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Income Surges 28% at Amgen

Pharmaceuticals: The company says Neulasta sales were better than expected. The report is a rare piece of good news for the industry.

July 25, 2002|DENISE GELLENE | TIMES STAFF WRITER

Amgen Inc. reported sharply higher second-quarter results Wednesday, driven by better-than-expected sales of Neulasta, its second-generation drug for chemotherapy patients.

The Thousand Oaks-based company said income rose 28% to $412 million, or 38 cents a share, beating Wall Street's estimate by 4 cents. It earned $322 million, or 30 cents, a year earlier. Revenue increased 27% to $1.2 billion.

The results extended the run of good news for Amgen, which on Monday received approval to market the anti-anemia drug Aranesp to cancer patients. And it came in sharp contrast to the weak results plaguing the drug industry.

Amgen shares rose $1.49 to $37.09 on Nasdaq before the results were announced, then soared to $40.65 in after-hours trading.

The company said sales of Neulasta, used to boost white blood cell production in chemotherapy patients, totaled $110 million in its first quarter on the market. Amgen cited high demand for the drug, which is administered once during a 10-day course of chemotherapy. Neupogen, the first-generation drug, is injected daily.

Sales of both drugs totaled $473 million in the quarter, exceeding the Wall Street consensus by nearly $100 million.

"They knocked the cover off the ball," said Ronald C. Renaud, an analyst with Bear Stearns in New York. "The Neulasta launch appears to be going very, very well. Aranesp is starting to get some traction. And their forward-looking guidance is in line with most folks' expectations."

Amgen raised its full-year projection for earnings-per-share growth. It said the percentage gain would be in the mid-20s, up from the low 20s, excluding the effect of the Immunex acquisition.

The company said it would take a noncash $2.4-billion charge in the third quarter related to the acquisition. The charge, which was expected, represents a write-off of research and development at Immunex.

Also as expected, Amgen lowered its sales projections for Enbrel, the rheumatoid arthritis drug it acquired as part of its purchase of Immunex. Production problems exacerbated a shortage of the drug, hammering quarterly sales down to $192 million from $217 million in the first quarter.

Amgen said Enbrel sales for 2002 should range between $750 million and $800 million, about $100 million less than Immunex's most recent forecast. For 2003, sales should fall between $1.2 billion and $1.4 billion, down from $1.6 billion, the company said.

The number of patients on Enbrel has fallen to 79,000 from 84,000, and there are 23,000 people on a waiting list for it, Amgen said. The company said it hoped to begin supplying some patients on the waiting list in the fourth quarter. Amgen said it remained on track to open an Enbrel factory in Rhode Island during the first quarter of 2003.

The shortage has benefited Remicade, a rival drug from Johnson & Johnson, which posted sales of $332 million in the quarter, up 94%. Remicade sales this year total $577 million, putting the drug on track to reach the $1-billion mark.

"They certainly have increased the number of patients they serve, but we have a better drug," Amgen Chairman and Chief Executive Kevin Sharer said in an interview. When supplies of Enbrel improve, he said, "we will do fine."

Sharer said the company was sticking with previous peak sales forecasts for Enbrel of $3 billion by 2004 or 2005.

During a conference call with analysts, Amgen offered new information on the Food and Drug Administration's action on Aranesp. The drug is a long-lasting version of the protein erythropoieten, which spurs red blood cell production. In the cancer market, it competes with Procrit, a first-generation product marketed by Johnson & Johnson under a license from Amgen.

Amgen said the FDA approved a label that says Aranesp should be administered once a week for cancer patients. Amgen had hoped for an every-other-week indication and has conducted numerous studies to show that the drug is effective when used that way.

An every-other-week indication would have give Aranesp a clear advantage over Johnson & Johnson's competing drug Procrit, which is commonly administered off-label on a weekly basis, though its label calls for three doses a week.

However, Bear Stearns' Renaud said the Aranesp label did not pose a competitive problem. He said doctors would use Aranesp off- label every other week once they realize it works and is cheaper than once-weekly Procrit.

Aranesp, which had sales of $56 million in the quarter, stands to benefit from quality problems Johnson & Johnson is having with Eprex, a version of Procrit it markets in Europe. Johnson & Johnson last week confirmed a federal criminal investigation of the Puerto Rican factory where Eprex is made. But it is unknown whether the probe is related to the unexplained rash of blood disorders in patients who have used Eprex. The disorder, called red blood cell aplasia, has sickened 141 patients and killed one.

Amgen, during its call, emphasized that it had not observed the disorder in patients who had used Aranesp. It said only two cases of the disorder had been linked to its first-generation product, Epogen. Epogen, sold only to kidney dialysis patients in the U.S., posted sales of $570 million in the quarter.

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