AMGN shares flat after FY24 earnings outlook disappoints lofty expectations

Amgen, a leading biotechnology company, released its fourth-quarter earnings report. Despite beating Wall Street's estimates for the fourth quarter, Amgen's profit guidance for 2024 fell short of high expectations. Shares are down slightly on low volume following the results. 

The company reported adjusted earnings per share (EPS) of $4.71, beating analysts' estimates of $4.60. Amgen reported adjusted operating expenses of $4.54 billion, an increase of 18% year-over-year. Adjusted research and development (R&D) expenses amounted to $1.49 billion, up 16%, while adjusted selling, general, and administrative (SG&A) expenses were $1.76 billion, representing a 20% increase. 

Amgen's adjusted operating income for the quarter was $3.66 billion, a 22% rise compared to the previous year. The company also achieved an adjusted operating margin of 46.7%, slightly higher than the 45.9% reported in the same period last year.

Amgen reported revenue of $8.2 billion for the quarter, slightly surpassing expectations of $8.12 billion. The growth was primarily driven by the acquisition of Horizon Therapeutics, which contributed to a 20% increase in product sales.

Looking ahead, Amgen provided its forecast for the fiscal year 2024. The company expects revenue to range between $32.4 billion and $33.8 billion, placing the midpoint slightly above the estimated $32.51 billion. Adjusted EPS for the year is anticipated to be in the range of $18.90 to $20.30, leaving the midpoint short of the estimated $19.83. 

Amgen stated that its capital expenditure for the year is projected to be around $1.1 billion, and it plans to conduct a share buyback of up to $500 million. 

Blincyto, a drug for the treatment of a form of leukemia, which experienced impressive growth with sales skyrocketing by 47% to $241 million. Evenity, a treatment for osteoporosis, generated $318 million in sales, demonstrating a substantial year-over-year growth rate of 41%. Repatha, a drug used to lower cholesterol, saw revenue of $417 million, reflecting a 25% increase compared to the previous year. Prolia, a drug for osteoporosis, recorded revenue of $1.11 billion, displaying a 12% increase year-over-year. 

While these top-selling drugs performed well overall, there were a few disappointments. For instance, Aimovig, a drug for the prevention of migraines, delivered revenue of $78 million, which was lower than the estimated $96.4 million. This represents a year-over-year decline of 32%. Another drug that fell short of expectations was Enbrel, used to treat rheumatoid arthritis, with revenue totaling $1.02 billion, down 7.6% compared to the previous year and lower than the estimated $1.06 billion. 

While the company's revenue guidance was narrowly above estimates, the adjusted EPS forecast was lower than analysts had predicted. However, Amgen remains confident in its pipeline, with CEO Robert Bradway stating that they anticipate more than a dozen significant milestones in 2024. 

The company is on track to report the first human trial data for its experimental oral obesity drug AMG786 in the first half of 2024 and expects to announce results from a mid-stage trial of its lead injectable weight loss candidate, MariTide, later this year.

In summary, Amgen reported strong fourth-quarter results, beating earnings expectations while also achieving revenue growth. The company's top drugs, including Blincyto, Evenity, Repatha, and Prolia, contributed significantly to its sales. However, there were some drugs, such as Aimovig and Enbrel, that did not perform as well as anticipated. Amgen remains optimistic about its prospects, highlighting its upcoming pipeline milestones and ongoing investments in research and development.