The stock of another high-profile biotechnology companyplummetted on Thursday after Amgen Inc. told analystsWednesday afternoon that earnings for its first quarter wouldbe 10 percent to 15 percent below Wall Street expectations.
Amgen's stock (NASDAQ:AMGN) dropped $9.25, closing at $37.About 22 million of the company's 147 million sharesoutstanding traded hands -- more than the 21 million sharestraded Monday on news of disappointing results for SynergenInc.'s anti-infective, Antril.
AMGEN'S stock had already been sliding; it has now fallen 38percent since Feb. 1.
Amgen blamed the lower-than-expected earnings on slow salesof Neupogen, which comprises about 40 percent of THECOMPANY'S revenues. The drug, a granulocyte colonystimulating factor (G-CSF), is approved for use to reduce theincidence of infection in chemotherapy that lowers the whiteblood cell count.
The Thousand Oaks, Calif., company also markets Epogen totreat anemia in kidney dialysis patients.
"Epogen and foreign Neupogen sales remain on trend," saidLowell Sears, Amgen's senior vice president and acting chieffinancial officer.
The company arranged a conference call with analysts after themarket closed Wednesday to alert them to the lower earningsexpectations.
"The company has been able to offer little basis for thedecline," Gregory Brown of Vector Securities complained, "otherthan temporary and seasonal factors, such as a slowdown inchemotherapy treatments over the holidays."
Amgen also pointed to changes in distributor inventories,variations in salesforce efforts between Epogen and Neupogen,and the uncertainty of future health care policy.
Amgen ended 1992 with $550 million in the bank and expectsto maintain $400 million in cash by the end of 1993, said SarahCrampton, director of investor relations.
She declined to discuss the company's sales projections, butBrown said management disclosed that sales for the first-quarter, ending March 31, were below "internal expectations."
Analyst David Stone of Cowen & Co. downgraded his near-termrating to "neutral" from "outperform," but maintained a long-term outperform rating, based on uncertainty in short-termsales trends and a perceived opportunity to further penetratethe cancer market and perhaps also use Neupogen in thetreatment of infectious disease.
Brown, however, wondered whether the company is "moving asaggressively as previously indicated to develop expandedindications for Neupogen." He also said Epogen is vulnerable topricing pressure through dependence on Medicare forreimbursement and its commercial success, which make it"somewhat of an easy target in this environment."
Jeff Casdin of Oppenheimer & Co. said the slow sales "sayssomething about growth rate and penetration" of Neupogeninto the cancer therapeutics market.
He also was surprised that the company's management didn'talert analysts earlier. He noted that Amgens' president, KevinSharer, is new to biotechnology. Sharer joined Amgen from MCICommunications Corp. in October 1992. Last August, DennisFenton was named senior vice president of sales after handlingproduction responsibilities as vice president, processdevelopment, facilities and manufacturing services.
Amgen's vice president of sales, Tom Beard, has been off workfollowing a heart attack, said Kimberly Dorsey, corporatecommunications manager. Sears was named senior vicepresident, Asia-Pacific in August, she said, and had traveled totake on his new duties.
"I think their eye is back on the ball," Casdin said. He shifted tomore conservative earnings estimates, as did other analystswho cover Amgen. That suits the company, Crampton said,explaining, "We take a very conservative approach."
Overnight trading significantly affected the stock, and, in fact,the first buys were only recorded at $33, said John McCamant,publisher of the Medical Technology Stock Record.
"We would have bought it at $32 if it opened there," said AmyBerler of Alex. Brown and Co., who reiterated her "neutral"recommendation on the stock and REVISED earnings estimatesto $2.45 in 1993 and $2.80 in 1994, down 15 cents and 36cents, respectively.
-- Nancy Garcia Associate Editor
(c) 1997 American Health Consultants. All rights reserved.