Amgen Shares Drop On More Anemia-Drug Fallout

Another setback for Amgen anemia-drug franchise sent shares of the No. 1 biotechnology company spiraling down as much as 6.6% on Tuesday -- to a 2-1/2-year low -- as more analysts cut their ratings on the beaten-down stock.

Analysts at Bank of America and Robert W. Baird both downgraded their ratings to "neutral" after the U.S. Medicare health insurance program late on Monday proposed limiting payments for Amgen and Johnson & Johnson'sanemia drugs in response to safety concerns.

Baird analyst Christopher Raymond said the move by Medicare could lead to similar pressure from private insurers.

"We see the extent and nature of the coverage cuts as nothing less than stunning," Raymond wrote in a research note.

Amgen shares have now fallen more than 15% since before a U.S. Food and Drug Administration advisory panel last Thursday urged more limits and further study of the anemia drugs.

The shares fell as low as $52.36 earlier, the stock's lowest price since October 2004.

Looking ahead, Amgen shares could take a further hit if U.S. regulators were to approve a rival anemia drug from Roche AG. U.S. regulators are expected to act later this month on Roche's Mircera, which is in the same class as Amgen's franchise.

"Given everything that is surrounding the anemia drugs, we suspect there's a better-than-average chance that the FDA asks Roche for additional safety studies," said Jason Fox, a healthcare analyst with H&R Block Financial Advisors.

However, Fox said, if the FDA approves Mircera, "that would be another negative for the anemia franchise at Amgen."

Sales performance of its rheumatoid arthritis drug Enbrel in upcoming quarters also stands to affect Amgen shares, Fox said. He said data supporting Amgen's cancer treatment Vectibix also could impact the stock.