Amgen Needs a Break

Soft earnings aside, news of several setbacks in Amgen's (AMGN) drug pipeline was what did the most damage to the biotech company's stock in late trading.

Nevertheless, I wouldn't be surprised to see the shares, which slipped 3% to $72.60 in after-hours trading, break the $90 level if the overhang from its anemia drug litigation is removed sometime this year.

Amgen is currently in the court system arguing that Roche's Cera infringes on Amgen's patent for anemia drugs Epogen and Aranesp. Cera is expected to enter the market midyear. On its conference call Thursday, Amgen management said that even if Cera is launched, it wouldn't be a big factor financially in 2007.

I'm not sure all of Wall Street agrees, because Amgen's stock has been in a rut for well over a year.

On the call, analysts spent very little time focused on the solid revenue performance. Amgen's largest revenue driver, Aranesp, grew sales 27% in the fourth quarter vs. an increase of 24% in the year-ago period.

Epogen experienced growth of 10%, after a decline of 10% last year. Sales of its Enbrel arthritis drug climbed 18% vs. 19% growth last year.

Only Neulasta showed significantly slower growth: 10% compared with 22% in the fourth quarter of 2005.

Management said that all but 2% of revenue growth was due to demand. Even its newly launched Vectibix cancer drug scored well with sales of $39 million. Earlier in the week, I projected that a $40 million figure would be indicative of a strong launch. Management said Vectibix captured 20% market share in the less than three months it's been available.