Earlier this week I bloggedabout Amgen's negative test results for its anemia drug Aranesp in breast cancer. The studies showed the drug may have caused tumors to grow and death. This morning it almost seems like there's a delayed market reaction.
Although the pressure on the stock could be exacerbated by a company press release issued late yesterday and a price-target cut by Credit Suisse this morning.
Amgen announced--I don't think to anyone's great surprise--that it's talking to the Food and Drug Administration about updating the safety information on the labels of its anemia drugs which are the biotech company's bread and butter. But perhaps more importantly, Amgen says an FDA Advisory Committee on oncology--the same one that took up Genentech's Avastin for breast cancer this week--will meet to address the ongoing safety controversy about the drugs sometime in the first quarter of next year.
Miller Tabak healthcare analyst Les Funtleyder writes in a research note to clients this morning: "We do not believe they (Amgen) will be successful in improving the increased restrictive label. The company's core franchise continues to decelerate and the nearest potential positive catalyst is next year." I'm assuming he's referring to anticipated late-stage test results on a twice-a-year osteoporosis drug Amgen is developing.
But Credit Suisse analyst Dr. Michael Aberman is even more bearish. He's cutting his worldwide Aranesp sales estimates by more than half-a-billion bucks. And he doesn't think the damage to the franchise will bottom out until the second half of next year. "We are hesitant to defend Amgen ahead of what looks to be another tumultuous period," he writes in a research note to clients this morning. Dr. Aberman thinks the stock could drop into the 40s around the FDA panel meeting.
Nonetheless, he's keeping his Outperform rating on the stock because he thinks it's "eventually" going to rebound. In the meantime, he's cutting his price target from $65 to $63. CS has done and wants to do more banking for AMGN and makes a market in the stock.
I'm off to Houston this weekend to cover Vioxx lawyer Mark Lanier's "ginormous" holiday party--we're talking 8,000 (yes, 8,000!) people on the grounds of his estate. Look for the story to air soon on Tyler Mathisen's "High Net Worth"which airs on CNBC Fridays at 8:30 p.m. ET and then repeats a bunch of other times.
And then next Tuesday I'll be live from Merck HQ in Whitehouse Station, NJ for the company's annual analyst meeting and a live interview with Chairman and CEO Dick Clark--his first chat with us in two years--on "The Call" around 11 a.m. ET. Clark will be taking a victory lap with the stock having doubled on his watch and the recent $5 billion settlement of the Vioxx cases.
Plaintiffs' lawyers like Lanier get about 30 percent of that, so maybe his party will be even bigger and more lavish this year. You can read about it on "The Wall Street Journal Law Blog."
And finally a correction: On air yesterday, I said Eli Lilly's 2008 profit forecast is as much as 29 cents above consensus. I should've said 19 cents.
Questions? Comments? Pharma@cnbc.com