Amgen Earnings Rise on Growing Sales of Anemia, Arthritis Drugs
Amgen reported higher first-quarter profit, driven by increased sales of its anemia and arthritis drugs, but the world's largest biotechnology company said it expects 2007 earnings at the low end of its previous forecast.
Excluding items, the Thousand Oaks, Calif.-based company earned $1.08 a share, matching analysts' average forecast of $1.08 a share, according to Thomson Financial.
Amgen posted a net profit of $1.11 billion, or 94 cents a share, compared with a profit of $1 billion, or 82 cents a share, a year earlier.
Amgen reported revenue of $3.68 billion, compared with analysts' projections of $3.72 billion.
Amgen said earnings per share for the year are now expected to be at the low end of its prior range of $4.30 to $4.50. It said its revenue expectations for the year are currently under review but that it will take action to reduce operating expenses to offset revenue impact, likely due to declining sales of its biggest product, the anemia drug Aranesp.
Geoff Hsu, senior biotech analyst at Orbimed, told CNBC that recent clinical studies suggest raising hemoglobin levels above a certain range can actually endanger patients –- and therefore, the FDA has put so-called “black box” warnings on two of Amgen’s products, including Aranesp.
Hsu predicted that Amgen's results in the current quarter will “be OK,” but foresees that the firm will lower guidance for the remainder of the year.
Worldwide sales of Aranesp rose 14% from a year earlier to $1.02 billion but were down from $1.1 billion in the previous quarter.
Aranesp use is expected to decline amid concern that it and similar anemia drugs for kidney disease and cancer patients have been used too aggressively and could be harming people.
Amgen dodged a bullet last week when a study of the drug showed no difference in risk of death from a placebo in lung cancer patients undergoing chemotherapy. Chemotherapy-induced anemia is by far the most lucrative Aranesp indication.
In a study of cancer patients not undergoing chemotherapy, reported in January, increased deaths seen with Aranesp heightened concerns about the class of drugs, including Amgen's older Epogen. The drugs are forms of the natural protein erythropoietin used to boost hemoglobin levels in the blood.
Amgen shares are down about 17% since the study was released in January. The broader American Stock Exchange Biotech Index is up about 7% over that same time period.
Epogen sales rose 3% to $625 million. Sales of Neulasta and Neupogen, used to boost white blood cells in chemotherapy patients, rose 14% to $1.02 billion. Enbrel, for rheumatoid arthritis and the skin condition psoriasis, saw sales rise 11% to $730 million.
SEC Files Fraud Charges Against Husband of Amgen Executive
Separately, the Securities and Exchange Commission said Monday it filed securities fraud charges against the husband of an Amgen top executive, accusing the man of insider trading in the stock of another company, Abgenix.
The SEC complaint alleges Gary K. Melton misappropriated confidential information from his wife, Amgen's vice president of strategic sourcing and procurement, when he bought stock days before Amgen's acquisition of Abgenix was made public.
The SEC did not name Melton's wife. She is Farryn Melton.
Amgen tipped off the SEC, prompting the investigation, said Amgen spokesman David Polk.
According to the complaint, which was filed in U.S. District Court in Los Angeles, Gary Melton first told his wife in November 2005 that he might buy some Abgenix stock after seeing positive results from a study of an antibody jointly developed by Amgen and Abgenix. His wife said nothing, the SEC said.
Still, a month later, having learned Amgen was preparing to announce its acquisition of Abgenix, the Amgen executive warned her husband not to buy any Abgenix stock, careful not to specify why, the SEC said.
Her husband, however, went ahead and purchased 2,050 shares of Abgenix stock between Dec. 8 and Dec. 13, 2005, the SEC said.
The next day, Amgen announced it agreed to buy Abgenix for $22.50 per share, a 54 percent premium on Abgenix's closing stock price that day. Gary Melton reaped $15,252 from his trades, the SEC said.
Gary Melton, 54, agreed to pay about $31,000 to settle the fraud charges, without admitting or denying any wrongdoing, the SEC said. Gary Melton's attorney, Andrew Holmes, said his client was happy the case was over and stressed that his client's wife never gave him any information.
"This was him doing something he shouldn't have done, actually directly against her instructions," Holmes said, adding that his client did not admit or deny the SEC allegation that he misappropriated information from his wife. "It was certainly not her idea to do this," he said.