Amgen shares up as lawmakers enter anemia drug row
By Doris Frankel and Lisa Baertlein
CHICAGO/SAN FRANCISCO, Sept 5 (Reuters) - Shares in Amgen Inc (AMGN.O) rose 2 percent on Wednesday and its options surged after U.S. lawmakers urged the government to reconsider payment limits for anemia drugs, which accounted for about half Amgen's 2006 sales.
The U.S. Senate on Tuesday passed a nonbinding resolution urging the Centers for Medicare & Medicaid Services to immediately reconsider payment limits for use of anemia drugs by elderly and disabled people with cancer.
CMS in July pared coverage for Amgen's Aranesp as well as Johnson & Johnson's (JNJ.N) Procrit in July, due to safety concerns.
Amgen reaped $6.6 billion from sales of Aranesp and its older anemia drug Epogen last year. Sales fell 10 percent in the first half of this year, due to the CMS move and the U.S. Food and Drug Administration's decision in March to slap its strongest warning label on the drugs, which belong to a class known as erythropoiesis-stimulating agents (ESAs).
Analysts called the Senate's action a positive development for Amgen, which has been grappling with the blow to its most important business.
"The news is viewed as a positive for Amgen's future sales and earnings. It is welcome news to shareholders, who have seen shares of Amgen fall 24.84 percent so far this year prior to Wednesday's rally," said Frederic Ruffy, analyst at Optionetics, an options education firm in California.
Shares in Amgen rose $1.22, or 2.4 percent, to $52.56 in heavy volume on the Nasdaq.
Options investors also positioned for further strength in the stock by buying calls that give them the right to buy the stock at a preset price and time with some cashing in on the calls to collect profits.
In late afternoon trade, more than 52,000 calls compared to 15,782 puts traded in Amgen, far outnumbering its normal volume of 35,071 contracts, according to market research firm Track Data.
Particularly active have been the calls allowing investors to buy Amgen stock at $57.50 and $52.50 a piece by mid-October, Ruffy said. The September $50, $52.50 and $55 calls were also busy.
William Lefkowitz, options strategist at brokerage firm vFinance Investments in New York, said "some people are anticipating future good news and are buying Amgen calls."
Amgen has stepped up its lobbying efforts in Washington, D.C., and last week a lobby of U.S. cancer doctors said they planned to increase pressure on CMS to reverse its decision to limit payments on ESAs.
"Amgen urges CMS to quickly respond to the concerns of the oncology community and now the U.S. Senate by allowing patients access to the medicines their doctors believe are a critical part of their cancer care," Amgen spokesman David Polk said in a statement.
The FDA next week will debate the use of ESAs in patients with kidney disease.
((Editing by Gary Hill; Reuters Messaging: lisa.baertlein.reuters.com@reuters.net; mail to:lisa.baertlein.reuters.com@reuters.net; +1 213 955 6742)) Keywords: AMGEN SENATE/
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