The company that showed biotech investors how a single drug can produce gaudy returns is out to justify how four drugs can warrant an $80 billion market cap.
In the third quarter, Amgen
One of the primary drivers for growth was Aranesp, an anemia drug that saw sales jump 284% from last year's quarter to $324 million. Its predecessor, Epogen, gained 12% to $626 million in the quarter.
Combined sales of Neulasta and its predecessor Neupogen, which help prevent chemotherapy-related infections, grew 39% to $657 million. Sales of Enbrel, the rheumatoid arthritis drug Amgen gained in its acquisition of Immunex, more than doubled to $342 million.
At a little over 30x this year's earnings, Amgen now looks reasonably priced, if it didn't just a few years ago. The gaudy sales growth has generated in excess of $2 billion in annual free cash flow, which the company has used to repurchase shares. Through the first three quarters this year, the company has repurchased 20 million shares for $1.2 billion, or about $60 a share.
So it would appear that Amgen's production might actually justify the promise priced into the shares of younger biotechs we've covered in the past, such as Millennium Pharmaceuticals
Going forward, Amgen raised full-year, combined Epogen/Aranesp sales guidance from between $3.7 and $3.9 billion to between $3.8 and $4.0 billion. In addition, it narrowed total product sales guidance to between $7.6 and $7.9 billion from a wider range of $7.5 to $8.0 billion.
Following yesterday's announcement, shares of Amgen are down 5% to $60.41 in early afternoon trading.
Jeff Hwang can be reached at [email protected].
