Amgen shares plunge further on anemia drug concern
By Toni Clarke
BOSTON, Aug. 1 (Reuters) - Shares of Amgen Inc. (AMGN.O) fell to their lowest level in more than four years on Wednesday as analysts continued to pull back their sales forecasts for the company's biggest-selling drug following new rules that could significantly reduce its use.
Amgen's shares plummeted for the second day in a row as the full impact of new rules announced on Monday by the U.S. Centers for Medicare & Medicaid Services, or CMS, seeped through to investors.
On Monday, CMS issued its final ruling governing use of a class of anemia drugs known as erythropoietin-stimulating agents that include Amgen's Aranesp and Johnson & Johnson's (JNJ.N) Procrit and have been the subject of safety concerns.
The ruling, while more relaxed in some ways than an earlier proposal, were tougher in other ways, leading to some confusion among doctors and investors.
Last night, however, CMS posted a clarification on its Web site that reiterated its ruling that patients should not be started on treatment unless their level of oxygen-carrying hemoglobin is 10 grams per deciliter of blood or lower.
CMS also ruled -- surprisingly -- that patients whose hemoglobin levels rise above 10 grams per deciliter should be denied coverage after four weeks of treatment.
Physicians and the investment community had assumed that even if the initiation level was 10 grams or lower, the maintenance level could rise as high as 12 grams.
The ruling goes to the heart of the core franchise of the world's biggest biotech company by sales.
Aranesp is approved to treat anemia associated with chemotherapy and kidney disease, and in 2006 generated sales of $4.1 billion. But sales of the drug have fallen amid safety concerns and analysts are pulling back their forecasts dramatically.
"We now interpret the new policy to be extremely restrictive regarding Aranesp use in oncology and that a profoundly negative impact could permanently burden U.S. Aranesp revenues from the fourth quarter onwards," said John Sonnier, an analyst at William Blair & Company, in a research note.
Sonnier reduced his Aranesp forecast for 2007 to $3.65 billion from a previous estimate of $3.85 billion, and cut his 2008 forecast to $2.97 billion from $3.84 billion.
Amgen's shares fell 4.5 percent to $51.35 in mid-morning trading on Nasdaq.
(Reporting by Toni Clarke)
((Editing by Dave Zimmerman, Reuters Messaging, toni.clarke.reuters.com@reuters.net, 617-367-4165)) Keywords: AMGEN SHARES/
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