7/26 AMGN Beats 2Q Earnings View, But Pdt Sales Disappoint
By Beth Mantz
NEW YORK (Dow Jones)--Amgen Inc.'s (AMGN) second-quarter earnings were a
penny a share better than analysts expected, but analysts said they were
disappointed product sales weren't higher.
Late Wednesday, the Thousand Oaks, Calif. biotechnology company reported
quarterly profits of $302.6 million, or 28 cents a diluted share, edging out
the $267.6 million, or 25 cents, earned a year earlier. Analysts surveyed by
First Call/Thomson Financial estimated Amgen would earn 27 cents a share.
The company had total revenue of $914.4 million, compared with $820.5
million a year ago. Product sales were $806.8 million, compared with $737.9
million in the same quarter a year earlier.
Anemia-fighting drug Epogen generated $493 million in sales, up 15% from a
year earlier and contributing more than half of total revenue.
What disappointed analysts was the company's No. 2 drug, Neupogen, which
fights low white-blood-cell count. It generated sales of $310 million,
higher than the first quarter's $250 million but below expectations. In the
first quarter, Neupogen was hit by problems with inventory overstocking.
The company blamed weak Neupogen sales in the second quarter on unfavorable
foreign exchange rates, low inventory levels at wholesalers and reduced
demand due to the realignment of the company's oncology sales force.
While "there seems to be an explanation, it certainly keeps the focus on
whether it (the Neupogen sales shortfall) is really due to other factors, or
(whether) there could be more fundamental issues being masked by these
factors," said Morgan Stanley Dean Witter analyst Caroline Copithorne.
Most analysts, though, expect the problems to pass, allowing Amgen to meet
its projections of increased Neupogen demand for the remainder of the year.
The company has said it expects full-year sales to equal 1999's $1.26
billion as a result of an expanded sales force and marketing initiatives.
Copithorne said she isn't changing her estimates for the second half.
Focus Is On Pipeline
While Amgen gave further guidance for the year - including projections of
earnings between $1.06 and $1.08 a share, and Epogen sales growth in the low
teens - the emphasis shifted away from current drivers to the company's
future drugs.
"The real story is the pipeline, which is going well," said CIBC World
Markets analyst Matt Geller. "This is a transition year ... moving from a
two-drug company to possibly a six- or seven-drug company" over the next few
years, he said.
Of particular interest is next-generation Epogen, NESP, which is moving
though the regulatory process and should be on the market by the beginning
of next year.
This anemia-fighting drug offers greater opportunities than the current
Epogen product; Amgen will be able to reach the cancer market in the U.S.
and overseas, and the dialysis market in Europe with NESP. Johnson & Johnson
(JNJ) markets Epogen overseas to dialysis patients and sells Epogen under
the name of Procrit to cancer patients worldwide.
Dresdner RCM Biotech Fund manager Faraz Naqvi said he wouldn't be surprised
if Amgen stock sees some weakness Thursday because of the second-quarter
results, but said: "I am not too worried; my inclination is buy more."
During after-hours trading, Amgen shares continued to slide, trading at 68
3/4, according to Reuters Instinet. In the regular session, Amgen fell 4
1/4, or 5.8%, to 69 3/8.
-Beth M. Mantz; Dow Jones Newswires; 201-938-5287
(END) DOW JONES NEWS 07-26-00
09:30 PM
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