancer and the news sent its shares up almost 13 percent in after-hours trade.
The biotechnology company said on Tuesday its drug, denosumab, proved superior to Novartis AG's (NOVN.VX) Zometa in a late-stage study.
Bone metastases, or the spread of cancer to the bone, are a serious consequence of breast cancer, weakening or destroying bone around the tumor. The Phase 3 study assessed the incidence of serious bone complications, or SREs, among such patients.
"We are extremely pleased with the outcome of this important study, which shows that denosumab can reduce or delay the serious complications of bone metastases in breast cancer patients better than the current standard of care, and with a favorable benefit/risk profile," Roger Perlmutter, Amgen's research chief, said in a press release.
Amgen is awaiting U.S. approval of denosumab as a treatment for post-menopausal osteoporosis. Potential use of the medicine to avert bone damage among cancer patients could provide a lucrative additional sales avenue for the company's most valuable experimental medicine.
Amgen, based in Thousand Oaks, California, is one of the world's biggest biotech companies, but has posted disappointing sales in recent quarters due to concerns about the safety of its anemia drugs and the impact of the global recession.
It is counting on denosumab to turbo-charge its future revenue and earnings.
Shares of Amgen were trading at $58.96 in after-hours trading, from their closing price of $52.23 on the Nasdaq. |
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HenryTo
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HenryTo
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| Posted: Tue Oct 25, 2011 3:54 pm Post subject: |
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Morningstar on AMGN's 3Q earnings:
| Quote: | | Amgen's AMGN third-quarter results were in line with our overall expectations, and we're maintaining our fair value estimate. The top line grew 3%, weighed down by a decline in sales of anemia drugs Epogen and Aranesp and boosted by strong growth of the firm's smaller and newer franchises such as Sensipar, Nplate, and Xgeva. Operating expenses grew 11% in the quarter because of higher costs from late-stage development programs, mostly due to oncology programs such as AMG 479 in pancreatic cancer and AMG 386 in ovarian cancer. We expect to see data from acquired immunotherapy drug OncoVex (now known as talimogene laherparepvec) in melanoma in 2012, but only incorporate a 40% probability of approval and limited (below $500 million) peak sales potential because of th e novelty of the technology and the increasingly competitive nature of the melanoma market. Amgen recently announced a restructuring program to reduce research and development spending and focus funds on these late-stage programs, but we remain concerned that these new drugs will be unable to combat declines in sales of Amgen's mature biologics, which are coming under pressure from reimbursement changes (such as the recent bundling of Epogen with other dialysis drugs) and the strong likelihood of future biosimilar competition in the United States. While expenses grew faster than sales, Amgen's adjusted earnings per share growth matched its 3% top-line growth in the third quarter, thanks largely to share repurchases. During the third quarter, Amgen spent $2.4 billion buying back shares and initiated its dividend program; with $17.7 billion in cash (mostly offshore) and $14.5 billion in debt at the end of the quarter, management has room to continue to raise debt to fuel the newly announced $10 billion share-repurchase program. While management now plans to exceed its previous guidance of returning 60% of adjusted net income to shareholders over the next several years, our boosted assumptions for share repurchases don't move the meter on our AA- credit rating for Amgen. |
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HenryTo
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| Posted: Mon Jul 11, 2011 11:57 am Post subject: |
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Morningstar on AMGN's new debt issuance:
| Quote: | Credit Rating Downgrade: Amgen
We're downgrading Amgen's credit rating to AA- from AA after the firm issued more debt to fund share repurchases and a new dividend. Management recently outlined a share repurchase and dividend strategy that returns 60% of net income to shareholders at least through 2015, which we've accounted for in our cash flow cushion pillar. However, with about $15 billion of cash on its balance sheet (compared to $11 billion in debt) and an expected $5 billion in free cash flow expected annually for the next five years, we thought it was unnecessary for Amgen to tap the debt markets again, leading us to speculate that the firm remains on the hunt for acquisitions. Given these factors, we're taking a more cautious stance on the firm.
Overall, we have a stable view of Amgen's cash flow generating abilities in spite of some risks to its current drug portfolio. Beyond 2011, we think Amgen will struggle to generate top-line growth, as potential blockbusters (like Prolia for osteoporosis) barely offset expected declines in older blockbuster products (like Enbrel for rheumatoid arthritis and psoriasis) in the face of new competition. With its limited internal growth prospects, we believe Amgen sports a negative moat trend, which informs our current credit rating. If the firm doesn't boost its new product prospects by internal or external means, we'd consider reducing our moat rating to narrow. With this somewhat uncertain long-term competitive position, we believe Amgen may look to use its substantial financial resources to buy other health-care firms. The key risk to debtholders is if Amgen depletes it current cash stores with a large acquisition; Amgen could possibly afford an acquisition around $20 billion. If Amgen pursues such an acquisition, we would consider reducing our credit rating further. |
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HenryTo
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| Posted: Tue Apr 26, 2011 12:22 am Post subject: |
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Morningstar on AMGN's 1Q earnings:
| Quote: | Amgen AMGN reported solid first-quarter results that put the firm on track to meet our expectations for 2011, and we're maintaining our fair value estimate. We will provide a more detailed update following the firm's business review Thursday.
