Amgen's Quarter Is on the Mark

Updated from 4:38 p.m. EST

Amgen hit its marks again in the fourth quarter, posting higher profits bolstered by mostly strong drug sales.

As calculated by generally accepted accounting principles, Amgen posted fourth-quarter profits of $456.4 billion, or 34 cents per share, compared to net income of $163 million, or 15 cents per share, in the year-ago period.

Pro forma net profits rose 16% to $471.7 million, or 35 cents per share, adjusted for certain expenses, including the acquisition of Immunex. Amgen earned $320.3 million, or 30 cents per share, in the year-ago quarter. These results matched Wall Street's consensus estimates, as compiled by Thomson Financial/First Call.

Total product sales rose 66% to $1.6 billion in the quarter, compared with product sales of $974 million in the fourth quarter last year. Total revenue was $1.62 billion, just below Wall Street's estimate of $1.66 billion.

Amgen closed out 2002 with adjusted earnings of $1.39 per share, up 18% from 2001. Total revenue increased 42% to $4.99 billion.

Before its earnings release, Amgen shares closed Thursday up 99 cents, or 1.9%, to $53.49. In the after-market session, the stock lost $1.23 cents, or 2.3%, to $52.27.

A quick round of phone calls to various fund managers uncovered some disappointment in the fact that Amgen didn't exceed Wall Street's EPS expectations, especially since top-line revenue was so strong. There was also some minor quibbling about higher-than-expected expenses, lower gross margins, and the impact of inventory stocking on drug sales in the quarter. Others, however, say such concerns are overblown.

Looking closer at Amgen's results, fourth-quarter sales of Aranesp, the company's anemia drug, totaled $207 million in the quarter, exceeding Wall Street's expectations and up 81% from third-quarter sales of $114 million. Aranesp is approved for use in patients with chronic kidney disease and cancer patients undergoing chemotherapy. The latter use is the key growth driver, because this is where Aranesp competes fiercely against Procrit, the rival anemia drug marketed by Johnson & Johnson .

Epogen, Amgen's older anemia drug, racked up $620 million in fourth-quarter sales, an 8% increase from the year-ago quarter. Analysts were looking for Epogen sales of around $585 million, but Amgen said some of the quarter's sales growth came from increased inventory stocking.