A day after celebrating a patent victory over Roche’s Mircera, Amgen came back down to earth by revealing a sharp decline in earnings due in part to lower sales of its own anaemia drugs in the third quarter.
The biotechnology giant posted net income of $201 million or $0.18 per share, compared with $1.1 billion, or $0.94 per share for the same quarter last year, noting that the decline reflected charges of around $1 billion, connected with the recent acquisitions of Alantos and Ilypsa and a restructuring programme announced in August which will see up to 2,600 jobs being lost in order to save $1-$1.3 billion in costs in 2008.
Revenues were flat at $3.61 billion, a good performance considering the decline suffered by Aranesp (darbopoietin alfa), its big-selling anaemia treatment. Sales slumped 23% to $818 million as the effect of label changes, concerns over the safety of the erythropoietin stimulating agents and changes in reimbursement started to take effect. In the USA alone, revenues from the product tumbled 36% to $460 million.
Those factors also hurt sales of Epogen (epoetin alfa), which slipped 5% to $602 million, but other Amgen products managed to make up for the declines of the key anaemia drugs. Combined sales of the white blood cell stimulators Neulasta (pegfilgrastim) and Neupogen (filgrastim) were up 10% to $1.10 billion, while Enbrel (etanercept) increased 16% to $821 million, thanks to continued growth “in both rheumatology and dermatology”, Amgen noted.
Sensipar (cinacalcet), for the treatment of secondary hyperparathyroidism in dialysis patients, climbed 47% to $122 million, but the colorectal cancer drug Vectibix (panitumumab)fared less well, down to $41 million from $45 million in the second quarter, which the company said was due to a study which showed the drug raised the risk of death when combined with Genentech's Avastin (bevacizumab) for newly diagnosed patients.
Commenting on the results, Amgen chief executive Kevin Sharer said on a conference call that the firm had been “caught in an unexpected hurricane” with its ESAs but it is on the way to coming out of it. He added that “we are making good progress in implementing a global restructuring plan to rationalise our cost structure and improve cash flow, while continuing to invest in the future”.
The cost-savings are what impressed analysts most (Amgen’s R&D spend was down 16% to $699 million) but the feeling is that the firm needs to reduce its reliance on the ESAs.