UPDATE 3-Amgen sees 2007 profit "well above" forecast
(Adds analyst comment, updates shares price)
SAN FRANCISCO, Jan 8 (Reuters) - Amgen Inc (AMGN.O) expects 2007 earnings "well above" its recently lowered forecast, as stable revenue and cost cuts offset weaker sales of anemia drugs, the company's chief executive told investors on Tuesday.
The news lifted shares of Amgen, whose blockbuster anemia drug Aranesp has been hard hit by safety and regulatory concerns, by as much as 5.6 percent. The stock closed 94 cents, or 2.1 percent, higher at $46.33.
"I think that there is some relief out there now that Amgen has shown they are going to manage expenses," said Geoffrey Porges, an analyst at Sanford Bernstein. "On the other hand, I don't think that they are signaling to investors that they are out of the woods."
Amgen expects fiscal 2007 earnings, excluding special items, to exceed its November forecast of $4.13 to $4.23 a share, coming close to the $4.30 a share low end of its "pre-troubles" forecast, Chief Executive Kevin Sharer said at the JP Morgan Healthcare Conference in San Francisco.
Analysts, on average, had estimated full-year earnings of $4.23 a share on that basis, according to Reuters Estimates.
The U.S. Food and Drug Administration is probing new data that suggest serious health risks for some cancer patients treated with anemia drugs sold by Amgen and Johnson & Johnson (JNJ.N).
Sharer said Amgen and J&J are working together to prepare for an FDA Oncologic Drugs Advisory Committee meeting in March, which is part of an ongoing review of the entire class of oxygen-boosting erythropoiesis-stimulating agent drugs, referred to as ESAs.
ESAs have been under fire on concerns that they may increase the risk of heart attack and stroke, and whether they may play a role in fueling the growth of cancer.
Porges said Amgen has implied that the advisory panel could result in further use-restricting changes to the drugs' labels.
In 2006, Amgen reaped $6.6 billion, or nearly half of its sales, from Aranesp and its predecessor Epogen. J&J is less dependent on its anemia franchise.
Aranesp and Epogen brought in combined sales of about $4.5 billion in the first nine months of 2007, down from the year-ago period, after the FDA slapped a restrictive warning label on the drugs and doctors reeled in their use.
Amgen responded by cutting its work force by 13 percent last year, and slashing operating and capital expenditures.
"ESA revenue is stable ... Obviously the dialogue is not over," said Sharer, who noted the company's cost cuts have come close to recapturing most of the profits lost with the revenue hits on Aranesp and, to a lesser degree, Epogen.
Sharer said Amgen is prepared to make more cuts if needed.
Responding to investors' questions on how he plans to balance Amgen's business risks, Sharer said he would like to be less dependent on North America, which accounts for about 80 percent of company sales, and on a few products for the bulk of its revenues.
He said Amgen has stepped up efforts to develop experimental osteoporosis drug denosumab, and that due to competition from generics, it will need to be priced lower than the typical biologic drug.
If the company can find pricing the market will accept, Sharer said denosumab may not need to grab a lot of market share to be a hit.
Results from a trial comparing denosumab to Merck and Co Inc's (MRK.N) osteoporosis drug Fosamax are due in the first half this year, Friedman, Billings, Ramsey analyst Jim Reddoch said in a research note on Tuesday. "An advantage will help Amgen make a stronger case for first-line use; lack of advantage will hurt denosumab in the osteoporosis market, especially with Fosamax going generic," he said. (Additional reporting by Susan Kelly in Chicago and Deena Beasley in Los Angeles, editing by Richard Chang and Braden Reddall)