Revenue was up 3% to $3.7 billion, and adjusted net income fell 2% to $1.26 billion. The gap between top- and bottom-line performance was the result of a 13% increase in operating expenses. This increase was largely tied to the launches of Prolia and Xgeva, the advancement of Amgen's pipeline, and the industry fee implemented in 2011 as part of U.S. health-care reform. Share repurchases in 2010 allowed Amgen to achieve 3% growth in adjusted earnings per share.
Epogen saw a 14% decline in sales, as bundling is now being implemented. Aranesp also saw double-digit declines in demand in the United States, and global sales of the drug fell 7%, in line with our full-year estimates. Combined sales of Neulasta and Neupogen were up 4% globally, but we're beginning to see more biosimilar pressure on Neupogen internationally, and sales were weaker than we had anticipated. While Prolia uptake still looks slow relative to our full-year assumptions, Xgeva performed strongly in the first quarter, with $42 million in sales. We expect to hear more details on Prolia and Xgeva performance and marketing strategies during the meeting.
Amgen ended the quarter with $15.4 billion in cash and $11.2 billion in debt and did not repurchase any shares. Management will discuss long-term capital allocation plans during its review, and we expect it to announce a sustainable dividend that will make use of some of the firm's free cash flows (which amounted to 24% of revenue in the first quarter). However, we still believe Amgen will reserve enough cash to afford mid-cap biotech acquisitions, as we're skeptical that its internal pipeline will be able to provide enough growth to offset the significant pressures from biosimilar and branded competition. |
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HenryTo
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| Posted: Tue Jan 25, 2011 2:48 pm Post subject: |
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Morningstar on AMGN's 4Q earnings:
| Quote: | | Amgen's AMGN fourth-quarter and full-year earnings slightly exceeded our expectations, but the firm's outlook for 2011 falls short of the projections in our valuation model. The continued effects of U.S. health-care reform, new Epogen reimbursement pressure, and Prolia/Xgeva's ramp remain the key factors in Amgen's performance in 2011. While we have now incorporated a slower ramp for Prolia sales in 2011, its impact isn't sufficient to move our fair value estimate. Amgen's product sales grew 2% in 2010, in line with our own estimate, but adjusted earnings per share increased 6% to reach $5.21, exceeding our $5.13 estimate. Given the flat net income, share repurchases were the key driver of growth--the firm repurchased $3.8 billion worth of its shares in 2010, $1.1 billion in the fourth quarter alone. This reversed the trend we've seen in the past couple of quarters of lowered share repurchases, which we saw pointing to a potentially large acquisition. However, Amgen still had $17.4 billion in cash on its books at the end of 2010. After the up-front payment for the pending BioVex acquisition and the repayment of convertible debt coming due in February, this translates to about $14.5 billion in cash and $11 billion in debt. This gives Amgen the flexibility to afford firms with market capitalizations up to roughly $10 billion, in our opinion. Despite Amgen's stated initiative to boost discovery research and our expectation for moderate increases in research and development spending in 2011, we think the firm still needs to look outside if it wants to achieve mid-single-digit top-line growth or high-single-digit bottom-line growth over the next five years. |
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HenryTo
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| Posted: Tue Oct 26, 2010 11:21 am Post subject: |
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Morningstar on AMGN's 3Q earnings:
| Quote: | | Amgen's AMGN third-quarter results were in line with our expectations, and we're not making any changes to our fair value estimate. We continue to think the firm is on track to achieve the lower end of management's $5.05-$5.25 non-GAAP earnings per share forecast for the full year. Third-quarter revenue was flat with the year-ago period at $3.8 billion, as declining U.S. Aranesp sales continued to counter relatively modest growth from Neulasta, Neupogen, and newer products. Prolia sales reached only $10 million in the third quarter, as reimbursement uncertainty in the United States and Europe--to be resolved early in 2011--ha s been holding physicians back from prescribing the drug. Amgen is rapidly approaching two significant milestones for Prolia; the Food and Drug Administration will rule on the use of the drug to prevent skeletal-related events in cancer patients in November, and data from a Phase III study in prostate cancer--which tests the ability of the drug to prevent bone metastases--will be available by the end of the year. Given the importance of Prolia to Amgen's growth prospects, disappointing news on either of these fronts would probably cause us to trim our fair value estimate. Non-GAAP EPS fell 9% in the third quarter to $1.36, mostly because of light research and development spending and tax benefits in the third quarter of 2009. However, in light of Amgen's $1.2 billion in free cash flow in the quarter, the cash balance has grown to $17 billion, now substantially above the $13.7 billion in debt on its books. The firm's repurchasing activity faded for the second consecutive quar ter and amounted to only $0.4 billion in shares in the third quarter; we think Amgen is saving cash for a large-scale acquisition. While we still believe Genzyme GENZ would be a nice strategic fit, we think Amgen could be tempted by the more affordable Swiss firm Actelion, particularly given Amgen's large proportion of offshore cash. |
