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Amgen, JNJ Get Somewhat Mixed Message From FDA Panel

Amgen , the world's biggest biotech company in terms of sales (Genentech dwarfs Amgen in market cap: $86 billion vs. $51 billion) and Dow component Johnson & Johnson avoided a worst-case scenario this afternoon. A Food and Drug Administration advisory committee voted 13-1 against recommending their drugs no longer be marketed for chemo-related anemia in cancer patients.

By a vote of 8-6, the panel also said Aranesp, Epogen and Procrit should not be restricted only to use on patients with small cell lung cancer. When those first two votes came in, the stocks--especially AMGN--rallied. But as I pointed out in an alert on CNBC at that time, the companies were not out of the woods yet.

That proved to be the case. The shares started to pull back as the rest of the votes came in. The committee said the drugs shouldn't be used on people who are considered to have potentially curable types of cancer, shouldn't be used on people with metastatic breast and head and neck cancers and that all cancer patients should sign an informed consent form before getting the drugs. According to analysts, those restrictions could hurt sales. There's also the question of what effect, if any, the votes will have on private insurance reimbursement for the drugs.

But the panel stopped short of recommending treatment-level restrictions for oncologists. As one committee member said, "We're approaching the point of silliness. We're trying to overmandate things." The consensus was that the red blood cell threshold should be determined on a case-by-case basis by doctor and patient.

Amgen investors still seem to be relieved. The stock rallied into the close--albeit off the high of the day, and coming off of a new intra-day low hit earlier this week. I will be tied up at the Genentech analyst meeting in New York tomorrow, but I'm sure analysts will be putting out a lot of research notes later today and tomorrow morning in the wake of this highly-anticipated panel meeting.

The FDA usually, but not always follows the advice of its advisory committees. The agency is expected to issue a final ruling on the recommended restrictions in 30-45 days. Attention will also soon turn to the next major pipeline event for Amgen...the release of late-stage test results for its experimental osteoporosis drug known as D-mab.

In the meantime, some analysts have suggested the relief rally in AMGN today and the potential for new or improved financial guidance out of Genentech tomorrow could provide a little one-two punch to spark a rally in biotech.

UPDATE: Ortho Biotech, the J&J subsidiary that sells Procrit, issued a statement saying it's:

"concerned by the Advisory Committee's recommendations to restrict access to (the anemia drugs) for chemotherapy-induced anemia in patients with metastatic breast and head and neck cancer, and patients with curative intent. The company believes that fully informed patients and their physicians should have the choice to use this important medication, which is the only therapeutic alternative to blood transfusion."

And Amgen issued this statement. ESAs is one of the abbreviations for the anemia drugs. ODAC is the abbreviation for the advisory committee:

“Amgen takes very seriously the safety signals seen in recent trials where ESAs were used outside of the labeled indication. The role of the ODAC is to advise the FDA. We are committed to working with the FDA to consider the input from the Committee and to implement future label changes.”

Questions? Comments? Pharma@cnbc.com