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Second-Generation Drugs Drive Up Amgen Net Income

The chairman of the Thousand Oaks biotech giant says the 'blowout' fourth-quarter results bode well for the company in 2003.

January 24, 2003|Denise Gellene | Times Staff Writer

Amgen Inc., the world's largest biotechnology company, met Wall Street's expectations by reporting Thursday that its fourth-quarter profit nearly tripled as revenue soared 57% because of increased demand for second-generation drugs.

The company's net income for the quarter rose to $456.6 million, or 35 cents a share, from $163 million, or 16 cents, a year earlier. The fourth-quarter results in 2001 reflect $242.6 million in inventory write-offs and other charges. Sales in the latest quarter rose to $1.76 billion from $1.12 billion.

For all of 2002, the Thousand Oaks-based company reported a net loss of $1.39 billion, or $1.21 a share, because of a $3-billion write-off that stemmed from its acquisition of Immunex Corp. in July. Without the write-off, Amgen would have reported earnings of $1.6 billion, or $1.44 a share. In 2001, Amgen had net income of $1.1 billion, or $1.07 a share.

Last year, Amgen's revenue jumped 38% to $5.5 billion from $4 billion in 2001.

Amgen's second-generation anemia drug Aranesp, launched 16 months ago, was a key driver of fourth-quarter growth. Chairman and Chief Executive Kevin Sharer said the medication, a longer-lasting version of Amgen mainstay Epogen, has captured 17% of the anemia market, in which it competes with a drug from Johnson & Johnson Inc.

The Johnson & Johnson drug, named Procrit in the United States and Eprex in Europe, are first-generation products sold under a license from Amgen.

Epogen, though sold only to dialysis patients in the United States, remained Amgen's bestselling drug, with fourth-quarter sales of $620 million, up 8%, and full-year sales of $2.3 billion, up 7%.

The company's anti-infection drugs posted combined sales of $541 million for the quarter and $1.8 billion for the year, driven by strong growth of its second-generation drug Neulasta.

Sales of Enbrel, the rheumatoid arthritis drug made by the Immunex unit, were $362 million for the period in which Amgen owned Immunex. Full-year sales for the drug, hampered by production constraints, were $802 million, the low end of the range previously forecast by Amgen. In December, Amgen opened a factory in Rhode Island that should double supply of the drug.

Sharer said Amgen had a "blowout quarter" that bodes well for 2003.

Amgen announced its results after the stock market closed. Amgen's shares rose $1 on Nasdaq to $53.50.

"The quarter was good," Fariba Ghodsian, managing partner with Castle Creek Life Sciences Partners in Beverly Hills, said. Ghodsian said Amgen's product sales were slightly higher than expected, but so were costs. She described the performance of Neulasta as "amazing."

Separately Thursday, Amgen said an experimental drug, rHu-KGF, reduced severe mouth ulcerations in chemotherapy patients undergoing bone marrow transplants for blood-related cancers. The drug, which stimulates growth of cells that line the mouth and gastrointestinal tract, is in late-stage human clinical trials.

There is no approved therapy for the condition, which makes it difficult to swallow, but the market is small. About 9,000 cancer patients annually undergo bone marrow transplants for leukemia, lymphoma and multiple myeloma.

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