Amgen Q3 profit beats but FDA concern hits shares

NEW YORK (Reuters) - Amgen Inc (AMGN.O) reported a better-than-expected profit as cost cuts and lower taxes helped offset a steep decline in sales of its Aranesp anemia drug, but regulatory concerns about its closely-watched osteoporosis drug sent shares lower.

The company said on Wednesday U.S. health regulators have requested additional clinical trial data on its experimental osteoporosis drug denosumab for prevention of bone loss in prostate and breast cancer patients.

That could mean a lengthy delay before any approval decision for those uses and may have negative implications for Amgen's efforts to get the drug approved for the larger market of reducing fracture risk in cancer patients.

Roger Perlmutter, Amgen's research and development chief, said the company still expects to file for regulatory approval in the bone cancer setting sometime after its expected first-quarter report of results from a third pivotal trial.

"It looks as though the operating business has stabilized," said Sanford Bernstein analyst Geoffrey Porges. "The problem is the FDA requested additional (denosumab) data in breast and prostate cancer patients undergoing hormone ablation therapy."

The drug, considered Amgen's most important future growth driver, is expected to get U.S. approval to treat post-menopausal osteoporosis early next year. But wider approvals are looking increasingly doubtful.

The company also cited worrisome clinical data on Aranesp, raising further concerns of possible future use restrictions.

The world's largest biotechnology company posted third-quarter net profit of $1.39 billion, or $1.36 per share, compared with a profit of $1.12 billion, or $1.05 per share, a year ago.

Excluding items, Amgen had adjusted earnings of $1.49 per share, helped by a tax benefit. That easily beat analysts' average expectations by 22 cents, according to Thomson Reuters I/B/E/S.

Amgen raised its full year profit forecast range by 10 cents and expects adjusted earnings of $4.90 to $5.05 per share. It still expects revenue to come in toward the upper end of its $14.4 billion to $14.8 billion forecast range.

For the third quarter, revenue fell 2 percent to $3.8 billion, in line with Wall Street estimates of $3.79 billion.

But worldwide sales of Amgen's once top-selling anemia drug Aranesp, which have been badly hurt by safety concerns and reimbursement restrictions, continued their steep decline. Aranesp sales fell 19 percent to $685 million, well off analyst estimates of $698 million and below the previous quarter's $693 million.

Further clouding Aranesp's future was additional analysis of a clinical trial that appeared to show the drug, which is primarily used to treat anemia caused by chemotherapy, increased the risk of stroke and death from cancer in patients with chronic kidney disease.

Porges called the data "alarming."

"I think it will raise the questions in investors minds as to whether regulatory agencies will consider additional restrictions," Porges said.

Amgen shares were down 2.9 percent to $57.70 in extended trade, paring earlier after hours losses.

U.S. sales of Epogen, an older red blood cell booster, rose 5 percent to $663 million, topping expectations of $644 million.

Sales of the rheumatoid arthritis drug Enbrel, which were surprisingly robust in the previous quarter, were again stronger than expected, rising 3 percent to $924 million. That easily exceeded Wall Street estimates of $907 million and the previous quarter's $899 million.

Combined worldwide sales of the white blood cell boosters Neupogen and Neulasta rose a modest 2 percent to $1.21 billion, edging past estimates of $1.18 billion.

Cost of sales decreased 8 percent to $542 million, while research and development spending decreased 12 percent in the quarter to $613 million.

The adjusted tax rate for the quarter was 12.9 percent compared to 22.7 percent in the year-ago quarter, primarily due to the favorable impact of settling Internal Revenue Service and California tax audits for prior years.

"The bottom line looks great; the top line looks solid," said Cowen & Co analyst Eric Schmidt, who called the denosumab disclosure an "incremental negative."

(Reporting by Bill Berkrot; additional reporting by Deena Beasley in Los Angeles; Editing Bernard Orr)