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Image source: Amgen via Flickr.

Earnings season is officially kicking into full swing, and one of the most important biotech companies, Amgen (NASDAQ:AMGN), is slated to deliver its results after the closing bell this Thursday, Jan. 28.

Officially, Wall Street is projecting that Amgen will deliver $5.53 billion in sales and $2.29 in earnings per share. The $5.53 billion would mark nearly 4% growth from Q4 2014, and the $2.29 would represent 6% EPS growth from the comparable quarter last year. It is worth noting that Amgen has regularly stomped Wall Street's EPS estimates over the past three years, with EPS beats ranging from $0.15 per share to $0.37 per share over the past four quarters. Although the past is no guarantee of future results, history favors Amgen toppling those estimates once again in the fourth quarter.

Three key numbers you'll want to monitor
What's different about Amgen's Q4 report relative to its other quarterly reports is that this one often closely follows its presentation at the Super Bowl of all healthcare conferences, the J.P. Morgan Healthcare Conference. Thus, we already have a good bead on the company's preliminary guidance for 2016, and we've been given a look under the hood at its pipeline, including what development and regulatory milestones we should be on the lookout for in 2016. This shifts the focus of Amgen's Q4 report away from its development pipeline and solely on actual results.

With this in mind, here are three key numbers you'll want to pay close attention to on Thursday:

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Image source: Flickr user Ryan Ritchie.

1. Operating margins
Investors are always looking to the future when evaluating the appeal of a stock, but current results also matter. Specifically, I would encourage investors to pay very close attention to the operating margin that Amgen reports.

What makes its operating margin such a closely watched figure has been the ongoing balancing act between cost-cutting and late-stage research/product launches. Amgen announced about 4,000 total layoffs in 2014 in an effort to save more than $1 billion annually. It was a seemingly odd move for a company that's been growing its sales and profits at a steady rate.

There was a motive behind the move, however. The growing number of late-stage trials Amgen has been conducting, coupled with six new product launches (five novel compounds and one label expansion) since Dec. 2014, has been costly for Amgen. The idea is that reducing employee head count will allow Amgen to redirect these dollars into clinical trials and marketing. Over time, as these late-stage trials wrap up and marketing costs are reduced as these new products develop a following with physicians and consumers, Amgen anticipates its operating margins to settle between 52% and 54% after sitting at 38% in 2013.

Keep a close eye on operating margin improvements in Q4.

2. Kyprolis' sales
Next, I'd watch Kyprolis' total sales closely.

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Image source: Amgen.

Kyprolis is the multiple myeloma centerpiece drug that coerced Amgen to pay more than $10 billion to buy Onyx Pharmaceuticals. Previously only approved for third-line and higher indications, Kyprolis received the stamp of approval from the Food and Drug Administration this past July as a second-line treatment for multiple myeloma, which more than doubled its potential patient pool. What we're going to see in Q4 is just how well Kyprolis performed in its first full quarter since this label expansion.

On the flip side, it'll be interesting to see what, if any, effect the approval of Johnson & Johnson (NYSE:JNJ) and Genmab's Darzalex in mid-November has had on Kyprolis.

Darzalex is a new multiple myeloma therapy for third-line and higher patients that demonstrated an overall response rate of 29% in clinical studies where patients had received (and progressed on) a median of five prior lines of therapy. Kyprolis' approval in the third-line indication came after it demonstrated a 23% overall response rate in patients who'd received a median of five prior lines of therapy. There is no head-to-head between Kyprolis and Johnson & Johnson's/Genmab's Darzalex, so cross-comparisons are purely hypothetical for the time being. However, I'd contend that the 6-percentage-point difference in overall response in coincidentally similar trials could turn heads and eat into some of Kyprolis' market share. Johnson & Johnson shareholders should be monitoring these numbers closely as well.

Pay close attention to any breakdown of second-line market share and sales, but also keep an eye out for data concerning Krypolis' share in third- and fourth-line indications.

3. Enbrel's price
Finally, I'd pay less attention to Enbrel's overall sales totals in the upcoming quarter -- Enbrel is a roughly $5 billion per year anti-inflammatory drug for Amgen -- and more on the intangibles behind Amgen's sales growth or decline in Q4.

Enbrel

Image source: Amgen.

For example, inventory levels normalizing on a year-over-year basis from Q3 2014 into Q3 2015 played a big role in Enbrel's 30% sales growth from the prior-year quarter. I'm not saying we should ignore inventory levels entirely, but we need to be able to examine actual Enbrel demand and Amgen's pricing power to truly determine the drugs' health.

Rheumatoid arthritis is a very competitive space for drugmakers, and Amgen accounted for "competition" as a negative factor during its Q3 report when discussing Enbrel. What I'd like to see is whether Amgen can maintain strong pricing power when it doesn't have an inventory correction in its back pocket. I don't believe we'll see the same inventory boost in its upcoming quarterly release, which should give us a better look at Enbrel's demand and pricing power on as level of a playing field as we can get as investors.

As a whole, I don't anticipate many surprises in Amgen's earnings release, and I stand firm in my belief that this biotech blue chip is on pace to deliver strong returns for investors over the long term. Nonetheless, there are some pressing near-term questions we'll shortly have answers to, so stay tuned.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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