Amgen profit falls sharply but tops Street

By Bill Berkrot and Lisa Baertlein

NEW YORK/LOS ANGELES (Reuters) - Amgen Inc (AMGN.O) reported sharply lower third-quarter profit on Wednesday on plunging sales of its most important anemia drugs, amid new insurance-coverage restrictions and ongoing safety concerns, and on restructuring charges.

But the world's largest biotech company by sales exceeded Wall Street's diminished expectations for the quarter.

Amgen posted net income of $201 million, or 18 cents per share, down from a profit of $1.1 billion, or 94 cents per share, a year earlier, as it cut jobs and tightened its belt to compensate for falling sales of its blockbuster anemia drugs.

"We were caught in an unexpected hurricane and we are coming out of it," Amgen Chief Executive Kevin Sharer said in a conference call with analysts.

Excluding stock option expense and other costs, Amgen earned $1.08 per share, topping analysts' average expectations by 5 cents per share, according to Reuters Estimates.

"It's really impressive how they were able to save on the expense line. That's the driver of the earnings, but I'm not sure that's going to get a lot of people excited," said Christopher Raymond, an analyst with Robert W Baird.

Total revenue of $3.6 billion for the quarter was flat from a year ago but slightly better than Wall Street estimates of $3.58 billion.

Amgen shares rose to $58.50, or less than 1 percent, following the report after closing at $58.13 on Nasdaq.

Worldwide sales of Aranesp, last year's best-selling biotech drug, decreased 23 percent to $818 million in the third quarter as U.S. sales of the anemia drug that boosts red blood cells in chemotherapy and dialysis patients tumbled to $460 million from $720 million a year ago. The results marked the third consecutive quarterly decline in Aranesp sales, which totaled $949 million in the second quarter.

"Sales of our ESA (anemia) products were adversely affected by regulatory and reimbursement changes," Sharer said.

Doctors have stopped prescribing the drugs for cancer patients not undergoing chemotherapy after a study suggested an increased death rate in those patients.

Regulators have also asked physicians to keep kidney dialysis patients on the drugs for shorter durations due to concerns the medicines had been overused in an attempt to avoid blood transfusions.

Oncologists were quick to rein in use of Aranesp for chemotherapy-induced anemia, while nephrologists who treat kidney disease appear only this quarter to have curtailed use.

Sales of Epogen, an older version of Aranesp primarily used in kidney dialysis patients that has also been hit by new restrictions on use and Medicare reimbursement, fell 5 percent to $602 million. Wall Street on average had been looking for $613 million, even with the new restrictions.

Epogen sales were $625 million and $624 million in the first and second quarters, respectively.