Image source: Amgen via Flickr.

Just in case you've been living under a rock for the past week and change, it is, indeed, earnings season, once again. Healthcare conglomerate Johnson & Johnson (JNJ 1.17%) kicked things off for drugmakers with another strong quarter, and on Thursday, April 28, the original biotech blue chip Amgen (AMGN 1.78%) will be looking to do the same.

For the first quarter, Wall Street will be looking for Amgen to report $5.32 billion in revenue, a nearly 6% increase from the prior-year period, with quarterly EPS of $2.60, which is nearly a 5% increase from the year-ago period. Although past performance is no guarantee of future results, Amgen has surpassed Wall Street's EPS estimates in each of the past seven quarters by anywhere from $0.11 per share to as much as $0.38 per share. History would seem to be on Amgen's side that an earnings beat could be on its way.

Three data points that will likely define Amgen's Q1 report
But there's far more to Amgen than just its headline numbers. These numbers are only important if you understand how Amgen got to them in the first place. I suspect that the following three data points in its Q1 report are going to define whether or not investors welcome this report with open arms or push Amgen's valuation lower.

1. Operating margin
One of the most highly watched figures within Amgen's quarterly reports is its operating margin. Operating margin, or how much bang it's getting for each dollar brought in as revenue, is important for each and every company, regardless of industry. But it's especially worth eyeing for Amgen since it's been cutting costs in an effort to streamline its new drug launches.

Image source: Pictures of Money via Flickr.

In 2014, Amgen announced that it was cutting its workforce by approximately 4,000 workers in an effort to save $1.5 billion in expenses per year. The term "save" is a bit misleading here because what Amgen really wants to do is use some of these "savings" to help pay for new drug launches and phase 3 studies. When Amgen first announced these cost cuts, its operating margin was in the high 30-percentile. By 2018, Amgen believes its operating margin will surpass 50% and perhaps hit as high as 52%. Investors will be looking for continued progress in 2016.

For added context, Amgen reported an operating margin of 48% in 2015. It could be tough to handily surpass this figure with late-stage studies and new drug launches seemingly imminent, but an improvement over the 44.4% operating margin in the sequential fourth quarter would probably be viewed positively.

2. Kyprolis sales
Secondly, all eyes are likely to be on multiple myeloma treatment Kyprolis for two key reasons.

Image source: Amgen.

First, Kyprolis wound up netting a much-welcome label expansion last summer that allowed Amgen to market to second-line multiple myeloma patients. The second-line market is about as large in terms of patient pool as the third-line and fourth-line market combined, and doubled! On one hand, investors will be looking for steady sales growth on a year-over-year and sequential quarterly basis.

But the other reason Kyprolis' sales should be closely watched relates to Johnson & Johnson's steady-as-she-goes Q1 report. Though J&J and partner Genmab didn't exactly break out sales of their newly launched third-line and up multiple myeloma drug Darzalex, Johnson & Johnson did specifically mention Darzalex as a reason why its pharmaceutical sales grew so strongly during the quarter.

It's further worth noting that Darzalex did wind up generating a response in 29% of multiple myeloma patients who'd progressed on a median of five prior therapies in phase 3 trials. This compared to a response rate of only 23% for Kyprolis in a coincidentally similar, but not head-to-head, late-stage study. It will be interesting to see if Kyprolis is losing share in third-line and up, or if the market has simply expanded to accommodate these new therapies.

3. Repatha sales and forecast
Finally, we should have a lot of eyes on injectable PCSK9 inhibitor Repatha, which is designed to dramatically reduce LDL-cholesterol levels in patients with select genetic disorders, as well as patients with atherosclerotic cardiovascular disease where statins alone aren't enough.


Image source: Amgen.

Recently, Sanofi, which developed competing PCSK9 inhibitor Praluent alongside Regeneron Pharmaceuticals, announced that Praluent, despite sporting solid insurer coverage, wrangled in only $10 million in Q1 sales. Although Praluent has clear blockbuster potential, the assumption at the moment is that its $14,600 wholesale annual cost is simply too high for insurers, physicians, and patients to jump onboard.

What does that mean for Amgen's Repatha, which is priced at a $500 discount ($14,100) to Praluent based on annual wholesale cost? It probably means an equally bad Q1 in terms of overall sales. However, Amgen's guidance on Repatha will really tell the tale.

Later this year, Amgen is expected to report its long-term cardiovascular outcomes trial for Repatha. If the drug demonstrates a clinically significant improvement in risk of death reduction compared to the current (and inexpensive) standards of care, then we could see coverage of Repatha, and possibly even Praluent, pick up. Amgen needs positive results from this study to justify the value proposition behind Repatha, which, in clinical studies, had led to as much as a roughly 60% reduction in LDL-C levels.

Whereas Repatha's Q1 sales will be in focus, Amgen's comments regarding the drug's long-term sales forecast and cardiovascular outcome data timeline later this year could be even more important.

Circle your calendars, because April 28 promises to be an important day for Amgen shareholders.