By Mary Welch
Amgen Inc. wowed investors as the Thousand Oaks, Calif., company reported second-quarter earnings of $268 million, or 50 cents per share, easily beating the Street's estimate of 46 cents.
The company's earnings increased 22 percent over the same period last year, which were $216 million or 41 cents per share. Product sales increase 21 percent for the quarter to $738 million, from $611 million.
Further impressing analysts was the news that the FDA will allow Amgen to file a biologics license application (BLA) for IL-1ra for rheumatoid arthritis after two large Phase II trials. The company expects to file by year's end.
"This is a blow-out quarter," said Dennis Harp, an analyst with Deutsche Banc Alex. Brown, of New York. "It was a surprising announcement about the FDA and the new rheumatoid arthritis product. That's coming along faster than we would have anticipated. It is unusual for the FDA to agree to a filing based on Phase II data."
Amgen now expects earnings per share for the year to be at the high end of a range of $1.90 to $1.95, assuming the government will extend a tax credit for the rest of the year.
Total revenues were $820.5 million for the quarter as compared to $656.9 million during the same period last year.
One of the reasons for the FDA ruling was that the second study, in which IL-1ra (interleukin-1), combined with methotrexate, produced a statistically significant dose response relationship and demonstrated an added benefit over the use of methotrexate alone. The fact that IL-1ra can reduce both inflammation and bone cartilage destruction means that the drug may provide a benefit for rheumatoid arthritis patients. Additional studies will be conducted to supplement the safety database, support the regulatory submission and further explore the effect of IL-1ra on disease progression.
"These were large trials in scope and they met the principal endpoint," Harp said. "Obviously, the trials and the patient safety database were adequate to satisfy the FDA."
The investment community has high hopes for Il-1ra, believing it could become Amgen's third billion-dollar drug. Some analysts predict sales will be $250 million in 2001, $860 million in 2002 and reach $1.3 billion by 2003. (See BioWorld Today, Dec. 22, 1998. p. 1.)
Sales of Amgen's flagship product, Epogen (Epoetin alfa), increased by 27 percent in the quarter to $428 million, from $337 million a year ago. Epogen is a recombinant protein that stimulates red blood cell production and is used in the treatment of anemia associated with chronic renal failure for patients on dialysis. In 1998 Epogen sales reached $1.38 billion. The company said it expects Epogen sales growth rate to be around 25 percent, with Neupogen sales growth rate to be around 10 percent.
Sales of Neupogen (Filgrastim), which stimulates the growth of white blood cells in cancer patients, increased 12 percent to $304 million, up from $271 million from the same period last year. Sales of Infergen (interferon alfacon-1) rose to $6 million in the second quarter of 1999 from $4 million for the same period last year. Infergen, which was introduced in 1997, is a bioengineered, non-naturally occurring type 1 interferon used in treating chronic hepatitis C viral infection.
"Amgen today has one of the finest pipelines in the biotech industry," Harp said. "They have more late-stage product than most companies, and with Epogen and Neupogen performing strongly, they are better than ever."
Also in the company's pipeline is abarelix for prostate cancer. During the second quarter, Amgen agreed to increase the number of patients in its Phase III trial and will begin a new study in order to enlarge the drug's safety package. The company expects to file for approval with the FDA next year.
Amgen entered into collaboration with Praecis Inc., of Cambridge, Mass., to develop abarelix. The drug is a gonadotropin-releasing hormone antagonist, designed to quickly reduce testosterone levels without clinical flare.
The drug can be referred to as an inhibitor of luteinizing hormone releasing hormone. At the time of the deal, Amgen said it expected to spend about $100 million this year in development expenses. (See BioWorld Today, March 11, 1999, p. 1.)
The company expects to complete the Phase III trial of a novel erythropoiesis stimulating protein for dialysis patients. The second-generation Epogen product is expected to be ready for new drug application by second quarter 2000.
In addition, the company will enter Phase III trials in the third quarter for its sustained duration granulocyte-colony stimulating factor molecule, SD-01, a second-generation Neupogen product.
Amgen's stock (NASDAQ:AMGN) gained $6 Tuesday to close at $72.313.