Amgen Q3 - Enbrel sales under pressure

Vestact-recommended biotech company Amgen had results out two weeks ago. The stock has been okay this year, up 9%, but has underperformed the broader market. All the complicated drug names can make writing about their results boring, but I'll do my best to keep things simple for the 617 clients that own the share.

Amgen posted a 23% rise in revenue to $8.5 billion for the quarter. There are a couple of fast-growing new drugs that have contributed to that impressive growth.

- Lumakras, which treats lung cancer, increased sales by 88%
- Blincyto, which combats leukemia, increased sales by 49%
- Repatha, a medication for cholesterol, increased sales by 40%
- Evenity, for osteoporosis, increased sales by 30%

Even though those four drugs had solid growth, much of that was overshadowed by the 20% drop in sales for rheumatoid arthritis drug Enbrel, which was Amgen's top-seller a year ago. Unfortunately, many new rheumatoid arthritis treatments have come to market and are hurting volumes and the pricing of Enbrel. The company expects further price pressure but stabilising volumes.

From their $8.5 billion in sales, Amgen was able to produce $3.3 billion in free cash flow, of which $2.4 billion was used to reduce debt and $1.2 billion was paid out in a dividend. That means that $300 million more was paid out than generated in cash flow. The rest was taken from cash on the balance sheet, which means that cash-on-hand declined to $9 billion, still very healthy.

It's worth noting that Amgen spent an impressive $1.44 billion on drug research and development last quarter, a 35% increase from a year ago.

There is considerable excitement about Amgen's weight loss drug MariTide, a once-a month injection, which is expected to hit the market in 2027. If the drug is successful, it will be a nice tailwind; if not, Amgen still has a very broad stable of promising drugs.