By Charles Craig
Amgen Inc.'s 1996 earnings increased 26 percent on the strength of revenues from its two marketed products, Epogen and Neupogen, which both broke the $1 billion sales mark.
The Thousand Oaks, Calif., company's 1996 earnings performance helped offset negative news earlier this month when Amgen and partner Regeneron Pharmaceutical Inc., of Tarrytown, N.Y., said their brain-derived neurotrophic factor (BDNF) failed in Phase III trials for treatment of amyotrophic lateral sclerosis.
Amgen's stock (NASDAQ:AMGN) dropped 5 percent to $55.062 Jan. 10, the day the disappointing data were reported. (See BioWorld Today, Jan. 13, 1997, p. 1.)
The stock fell another 4 percent to $53 the following business day, Jan. 13.
Amgen released its fourth quarter and year-end 1996 fiscal report after the market closed Thursday. Its shares Friday gained $1.25 to close at $56.25.
Amgen's total revenues for 1996, based almost entirely on $1.1 billion in sales of Epogen and $1 billion in sales of Neupogen, reached $2.2 billion, a 15 percent increase over 1995.
Epogen is a red blood cell booster used to treat anemia in kidney dialysis patients. Neupogen increases white blood cells and is given to cancer chemotherapy patients.
Amgen's net income for 1996 increased to $680 million from $538 million the year before. Earnings per share also jumped 26 percent to $2.42 from $1.92 in 1995.
Fourth quarter figures showed a net income gain of 22 percent to $178 million from $146 million for the last three months of 1995. Earnings per share for the last quarter of 1996 increased 23 percent to 64 cents from 52 cents a year ago. Fourth quarter revenues were up 16 percent to $594 million from $514 million in 1995.
Despite the strong earnings, Amgen's stock, analysts said, is controversial because investors are unsure about long-term growth in a company with only two marketed products.
However, Barbara Hoffman, analyst with Vector Securities International Inc., of Deerfield, Ill., said Amgen still has growth potential with Epogen and Neupogen and its 12 other products in the pipeline.
She pointed to glial-cell-line-derived neurotrophic factor for Parkinson's disease and megakaryocyte growth and development factor for restoring platelets in cancer chemotherapy patients as two promising drug candidates with big sales potential.
In addition, she noted if the company succeeds in clinical trials of Novel Erythropoiesis Stimulating Protein (NESP), dubbed "son of EPO," Amgen would not be restricted to selling a red blood cell booster for anemia only in patients on dialysis.
Under Amgen's Epogen development agreement, Johnson & Johnson, of New Brunswick, N.J., sells erythropoietin (EPO) as Procrit in the U.S. for anemia in non-dialysis patients. The pharmaceutical company also has rights to EPO outside the U.S.
Procrit is approved in the U.S. for anemia in AIDS patients, in chemotherapy patients and in patients undergoing elective, non-cardiac and non-vascular surgeries.
If the molecular structure of NESP is different from EPO, as Amgen claimed in announcing the start of clinical trials last week, NESP eventually could compete for Procrit sales.
Another product nearer to market for Amgen is Infergen, a consensus interferon, under review by the FDA for hepatitis C.
However, in addition to gaining FDA approval, the drug may have another hurdle to overcome. Schering-Plough Corp., of Philadelphia, has filed a federal court lawsuit alleging that Infergen infringes its patents for Intron-A, or alpha interferon, licensed from Biogen Inc., of Cambridge, Mass. Intron-A is marketed for hepatitis B and C and a variety of cancers.
Amgen also has completed Phase III trials of stem cell factor (SCF), an early-acting blood cell growth factor. Used in combination with Neupogen, SCF enabled breast cancer patients to overcome higher than normal chemotherapy doses.
In 1996 Amgen's research and development expenses jumped 17 percent to $528.3 million from $451.7 million in 1995. In the fourth quarter, research and development spending was up 16 percent to $143.7 million from $124 million.
Amgen ended 1996 with $1 billion in cash. *