FDA Approves Amgen's Long-Awaited Anemia Drug

Amgen said Tuesday that U.S. drug regulators have cleared the way for the biotech giant to sell its new anti-anemia drug, Aranesp.

The Food and Drug Administration approved the drug for patients suffering from anemia related to kidney disease. Aranesp is a longer-acting version of Amgen's current blockbuster anti-anemia drug, Epogen.

The final approval of Aranesp was a highly anticipated event in biotech. Wall Street and Amgen were expecting to launch the drug in the first half of the year, but negotiations between the company and the FDA slowed down the process.

Amgen (AMGN Quote)is up $1.39, or 2.3%, to $62.24 in early Tuesday trading. Shares of the company fell 5% Monday in the overall market selloff.

Now that Aranesp is approved, the big remaining question is how much revenue will it generate. Many biotech analysts believe the drug will be another billion-dollar blockbuster, especially because Aranesp will be open to more new groups of patients than Epogen, which contributed $1.9 billion to Amgen's top line last year.

Amgen is also expected to file this week with the FDA seeking approval to sell Aranesp to cancer chemotherapy patients who also suffer from anemia. This is the drug's biggest potential market, currently controlled by Johnson & Johnson(JNJ Quote), which racked up $2.7 billion in Procrit sales last year, mostly to cancer patients. Procrit is the brand name used by J&J, but the drug is exactly the same as Epogen.

"Aranesp represents the next phase of growth for Amgen," said Amgen Chairman and CEO Kevin Sharer.

But Amgen bears believe that Aranesp may have a tough time meeting the sales goals expected by Wall Street. The drug's first approved treatment -- anemia associated with early kidney disease -- is a relatively untested market. And the FDA will not approve Aranesp for cancer patients until next year, and then it will meet stiff competition from J&J's Procrit.