Beating Wall Street estimates, Amgen Inc. performed well in the first quarter, reporting strong revenue for most of its products, despite Medicare reimbursement changes.

The Thousand Oaks, Calif.-based company posted adjusted earnings per share of 72 cents - a 26 percent increase over the 57 cents EPS during last year's first quarter. Adjusted net income rose 23 percent to $924 million from $752 million last year.

The results were released after trading on Thursday. Amgen's stock (NASDAQ:AMGN) dropped 36 cents Friday to close at $58.89.

"Our product performance was strong, particularly for Aranesp, Neulasta and Enbrel, and the momentum has continued into April," said Kevin Sharer, Amgen's chairman and CEO, in a conference call.

Amgen surprised some analysts with higher-than-expected product sales. Aranesp brought in $723 million, while Neulasta and Neupogen earned $795 million, an increase over last year's first quarter of 33 percent and 20 percent, respectively. Total product sales increased 24 percent to $2.7 billion, above analyst expectations.

"We had postulated Q105 Aranesp, as well as Neupogen/Neulasta revenue, could be light due to Medicare procedural confusion - on the part of CMS and physicians - in the first weeks of January," said analyst Christopher Raymond, of Chicago-based Robert W. Baird & Co., in a research note. "Given these drugs' performance in the quarter, it appears any such impact was minimal."

Amgen's management agreed, and increased adjusted EPS guidance for 2005 to a range of $2.80 to $2.90 from the previously projected range of $2.70 to $2.85. They also raised revenue growth guidance from high single-digits to low-teens to low double-digits to mid-teens.

The company and its analysts have shown concern over how the Medicare Modernization Act might affect reimbursement for certain drugs. A certain percentage of patients, for instance, now need to receive treatments in a hospital setting. That might have discouraged patients from using drugs like Aranesp (darbepoetin alfa) and Neulasta (pegfilgrastim). Aranesp is a second generation red-blood-cell booster approved to treat anemia with chronic renal failure and anemia due to chemotherapy, and Neulasta is a longer-acting version of Neupogen, a white-blood cell stimulator used to decrease the incidence of cancer-related chemotherapy infections.

Amgen, however, has reported that new Medicare reimbursement policies have had little impact on sales.

"The practice patterns doctors have had have not changed, and we're really encouraged by that," Sharer said. "We had some concern earlier that perhaps these changes would really chill doctors from prescribing, and they haven't. We see good performance, good growth."

Analyst Eric Schmidt, of New York-based SG Cowen & Co., said Amgen's first quarter has laid to rest the Medicare concerns, positioning the company well for the year.

"Solid sales growth with minimal encumbrance from recent CMS reimbursement changes should drive Amgen to outperform in 2005," he wrote in a research note.

Amgen's earnings per share of 72 cents beat Schmidt's estimate by a penny, and Raymond's and the consensus estimate by 4 cents.

Recorded sales of Enbrel - $592 million, over $397 million last year - also surpassed analyst expectations, as did Aranesp. But Epogen's sales of $583 million dropped from $590 million last year due to a spillover calculation related to Amgen's relationship with New Brunswick, N.J.-based Johnson & Johnson. Epogen (epoetin alfa) is Amgen's anemia therapy for patients on dialysis, and Enbrel (etanercept) is used to treat inflammation.

During the quarter, Amgen initiated Phase III trials for AMG 531 for immune thrombocytopenic purpura (ITP). It also reported Phase III data of Neulasta showing that administering during the first and subsequent cycles of chemotherapy reduced the incidence of febrile neutropenia by more than 90 percent.

Amgen launched Kepivance (palifermin) during the first quarter in the U.S. to help decrease severe oral mucositis in patients with blood cancers undergoing high-dose chemotherapy with or without radiation, followed by a bone marrow transplant. Other Phase III trials of the therapy are under way. (See BioWorld Today, Dec. 17, 2004.)

Amgen continues to develop the cancer drug AMG 102 and the asthma treatment AMG 317, both in Phase I trials. But analysts are keeping an eye on the company's later-stage products: ABX-EGF and AMG 706 in oncology, AMG 162 in bone disease and AMG 531 in ITP. The products could become "meaningful catalysts for the stock over the next several months," Raymond's note said.

Amgen's research and development expenses during the first quarter rose to $521 million, compared with $433 million in the first quarter of 2004. The rise in expenses was primarily due to staff-related costs associated with the Tularik Inc. acquisition and key clinical trials, including the Phase III studies for AMG 162.

Amgen closed its $1.3 billion acquisition of South San Francisco-based Tularik last August, gaining five clinical programs in oncology, inflammatory disease, Type II diabetes and obesity. Prior to that, the company bought Seattle-based Immunex Corp. for $16 billion in December 2001, gaining Enbrel.

As of March 31, Amgen had $4 billion in cash and marketable securities and about 1.2 billion shares outstanding.