Los Angeles Business Journal

Large Charge Cuts Amgen’s Profit

By Deborah Crowe Originally published October 24, 2011 at 3:07 p.m., updated October 25, 2011 at 2:57 p.m.

Amgen Inc. on Monday reported 60 percent lower third quarter income, primarily due to a charge for a planned settlement in a marketing practices investigation. But the drug maker’s adjusted results beat Wall Street expectations.

After the market closed, the Thousand Oaks company reported net income of $454 million (50 per share) compared with $1.2 billion ($1.28) in the same period a year earlier. Revenue rose 3 percent to $3.9 billion

The company took a $780 million charge, equivalent to 77 cents per share after taxes, in anticipation of settlement of investigations into its sales and marketing practices by the U.S. Attorney’s Offices for Eastern New York and Western Washington.

Minus the charge, earnings per share would have been $1.40. Analysts surveyed by Thomson Reuters on average expected Amgen to report adjusted per-share profit of $1.29 on revenue of $3.8 billion.

For its three largest franchises, combined sales of infection fighters Neulasta and Neupogen rose 6 percent to $1.3 billion. Sales of Enbrel, which treats rheumatoid arthritis and other inflammatory diseases, were up 1 percent to $925 million. For the company’s struggling anemia business, Aranesp sales fell 4 percent to $600 million, and the older Epogen dropped 27 percent to $476 million.

In the company’s new bone-loss prevention drugs, sales of Xgeva were $100 million and Prolia were $51 million.

Amgen raised its profit forecast for the year to $5.15 to $5.30 per share, from a prior forecast of $5 to $5.20 per share. The company now expects revenue of $15.4 billion to $15.6 billion, up from $15.1 billion to $15.5 billion. The board also authorized increasing the company's stock repurchase program to a total $10 billion.

“Our business has performed well this year, which has given us confidence to increase our full-year revenue and EPS guidance,” Chief Executive Kevin Sharer said in a statement. “We are also confident in our outlook and long-term value and intend to accelerate our stock repurchase program.”

Shares on Tuesday closed down $2.48, or 4 percent, to $56.47 on the Nasdaq.