By Lisa Seachrist

Washington Editor

Fueled by record sales of Enbrel, Immunex Corp. reported higher-than-expected earnings as the company posted net income of $32.2 million, or 6 cents per share, in the first quarter, a penny higher than the Street's consensus.

Sales of the Seattle-based company's rheumatoid arthritis drug, Enbrel, drove the earnings with $131.1 million in net product sales. Those sales figures are up 120 percent over Enbrel sales in the first quarter 1999, which came in at $59.7 million.

Despite news of the record sales, the company's stock (NASDAQ:IMNX) fell $7.312, or about 15 percent, to close Wednesday at $40.75. Part of the tepid reception to the company's earnings report may come from the fact the Street estimates typically included a tax rate of approximately 37 percent, while the company paid taxes of only 1.5 percent as a result of carrying forward research expenses. Immunex likely will have the lower tax rate for the next two quarters.

"The estimate for Enbrel sales for the first quarter was between $130 million and $135 million, and they did that," said Carol Werther, biotech analyst for Adams Harkness and Hill in Boston. "If you look at the whole picture it was a good quarter, not a great one. The stock drop today is probably a market sort of thing. If your news isn't great in this market, it sort of slaps you for it right now."

In addition to Enbrel sales, sales for Leukine for bone marrow transplant patients and Novantrone for the treatment of acute non-lymphocytic leukemia and to ease the pain of prostate cancer were slightly increased at $34.7 million, compared to $34.5 million for the first quarter 1999. The company also received a $10 million payment from development partner American Home Products Corp. (AHP), of Madison, N.J., triggered by sales of Enbrel exceeding $400 million during the last twelve months.

Total revenues for the quarter came in at $179 million compared with $98.2 million in the first quarter of 1999, when the company first broke even with a net income of $300,000. Immunex reported research and development costs of $34.7 million compared with $28.2 million in the first quarter of 1999. Selling, general and administrative (SG&A) costs were $72.3 million in the first quarter of 2000, compared with $44.3 million in the first quarter of 1999. SG&A expenses included profit-sharing payments to the company's marketing partner, Wyeth-Ayerst Pharmaceuticals, of Radnor, Pa., the pharmaceutical division of AHP. In addition, the company made investments in the marketing of Enbrel and prepared to launch Novantrone to treat worsening forms of multiple sclerosis once FDA approves the product.

"Immunex's story is looking forward, not back," said Mike King, vice president and senior biotechnology analyst at Robertson Stephens. "We can expect an increase in sequential Enbrel sales in the 10 percent to 15 percent range. Immunex continues to have growth potential."

That growth will be fueled by Enbrel's likely approval for all stages of rheumatoid arthritis in the next month or so. An FDA advisory panel endorsed the drug as a first-line disease-modifying anti-arthritic compound on April 11. (See BioWorld Today, April 12, 2000, p. 1.)

However, Elise Wang, first vice president of PaineWebber Inc. in New York, questions how important Enbrel will be in the early RA population when a cheaper, easier-to-administer drug, methotrexate, is on the market. Immunex predicts it eventually will capture 20 percent of the market, or over 200,000 patients with early RA.

"I don't think the drug will be a slam-dunk; I don't think the company believes it will be, either," Wang said. "One factor is the expense of Enbrel is not an insignificant hurdle for many patients."

Immunex is completing a Phase III study of Enbrel in psoriatic arthritis and could file to expand the label for the drug as early as the first half of next year.

In addition to Enbrel, Immunex is waiting for approval to market Novantrone as a treatment for worsening forms of MS. On Jan. 28, an FDA advisory panel recommended FDA approve the product. (See BioWorld Today, Jan. 31, 2000, p. 1.)

The company also is expected to have some news on Phase II studies of its asthma product, Nuvance, within the next 30 days.

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