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HenryTo
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| Posted: Fri Apr 23, 2010 1:20 am Post subject: |
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Morningstar's latest earnings notes on AMGN:
| Quote: | | Amgen's AMGN top line grew 9% to $3.6 billion in the first quarter, and we remain comfortable with our fair value estimate following the firm's earnings release. Global sales of Aranesp were roughly flat at $627 million, as strong competition and price declines in the United States countered an increase in demand internationally as well as a positive foreign exchange impact. Epogen sales grew 10% to reach $623 million based on increased demand. Sales of Amgen's neutropenia drugs Neulasta and Neupogen combined were also up 10%, reaching almost $1.2 billion thanks to price increases in the U.S. and strong demand internationally. Enbrel sales grew 6% to reach $804 million as wholesaler stocking and price increases more than outweighed a decrease in volume and lost ma rket share. Excluding certain changes such as stock option compensation expense and amortization, Amgen's earnings per share grew to $1.30, a 20% increase from the first quarter of 2009. This growth (exceeding top-line growth) was largely a tribute to Amgen's aggressive share repurchasing; the firm spent $1.7 billion repurchasing shares in the first quarter, but was still left with a cash balance of $14.1 billion at the end of the quarter. We continue to think that Amgen is well positioned to make a large acquisition. In 2010, the focus will remain on Prolia (denosumab). In osteoporosis, the drug should receive approval in Europe by the end of the first half and in late July in the United States. Amgen also plans to apply for approval of the drug in a new indication (to prevent fractures in cancer patients with bone metastases) by the end of the first half, and we should see data on the drug's ability to prevent bone metastases in the second half of the year. However, we already incorporate high probabilities of approval for Prolia (100% in osteoporosis and 60%-70% in cancer-related indications), and approval in all of these indications would probably raise our fair value estimate by only about $3 per share. |
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HenryTo
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| Posted: Tue Jan 26, 2010 4:07 pm Post subject: |
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Morningstar's latest notes on AMGN:
| Quote: | Amgen's 2010 to Focus on Prolia
Amgen AMGN reported fourth-quarter and full-year 2009 financial results that were in line with our expectations, and we're not making any changes to our fair value estimate. Amgen saw continued Aranesp pressure, foreign exchange headwinds (fourth quarter excluding), and inventory drawdowns in 2009 which contributed to the firm's $14.6 billion in revenue, a 2% drop from 2008. However, adjusted earnings per share grew by 8% to reach $4.91, thanks mostly to a drop in R&D expenses (as massive clinical trials for osteoporosis and cancer supportive care drug denosumab--or Prolia--wind down) as well as the firm's $3.2 billion in share repurchases during the year.
We're surprised to see Amgen reinitiate share repurchases in the fourth quarter after a two-quarter pause, as we think shares are trading close to their fair value. However, with $13.4 billion in cash at the end of 2009, the firm is still in a position to accumulate enough cash during the next few quarters to acquire a mid-cap biotech, should it choose to undertake a large-scale acquisition once Prolia is approved. We think Amgen's forecast for 2010--mid-single-digit sales and adjusted earnings per share growth--is realistic, and the bottom-line forecast could prove conservative if recent aggressive share repurchases continue into 2010. Amgen's Prolia salesforce targeting primary-care physicians has now been on the payroll for a full quarter, so we shouldn't see another incremental hit to the SG&A line in 2010.
Clinical data for the year will continue to revolve around Prolia. Amgen has responded to the FDA's complete response letter for the drug in osteoporosis, and we expect the firm to launch in this indication in the U.S. and Europe in 2010. Additional data in cancer indications should also be available this year, and if data is positive, Amgen may be able to claim superiority to Novartis' NVS Zometa. While we remain enthusiastic about Prolia's potential in both osteoporosis and cancer-related indications, we're still concerned about competitive pressure on Enbrel and regulatory risk surrounding Epogen in 2010, and we see Amgen shares as fairly valued. |
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