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Tuesday, Oct 3, 2023

Cost-Cutting Helps Amgen Beat Estimates

Amgen posted third-quarter earnings Monday that beat Wall Street estimates, as the company reported strong drug sales and benefited from cost-cutting once restructuring costs were excluded. The Thousand Oaks biotech reported net income of $1.24 billion ($1.61 a share) for the quarter ended Sept. 30, compared to $1.37 billion ($1.79) for the same quarter a year earlier. Revenue grew 6 percent to $5 billion. Excluding pre-tax charges of $376 million for the restructuring plan announced earlier in the quarter, the company’s earnings per share would have been $2.30 Analysts on average were expecting earnings of $2.11 on revenue of $5 billion, according to Thomson Financial Network. Total product sales increased 4 percent for the third quarter. The biggest growth came from Kyprolis, the drug that fueled its $10.4 billion acquisition of South San Francisco cancer-drug maker Onyx last year. Sales of the drug rose 21 percent from the second quarter to $94 million. “With regulatory submissions for four new products during the quarter, we are at the beginning of an exciting new product cycle,” said Chairman and Chief Executive Robert A. Bradway, in a statement. The results also were driven by layoffs, as the company has sought to please Wall Street and improve its bottom line. In July, the company announced it would lay off up to 2,900 workers, or nearly 15 percent of its global workforce, and consolidate on its sprawling 120-acre campus in Thousand Oaks. Amgen is also under pressure from activist hedge fund manager Daniel Loeb, who last week floated a plan to have Amgen break up into two companies, one selling legacy drugs such as Epogen, and the other focusing on research and development of new products. The company’s stock shot up 5 percent after Loeb announced his Third Point LLC had become one of the company’s “largest shareholders.” Amgen is scheduled to conduct a public review of its strategic planning on Tuesday morning, when many expect the company to address Loeb’s comments. Shares of Amgen closed up 94 cents, or less than 1 percent, to $148.20 on the Nasdaq. Shares have continued up slightly in after-hours-trading.

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