West Coast Editor

After the market closed Wednesday, Amgen Inc. - faced with label changes to include warnings and lowered reimbursement for two of its major products - made public its plan to reduce staff by 12 percent to 14 percent, or as many as 2,600 jobs, gaining a pre-tax savings of $1 billion to $1.3 billion in 2008.

Capital expenditures will drop by about $1.9 billion during the period from 2007 to 2008, with a resulting improvement in cash flow, and some production plants will be closed, the company said.

Charges for the restructuring are expected to total between $600 million and $700 million this year and next. Amgen lowered earnings per share guidance from $4.28 to a range between $4.13 to $4.23, because of dented revenues from the anemia therapy Aranesp (darbepoetin alfa).

Amgen's top-selling drug for patients on chemotherapy, Aranesp, sold $949 million worldwide in the second quarter, down 10 percent from the same period last year. Aranesp is the second-generation version of the erythropoietin stimulating agent (ESA) Epogen (epoetin alfa), and the pair of drugs accounted for almost half of Thousand Oaks, Calif.-based Amgen's sales last year.

The firm was hard hit by the Centers for Medicare & Medicaid Services changes in reimbursement for ESAs, disclosed late last month, following safety concerns about the drugs.

Among other things, CMS decided that coverage for ESA patients would be triggered at hemoglobin levels below 10 g/dL. (See BioWorld Today, Aug. 1, 2007.)

In a conference call, Amgen officials noted that 10 percent to 15 percent of currently treated patients never fall below 10 g/dL, and all of those patients will be lost under the new reimbursement rules. About 70 percent to 80 percent of patients "bounce around" that level, and an estimated two-thirds of that sector will not be covered. About half of the poor responders - which represent 10 percent to 15 percent of currently treated cases - will be lost under the new CMS guidelines.

Amgen's stock (NASDAQ:AMGN) closed Wednesday at $50.59, down 73 cents.