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Here Are the Highlights From Amgen's Q3 Results

By Keith Speights and Brian Orelli, PhD – Nov 11, 2021 at 7:01AM

Key Points

  • Amgen's sales growth was held back by lower net selling prices for its drugs.
  • The biotech's earnings per share increased due to Amgen controlling its spending and share buybacks.
  • An upcoming FDA approval for asthma drug tezepelumab could help get Amgen back on track.

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The big biotech reported only modest sales growth.

Amgen (AMGN -0.55%) reported its third-quarter results on Nov. 2, 2021. In this Motley Fool Live video recorded on Nov. 3, 2021, Motley Fool contributors Keith Speights and Brian Orelli discuss the highlights from the big biotech's Q3 update.

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Keith Speights: Well, Pfizer wasn't the only big drugmaker announcing earnings results this week. A big biotech also announced Q3 results on Tuesday. Amgen gave its update after the market closed yesterday. Brian, what were the highlights with Amgen's Q3 update?

Brian Orelli: Revenue was up 4%, which isn't all that great. The company is actually doing a little bit better than that would show. Sales volume was up 8%, but the problem was the net selling prices fell 7%. When you combine those two, that's how you get to the revenue actually being up 4%.

The lower prices were due to competition -- especially from cheaper generics and biosimilars. That pushed down the price. There's just more competition. The insurers aren't willing to pay as much as they were previously. Adjusted earnings per share were up 11%. That's obviously a lot better than the 4% top-line growth. The company's keeping its operating expenses in check. I think those only went up 1%. Anytime you can get your expenses to go up less than your revenue goes up, that's going to help your bottom line.

Then, of course, it's doing share repurchases. For their earnings per share, if you have less shares, then obviously, the same amount of earnings ends up with more earnings per share.

Cancer drug, Lumakras -- that's a cancer drug for KRAS mutations -- is off to a good start ,with sales of 36 million in its first full quarter on the market. The company lowered the top end of its revenue guidance and raised the adjusted earnings-per-share guidance. Again, their revenue is not doing so hot, but they're making up for it in earnings by lowering costs and repurchasing shares.

I'm looking ahead to 2022, and they have a big asthma drug tezepelumab and the FDA [Food and Drug Administration] is supposed to make a decision on that in January. I think that could help them regain some growth and get back into the healthy 10% range.

Speights: Brian, I was scrambling here to try to pull up Amgen's cash position at the end of the third quarter, and I finally found it. The company had cash and investments of $12.9 billion. Pretty hefty cash stockpile.

Are you surprised that Amgen hasn't done some more dealmaking, knowing that it's having some headwinds with several of its products and has so much cash on its balance sheet?

Orelli: Yeah. I'm sure they're looking. I think it's maybe harder to find a late-stage product that fits their pipeline, and then if you buy early-stage stuff, it takes a lot of money. There's a lot of deals to work through that amount of cash. I think that's probably the issue there.

Speights: Yeah. I would think Amgen's going to make a deal, probably a significant deal at some point, it's just when.

Keith Speights owns shares of Pfizer. The Motley Fool recommends Amgen. The Motley Fool has a disclosure policy.

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