Amgen announced a modest total revenue increase in the third quarter Tuesday, as profits dropped 19% due to a $650 million write-down from axing an experimental prostate cancer drug.
In the third quarter, Amgen’s operating income fell from $2.7 billion to $2 billion due to the write-down. The biotech’s earnings per share dropped from $3.98 to $3.22, which Amgen says was driven by the impairment charge following the discontinuation of AMG 340.
The prostate cancer drug was acquired in a $900 million upfront buy of Teneobio in 2021. In its reprioritization decision, Amgen said it is scrapping the candidate after posting positive Phase Ib results of another bispecific T-cell engager xaluritamig earlier this month.
Amgen’s decision to discontinue AMG 340 was partially offset by increased revenues. Third-quarter revenues increased 4% to $6.9 billion, compared to the same period in 2022, due to a 5% increase in product sales.
However, sales of Amgen’s biggest seller—autoimmune disease biologic Enbrel—declined by 6% to just over $1 billion, falling slightly short of forecasts. The biotech’s product sale volume was up 11% but was offset by lower selling prices and rebate programs, leaving total product sales at $6.5 million—up 5% compared to 2022’s third quarter.
Otezla, its psoriasis and psoriatic arthritis drug, had a 10% drop in sales compared to the prior year period. The company pointed to free drug programs for new competition as affecting demand for the treatment.
Despite the third quarter’s earnings per share drop, Amgen is confident its long-awaited closing of the Horizon Therapeutics acquisition will make up the difference. The company increased its full-year revenue guidance to between $28 billion and $28.4 billion, up from previous projections of $27.4 billion on the top end. Adjusted earnings also increased by 40 cents at the lower end of the range.
The acquisition, which closed in October 2023, had faced a rocky road with an FTC lawsuit to block the deal. Amgen and Horizon launched their own countersuit in July 2023, questioning the constitutionality of the FTC’s efforts. After finally getting the FTC’s go-ahead to close the buy, Amgen earlier this month announced it is laying off 350 employees, affecting Horizon roles that overlap with existing Amgen teams.
“With the completion of the Horizon acquisition, Amgen has added rare disease medicines that fit well with our broad innovative portfolio,” CEO Robert Bradway said in a statement.
The deal is the biggest to close so far this year and brings in seven approved products in addition to a healthy pipeline of assets.
Amgen’s stock dipped approximately 3% in Tuesday morning’s premarket trading.
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