UPDATE 4-Amgen to pay dividend, gives 2015 outlook

Thu Apr 21, 2011 1:46pm EDT

* Dividend to be about 20 pct of net income

* Sees 2015 EPS $7.25 to $8.60

* Sees 2015 revenue $16 bln to $18 bln

* Shares down 4.6 percent (Adds analyst, CEO comment, updates shares)

By Bill Berkrot

NEW YORK, April 21 (Reuters) - Amgen Inc (AMGN.O) provided a financial forecast for 2015 above Wall Street estimates and said it will begin paying a dividend this year amounting to about 20 percent of its adjusted net income, and increasing going forward.

The world's largest biotechnology company told a meeting of investors and analysts at a New York hotel on Thursday that it expects 2015 revenue of $16 billion to $18 billion and earnings of $7.25 per share to $8.60 per share.

Analysts on average are estimating 2015 earnings of $7.16 per share and revenue of $16.95 billion, according to Thomson Reuters I/B/E/S, but Amgen shares fell nearly 5 percent.

Sanford Bernstein analyst Geoffrey Porges said investors may be disappointed that the low end of the revenue forecast represents just 1 percent growth over current revenue.

Other analysts said there was likely near-term concern over potential declines in use and sales of Amgen's anemia drug Epogen in kidney dialysis patients.

Amgen said it expects sales of its new denosumab products -- the cancer drug Xgeva and osteoporosis medicine Prolia -- to reach $3 billion to $4 billion in 2015.

"We're determined to work hard to make the forecast that we present to you today a reality, or better," Chief Executive Kevin Sharer told his audience at the company's first such meeting since 2008.

Sharer, 63, told Reuters in an interview that there will be a new CEO to see the 2015 forecasts through.

"I will not be here in 2015," Sharer said definitively.

"In the next few years I'm sure we'll have a management transition, but we're not announcing any dates or anything," he said. Amgen does not have a mandatory retirement age.

Analysts and investors had been expecting Amgen to announce initiation of a dividend after months of expressing displeasure with the idea that the company might use its large cash balance for a major acquisition rather than returning money to shareholders.

The Amgen board also authorized repurchases of up to an additional $5 billion of its common stock, bringing the average return to shareholders to about 60 percent of adjusted net income through 2015, including the dividend.

Sharer stressed that Amgen intends to continue its research and development spending and said, "when we do acquisitions we cannot be seduced simply by accounting benefits."

Research chief Roger Perlmutter said the company will report late-stage clinical results on five drugs over the next five years, and sees a "high probability of success" in experimental drugs for psoriasis and osteoporosis.

Analysts have expressed particular interest in the potential of AMG 785, which has demonstrated an ability to increase bone density in midstage osteoporosis studies.

Amgen also said it plans to expand into emerging markets and Japan, making investments in Japan beyond its current partnership arrangements there.

"We have a long-term objective of being an operating company in Japan," Sharer said, calling it a commitment.

Xgeva, for preventing fractures in cancer that has spread to the bones, is off to a strong start with sales of $42 million in its first full quarter on the market, far exceeding Wall Street expectations. The drug is widely seen as Amgen's most important future growth driver.

The Prolia launch has been disappointing to Wall Street so far, with slow adoption by physicians, and reimbursement roadblocks.

Amgen expects Prolia sales to accelerate once it gains Medicare Part D reimbursement and more primary care providers come on board. The company said it was confident that Prolia will eventually become a blockbuster drug.

The news was not as optimistic for its anemia franchise that has seen sales erode since 2007, after safety concerns emerged.

The company said that, due to reimbursement changes, it expects a mid-teens decline in utilization of the anemia drugs this year. In first-quarter results reported on Wednesday, sales of the older red blood cell booster Epogen fell 14 percent.

However, Amgen sees profitability for its still growing blockbuster rheumatoid arthritis and psoriasis drug Enbrel improving following expiration of a profit sharing agreement with Pfizer Inc (PFE.N) in late 2013.

Enbrel sales for the first quarter climbed 9 percent to $875 million. The company said it does not expect competition to Enbrel from biosimilars in the foreseeable future.

Amgen said it sees a significant opportunity for its own fledgling biosimilar business beyond 2015.

Amgen shares were down 4.6 percent at $54.57 in afternoon trade on Nasdaq. (additional reporting by Lewis Krauskopf in New York and Deena Beasley in Los Angeles; editing by Gerald E. McCormick, Dave Zimmerman and Gunna Dickson)

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