By Bill Berkrot
(Reuters) - Amgen Inc (O:AMGN) on Wednesday reported higher-than-expected first-quarter profit as cost controls helped offset a sharp drop in sales of Enbrel, its blockbuster rheumatoid arthritis and psoriasis drug.
But an earnings beat based on lower expenses rather than sales growth did not please investors and Amgen shares fell more than 3 percent to $159.00 in after-hours trading.
Sales of Enbrel, faced with increased competition and slowing growth in the rheumatology and dermatology sectors, dropped 15 percent to $1.18 billion, below Wall Street estimates of about $1.38 billion. Enbrel has traditionally been a growth driver for Amgen, although the company had cautioned that pricing pressure would likely hit the franchise this year.
"The biggest weakness on the top line was definitely Enbrel. It's in decline," said Cowen and Co analyst Eric Schmidt, adding that inventory stocking in the prior quarter likely contributed to the sales drop.
Total sales fell 1 percent to $5.5 billion, shy of analysts' consensus estimates of $5.6 billion.
Excluding items, Amgen had adjusted earnings of $3.15 per share, topping analysts' average expectations by 15 cents, according to Thomson Reuters I/B/E/S.
Amgen maintained its full-year revenue forecast of $22.3 billion to $23.1 billion. It raised the low end of its adjusted 2017 earnings forecast by 20 cents to $12.00 per share, but kept the top end of the range at $12.60.
Total operating expenses fell 8 percent to $2.87 billion, helped by a 12 percent drop in research and development spending.
The company's potent new cholesterol drug Repatha, faced with reimbursement barriers from insurers and pharmacy benefit managers, had sales of just $49 million.
Data showing that it does indeed cut the risk of heart attacks and strokes, expected to greatly improve payer and physician acceptance of the expensive medicine, did not come out until late in the quarter and so was not reflected in the sales for the period.
Still, Schmidt said, "it's not good when your growth franchise is weak, even if it's early days."
The world's largest biotechnology company said net profit rose to $2.07 billion, or $2.79 per share, from $1.9 billion, or $2.50 per share, a year ago.
Other key medicines performed better, with sales of osteoporosis drug Prolia rising 21 percent to $425 million, ahead of Wall Street estimates of about $415 million.
Sales of infection fighter Neulasta rose 2 percent to $1.21 billion, above analyst expectations of $1.13 billion.