Earnings Preview: Amgen to report 3rd quarter

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NEW YORK -Biotechnology company Amgen Inc. is scheduled to report its third-quarter results Wednesday. The following is a summary of key developments and analyst commentary for the period.

OVERVIEW: The Thousand Oaks, Calif.-based company continued to grapple with a weakened economy during the quarter, though price increases and a boost from overseas drug sales are expected to help Amgen's results. Furthermore, the company's shares managed to avoid the volatility seen in other health care sectors as the debate over health care reform continues.

The quarter brought new developments for the company's next anticipated blockbuster, denosumab, or Prolia. In August, a panel of experts recommended the Food and Drug Administration approve the drug as a treatment for post-menopausal osteoporosis, but it voted against using the drug to prevent osteoporosis in postmenopausal women and for use in breast cancer patients.

On Monday, the FDA requested additional information on the drug, delaying the entire Prolia program for at least a few months. The agency now wants to know how Amgen will monitor patients using the drug, and expect a risk evaluation strategy.

Wall Street has been looking toward the treatment to help offset sagging revenue following a downturn in sales of anemia drugs. Lagging sales of the anemia drug Aranesp prompted the company to lower its full-year profit outlook earlier in the year.

BY THE NUMBERS: Analysts polled by Thomson Reuters expect profit of $1.27 per share on about $3.79 billion in revenue.

ANALYST TAKE: A mix of pricing increases and foreign currency benefits should play key roles in helping the company meet Wall Street expectations, according to several analysts.

"We remain buyers as we like the chance for third-quarter earnings to serve as a possible catalyst for shares, with a weaker dollar, recent price increases, and generally favorable script trends in support," said Robert W. Baird analyst Christopher J. Raymond in a note to investors Oct. 8.

On the development front, analysts mainly brushed off the FDA's request for more information on Prolia, with several saying it had been expected following the panel recommendations in August.

WHAT'S AHEAD: Analysts have pushed forward estimates for Prolia sales following the FDA request, but still expect the drug to eventually become a blockbuster revenue producer for the company.

STOCK PERFORMANCE: The stock rose 13.7 percent to end the quarter at $60.23.

2009-10-20 11:52:36