Managing Editor

Like its fellow big biotechs, Amgen Inc. posted solid numbers for the second quarter. The Thousand Oaks, Calif.-based firm reported net income of $1.28 billion and earnings per share (EPS) of $1.37, well ahead of consensus estimates of $1.28 per share.

Amgen also bested revenue estimates by $180 million, pulling in about $3.96 billion during the three-month period. Net product sales jumped 8 percent over the same period last year to $3.89 billion, driven by better-than-expected sales of neutropenia drugs Neulasta (pegfilgrastim) and Neupogen (filgrastim), up 13 percent over last year to $1.3 billion, and rheumatoid arthritis drug Enbrel (etanercept), up 9 percent to $956 million.

Even better, Prolia (denosumab), the RANK ligand inhibitor for osteoporosis whose sales generally have disappointed since its launch a year ago, appeared to benefit from Amgen's increased marketing efforts. Second-quarter sales reached $44 million.

Sales of Xgeva, denosumab for skeletal-related events in cancer patients, totaled $73 million for the quarter, staying strong for the second full quarter following its late 2010 launch.

But much of the company's earnings call was focused on its erythropoiesis-stimulating agent franchise, a business that once made up more than half of Amgen's revenues but has dropped over the past few years on safety issues and bundling and reimbursement rules. Most recently, the FDA updated the label for Aranesp (darbepoetin alfa) and Epogen (epoetin alfa) to include more conservative dosing guidelines when used to treat anemia in patients with chronic kidney disease, citing the cardiovascular risks.

Not surprisingly, sales of Aranesp were down 3 percent to $585 million, while Epogen sales were $543 million, down $114 million, or 17 percent, compared to the same period last year. On the plus side, however, Epogen's sales "were actually up 1 percent over" the first quarter of this year, noted Robert Bradway, president and chief operating officer, suggesting that revenues have "largely stabilized in the wake of bundling."

Going forward, Amgen is taking what many analysts are calling a "worst-case-scenario approach" to Epogen sales, projecting a year-over-year decline of 20 percent to 25 percent as a result of the labeling changes, though Bradway added that those drops will be offset at least partially by increases in the patient population and price hikes.

Of course, that "assumes that the QIP is finalized as proposed," he said, referring to the Centers for Medicare & Medicaid Services' quality incentive program. Last month, CMS said it would not issue a national coverage determination at this time for drugs such as Epogen and Procrit (epoetin alfa, Johnson & Johnson).

All the trouble that Epogen has given the company and its investors since 2007 prompted ISI Group analyst Mark Schoenebaum to ask on the call whether Amgen might consider divesting that business, pointing to the success some big pharma firms have had selling off slower-growing units.

CEO Kevin Sharer acknowledged that "it's not a crazy question, and we have thought hard about it," but pointed out that Epogen sales contribute substantially to the company's bottom-line. Plus, there are going to be at least 300,000 patients in the U.S. on dialysis who are going to need the drug "and that's not going to change."

"We will best serve patients and shareholders by managing this business well," he added.

Epogen, however, could face a competitor soon. Palo Alto, Calif.-based Affymax Inc. and partner Takeda Pharmaceutical Co. Ltd. recently filed a new drug application for peginesatide in anemia associated with chronic renal failure in dialysis patients. The FDA recently accepted the application for review, but approval is far from a slam dunk due to safety issues that cropped up in two trials in nondialysis patients. (See BioWorld Today, June 1, 2011.)

Amgen's other product sales for the quarter included: hyperparathyroidism drug Sensipar/Mimpara (cinacelcet), which increased to $199 million; colorectal cancer drug Vectibix (panitumumab), which totaled $81 million; and immune thrombocytopenic purpura drug Nplate (romiplostim) reached $75 million.

The company's R&D costs jumped 26 percent to $808 million, and the firm anticipates increased costs going forward. "We've highlighted 2011 as an investment year," said Jonathan Peacock, chief financial officer, with three late-stage programs under way – AMG 386 in ovarian cancer, AMG 479 (ganitumumab) in pancreatic cancer and OncoVex (talimogene laherparepvec), an oncolytic vaccine for metastatic melanoma picked up in a recent acquisition of BioVex Group Inc., of London. (See BioWorld Today, Jan. 26, 2011.)

CEO Sharer added that Amgen's R&D expenditure for the next five years is expected to fall in the range of 18 percent to 20 percent of product sales. For 2011, costs should "fall within the high end of this range," he said.

Amgen also updated its revenue guidance for 2011, which it said should be in the upper end of the $15.1 billion to $15.5 billion range, with EPS likewise to tend toward the upper end of $5 to $5.20 per share.

And, for the first time in its history, Amgen's board declared a quarterly cash dividend, with a payout of 28 cents per share of common stock due to shareholders on Sept. 8. Going forward, "we expect to return an average of about 60 percent of net income each year" through dividends and share repurchases, Sharer said.

As of June 30, the company had about $19.2 billion in cash, equivalents and marketable securities. Shares of Amgen (NASDAQ:AMGN) closed Friday at $54.70, up $1.27.

In other earnings news:

• BioMarin Pharmaceutical Inc., of Novato, Calif., beat revenue and earnings estimates for the second quarter, posting revenue of $110.6 million and a net loss of $5.1 million, or 5 cents per share. Analysts had projected revenue of $105.9 million and an earnings per share loss of 11 cents. The company's total product revenue jumped 21 percent to $109.6 million, driven by growing sales of mucopolysaccharidosis enzyme replacement therapy Naglazyme (galsulfase), which reached $60.3 million, and phenylketonuria drug Kuvan (sapropterin dihydrochloride), which totaled $28.8 million. As of June 20, BioMarin's cash position totaled $412.1 million. Shares of the company (NASDAQ:BMRN) gained $1.94, to close Friday at $31.23.