Amgen's (NASDAQ:AMGN) recently reported results for the fourth quarter of 2019 left investors feeling more mixed up than usual. Sales of important new products continued to exceed expectations, but the company also predicted a slight decline on the top and bottom lines this year.
Amgen results: The raw numbers
|Metric||Q4 2018||Q4 2017||Year-Over-Year Change|
|Revenue||$6.2 billion||$5.8 billion||7%|
|Income from operations||$2.4 billion||$2.2 billion||6%|
|Earnings per share||$3.01||($5.89)||N/A|
What happened with Amgen this quarter?
Enbrel is still Amgen's top-selling product, but sales of the anti-inflammatory injection fell 8% in the fourth quarter compared to the previous year. Despite Enbrel's slide, total product sales rose 8% with help from a handful of younger drugs. Here's what pushed the needle forward:
- The initial launch of the company's new migraine headache prevention drug is progressing better than expected. The company recorded $95 million in Aimovig sales despite heavily discounting the drug to maintain an early lead over competing treatments from Eli Lilly (NYSE:LLY) and Teva Pharmaceuticals (NYSE:TEVA).
- Sales of Repatha are also responding well to deep discounts. Despite a lower net price, increased volume helped drive sales of the cholesterol-reducing treatment 62% higher to $159 million.
- The company's bone density drug, denosumab, added $1.1 billion to the company's top line, which was 15% more than the same period a year earlier.
- Sales of Parsabiv, which launched at the beginning of 2018, generated $108 million during the fourth quarter. Sales of the hyperthyroidism treatment for patients with chronic kidney disease are being driven by dialysis providers of all sizes.
- Amgen's first bi-specific antibody has been gaining traction since it earned approval to treat leukemia patients that are nearly in remission in order to keep the disease from roaring back. Blincyto sales rose 37% on year to $63 million.
- Sales of the biotech's treatment for relapsed multiple myeloma finally achieved a $1 billion annualized run rate. Kyprolis earned approval for a more convenient weekly dosing schedule in October that helped it along.
The fourth quarter was a quiet one for Amgen's development pipeline. The National Medical Products Administration of China approved Repatha to reduce the risk of heart attacks and strokes for adults with cardiovascular disease. In December, Nplate earned approval to treat pediatric patients with immune thrombocytopenia and the company submitted another application to treat adults with the same condition.
What management had to say
Amgen CEO Robert A. Bradway was even more upbeat than usual about the company's fourth-quarter performance and ability to keep performing for the long run. He said, "Through our continued solid operating performance in 2018, we met and exceeded our long-term financial commitments. Looking to the future, we are encouraged by our long-term growth prospects driven by our portfolio of newer products, pipeline and ongoing success in international expansion."
The continued decline of Enbrel and the eventual decline of Neulasta will still hurt a great deal over the next several years, but Amgen's got what it needs to maintain those commitments. Operations generated $10.6 billion in free cash flow, and the company used just $3.5 billion to make dividend payments last year.
In 2019, Amgen expects total revenue to contract slightly from $23.7 billion to a range between $21.8 billion and $22.9 billion. On the bottom line, adjusted earnings per share are expected to slide slightly from $14.40 in 2018 to a range between $13.10 and $14.30 this year.
Amgen will have to compete for market share with Eli Lilly and Teva, but Aimovig appears to be holding on to its early lead in the migraine prevention race. During the fourth quarter, the company raised the number of patent starts since it launched to 150,000 from 100,000 at the end of September.
That means there are probably already enough people using Aimovig to drive annual sales of the monthly injection to $1 billion, and it's just getting started. Don't be surprised if Amgen raises its revenue expectations later this year.