By Jim Shrine

Amgen Inc.¿s first-quarter earnings, while beating consensus estimates, disappointed some investors, who trimmed 7.3 percent of the value off the company¿s stock Wednesday.

Epogen (epoetin alfa) sales increased 30 percent, to $395 million, compared to the year-ago quarter, but that large benefit was due to a change in federal policy that eased restrictions on Epogen reimbursement last year. The growth rate was only 1 percent over the fourth quarter of 1998. Neupogen (Filgrastim) sales increased 10 percent from a year ago, to $287 million, but were down 3.7 percent from the fourth quarter.

Total product sales for the quarter were $688 million, a 21 percent increase over a year ago, while net income was $247 million, or 46 cents per share. That beat analysts¿ average estimate of 44 cents.

¿Some people have said they thought a lot of the excitement was gone from the story, because it looks like Epogen sales are slowing down,¿ said William Tanner, biotechnology analyst at Vector Securities International Inc., in Deerfield, Ill. ¿But that¿s not unexpected. The slightly disappointing numbers they reported yesterday don¿t change our outlook because we always expected it to slow down a little bit.¿

The upside, Tanner said, is the soundness of the business and some potentially large products at late stages in the pipeline. ¿There are some products coming in the next year or two that are going to catalyze earnings growth again,¿ he said.

Dennis Harp, an analyst at BT Alex. Brown Inc., in New York, said those devaluing the stock based on the sequential Epogen numbers may not be seeing the whole story.

¿I¿m trying to step back,¿ Harp said, ¿and look at the bigger picture. I see two products with no threat of facing generic competition in the foreseeable future, and a pipeline rich with products in late-stage development.¿

Amgen, of Thousand Oaks, Calif., said it expects earnings for the year to come in between $1.80 to $1.85 per share, and growth of product sales to be in the mid-to-high teens. It also said it expects Epogen growth to be in the low 20 percent range for the year, and Neupogen to grow in the high single digits.

The chief value-driving products in the pipeline are novel erythropoiesis stimulating protein (NESP), Abarelix and SD-01, a second-generation Neupogen product.

Likely To Meet Annual Sales Goal: Analyst

Enrollment has been completed in Phase III trials of NESP, and studies should be finished by the end of the year, Amgen said. A preliminary analysis from 522 patients showed NESP is safe and effective in both hemodialysis and peritoneal dialysis patients with different routes of administration.

Abarelix is in a Phase III trial for treating hormonally responsive prostate cancer, and in Phase I/II for endometriosis. SD/01, a booster of white blood cells, is being tested in a Phase II trial involving multicycle chemotherapy.

In other news from the pipeline, Amgen said it discontinued development of native leptin for diabetes and obesity, citing two second-generation molecules that appear more promising. And it stopped development of glial cell-derived neurotrophic factor for Parkinson¿s disease after early studies failed to demonstrate benefit.

¿I think the company will meet its annual sales growth goal and make its earnings number,¿ Harp said.

Analysts have projected NESP as Amgen¿s third billion-dollar drug following the company¿s arbitration victory in December over Johnson & Johnson (J&J), of New Brunswick, N.J. That win gave Amgen all rights to the red blood cell stimulator. (See BioWorld Today, Dec. 22, 1998, p. 1.)

With that decision, Amgen would expect to compete with NESP against J&J¿s billion-dollar erythropoietin products, Procrit and Eprex, while not cannibalizing its own sales of Epogen.

In trading of 14.4 million shares, more than three times the average volume, Amgen¿s stock (NASDAQ:AMGN) fell $5 per share Wednesday to close at $64. n

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