By Mary Welch
With fourth-quarter and year-end results increasing by at least one-third, Amgen Inc. declared a 2-for-1 split of its common stock.
Amgen, based in Thousand Oaks, Calif., reported 1998 earnings per share of $3.27, up 39 percent from the $2.35 recorded in 1997. Net income jumped 34 percent, to $863 million for 1998, up from $644 million for 1997.
Fourth-quarter results were as strong, with earnings per share ending at $0.90, up from $0.67 for the fourth quarter of 1997, a growth rate of 35 percent.
"They were great numbers, there's no doubt about it," said Jay Silverman, senior analyst at BancBoston Robertson Stephens Inc., in New York. "Clearly, something gave Epogen a plug at the end of the year. Last quarter's  numbers were a bit soft, but we were predicting Epogen's growth to be about 24 percent, [with sales of] $360 million. Instead, they came in at 35 percent."
Epogen (Epoetin alfa) 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. Its growth started to decline in the second quarter of 1997, due to anticipated changes in federal reimbursement policies. Congressional pressure helped relax those policies last March, and further changes in June effectively reversed the policy of automatic claim denial or claim reduction.
For the fourth quarter of 1998, Epogen posted sales of $391 million, up from $289 million for the same quarter in 1997. For the full year, Epogen came in with sales of $1.38 billion, up from $1.16 billion - a 19 percent increase.
If not for an after-tax charge of $96 million (or $0.35 per share) related to a spillover arbitration award to Ortho Pharmaceutical Corp. in 1997, Amgen's full-year 1998 earnings per share would have increased 21 percent and net income would have increased 17 percent.
Amgen was ordered to pay Ortho, a division of New Brunswick, N.J.-based Johnson & Johnson, $78 million plus $18 million in interest. Under a license agreement reached in 1985, Amgen was allowed to sell Epogen for dialysis use, and Ortho was allowed to sell its brand of erythropoietin, called Procrit, for non-dialysis use. Procrit has been found effective in HIV-infected patients who are treated with AZT. Some buyers use erythropoietin for both, however, and the two companies could not agree on how to compensate each other for spillover sales. Amgen and Ortho developed erythropoietin together. (See BioWorld Today, Sept. 16, 1997, p. 1.)
Included in the fourth-quarter earnings per share is $23 million resulting from reduced uncertainty for the company's potential spillover liability to Ortho. However, offsetting that number is a write-down of certain equity investments.
Total product sales were strong in the quarter, rising 23 percent to $695 million, up from $564 million for the fourth quarter of 1997. For the full year, Amgen posted product sales of $2.5 billion, a 13 percent gain over the $2.2 billion posted in 1997. In addition to Epogen's growth, fourth-quarter worldwide sales of Neupogen (Filgrastim) increased 10 percent to $298 million, as compared to $272 million for comparable 1997 period. For the full year, total sales were $1.12 billion, a gain of 6 percent over 1997's $1.06 billion.
Licensed for five uses, Neupogen is a recombinant protein that selectively stimulates the production of infection-fighting white blood cells.
Fourth-quarter sales of Infergen (interferon alfacon-1) increased to $6 million, up from $3 million over 1997's fourth quarter. For all of 1998, the product's first full year on the market, Infergen posted sales of $16 million. Infergen, a bioengineered, non-naturally occurring type 1 interferon used in treating chronic hepatitis C viral infection, was launched in October 1997.
The 2-for-1 split of Amgen's common stock will be in the form of a 100 percent stock dividend. The dividend will be distributed Feb. 26 to stockholders of record as of Feb. 12.
"Stock splits like this are always well-received, especially when the stock gets up to $100," said Silverman. "Overall, you'd have to say the results and the split are wonderful news."
Amgen's stock (NASDAQ:AMGN) closed Thursday at $119.562, up $3.687. n