Amgen (AMGN) exceeded market expectations with its earnings report on Tuesday. However, the company’s stock took a hit after it abandoned its experimental prostate cancer treatment.
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The company did not provide any details regarding its decision to discontinue AMG 340, the experimental drug for metastatic castration-resistant prostate cancer. AMG 340 was acquired through Amgen’s $900 million purchase of Teneobio in 2021.
As a result of the decision to terminate AMG 340, Amgen will incur a net impairment charge of $650 million.
In afternoon trading on the stock market today, Amgen stock fell 4.1% to approximately $252.50.
Amgen Stock: ‘Puts And Takes’
Piper Sandler analyst Christopher Raymond highlighted both positive and negative factors impacting Amgen.
Revenue increased by 4% to $6.9 billion, meeting the expectations of analysts surveyed by FactSet. Adjusted earnings rose by 6% to $4.96 per share, surpassing the projected $4.68 per share.
However, worldwide product sales, excluding other revenue sources, fell short of estimates at $6.55 billion, according to Raymond.
Revenue from Enbrel, a drug used to treat autoimmune conditions, declined by 6% to $1.04 billion.
Analyst Salim Syed from Mizuho Securities noted that Lumakras, a lung cancer drug, is facing challenges due to ongoing reimbursement negotiations in France. Additionally, Otezla, an inflammation drug, is still being affected by free drug programs offered by new competitors in the market.
“For the remainder of 2023, we expect demand (for Otezla) to be affected by these free drug programs,” Amgen stated in a press release.
Obesity Treatment In Focus
On a more positive note, Tezspire, Aimovig, Prolia, Xgeva, and Evenity all exceeded expectations in terms of sales, according to Raymond. Tezspire is used to treat asthma, Aimovig is for migraines, and the latter three are osteoporosis treatments.
Amgen stock analysts are now looking forward to the company’s efforts in the field of obesity treatment. Amgen is currently testing a weight-loss pill called AMG 133 and expects to announce Phase 2 results in late 2024.
“Management also noted that they have a suite of preclinical obesity assets that they plan to bring forward ‘over the next few years,'” Syed said in a report from Mizuho.
Syed maintained a neutral rating and a price target of $223 for Amgen stock.
Amgen has raised its full-year outlook and now anticipates adjusted earnings of $18.20 to $18.80 per share on sales of $28 billion to $28.4 billion. This guidance revision follows the successful acquisition of Horizon Therapeutics earlier this month.
Analysts had predicted earnings of $18.36 per share and sales of $27.57 billion for Amgen.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
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