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Amgen Tops Expectations on Cost-Cutting Efforts

Amgen Inc., the world's largest biotechnology company, reported earnings of $1.12 per share on first-quarter revenues of $3.6 billion on Thursday, beating most Wall Street expectations on cost-cutting measures.

Analysts polled by Thomson Financial had expected a profit of $1.04 per share on $3.61 billion in revenue.

Amgen's first quarter earnings were up 4 percent from the $1.08 earnings per share recorded in the first-quarter of 2007.

Amgen
Amgen


Net profit rose to $1.14 billion, or $1.04 per share, from $1.11 billion, or 94 cents per share, a year ago, the company reported.

Total revenue fell 2 percent to $3.61 billion, in line with
Wall Street estimates.

The higher and better-than-expected profits reflected cost cutting measures that offset declining sales of its anemia drugs hit by safety concerns and reimbursement restrictions.

Amgen shares are down about 9 percent this year, continuing the sharp decline seen in 2007 amid a steady drumbeat of negative news involving its top-selling anemia drugs.

The company took hits from concerns about the safety of its drugs Epogen and Aranesp, which treat anemia caused by chemotherapy. Studies showed the drugs sped up the growth of certain tumors, and linked them to greater risks of blood vessel blockage and death.

The erosion of the anemia franchise continued unabated as worldwide sales of the red blood cell booster Aranesp -- long seen as Amgen's most important product -- fell 25 percent to
$761 million in the quarter.

That was below Wall Street's diminished estimate of $771 million and well below the previous
quarter's $827 million, marking the fifth successive quarterly
decline.

The older anemia treatment Epogen, used primarily in kidney dialysis patients, saw sales fall 11 percent to $554 million, missing analyst estimates of $604 million.

Aggressive cost cutting helped stem the tide of plunging anemia drug sales. Research and development spending was down 18 percent for the quarter, while capital expenditures were
slashed to $170 million from $325 million a year ago.

Enbrel, a treatment for rheumatoid arthritis and the skin condition psoriasis, provided a major bright spot as sales jumped 30 percent to $951 million, handily topping expectations
of $868 million.

Combined global sales of Neulasta and Neupogen, used to boost white blood cells, rose 7 percent to $1.08 billion.

Amgen shares are down about 9 percent this year, continuing the sharp decline seen in 2007 amid a steady drumbeat of negative news involving its top-selling anemia drugs.

Amgen reaffirmed its 2008 forecast for adjusted earnings of $4.00 to $4.30 per share.

MeanwhileRoche is attempting to launch its own anemia drug Mircera in the U.S., although the drug violates patents held by Amgen. A court injunction prevented the launch, but in March, Roche said it would accept a judge's recommendations and pay royalties to Amgen on sales.

Thousand Oaks, Calif.-based Amgen said it may sue Roche if it begins selling Mircera.

In February, Amgen sold its Japanese business, along with the Japanese rights to 13 drug candidates, to Takeda Pharmaceuticals for $1.18 billion.

Jefferies analyst Adam Walsh said estimates for anemia drug sales may continue to fall, as the full impact of the newest restrictions might not become clear for several months.

Walsh said Amgen's early stage pipeline and its osteoporosis drug candidate denosumab are critical to its success.

- Wire services contributed to this report.

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