Amgen Beats Profit Estimates

And fourth-quarter revenue slips but also beats estimates.
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Updated from 5:55 p.m. EST

Amgen

(AMGN) - Get Report

delivered flat revenue still beat quarterly and annual earnings estimates following the closing bell Thursday. The company, weathered by labeling and reimbursement changes to its anemia drug franchise, guided as expected for 2008 revenue but light on earnings per share.

Separately, Amgen released positive and earlier-than-expected data from bone-drug Denosumab.

After ending the regular trading session up 3%, shares ratcheted up another $1.78, or 3.9%, to $47.90 in after-hours trading following the earnings release.

The Thousand Oaks, Calif.-based jumbo biotechnology said Thursday that adjusted earnings for the recent quarter came in at roughly $1.09 billion, or $1 a share, on an adjusted basis (a 11% increase from the year-ago quarter) on revenue of $3.7 billion, a 2% decrease year over year.

The company edged past expectations of Wall Street analysts who were looking on average for 97 cents a share on revenue of $3.56 billion.

For the year, Amgen reported adjusted earnings of $4.8 billion, or $4.29 a share, on revenue of $14.8 billion, also high in comparison to the Street consensus of $4.26 a share on revenue of $14.57 billion.

Labeling and reimbursement changes and safety concerns for its erythropoiesis-stimulating agents (ESAs), such as Epogen and Aranesp, have resulted in clipped sales and a share price roughly 35% lower than last January. A restructuring to adapt to these changes spurred $739 million in charges in 2007, out of a total $775 million to $825 million expected to be incurred through 2008.

Quarterly worldwide sales of Aranesp fell 25% year over year to $827 million, and sales of Epogen fell 3% year over year but still managed to top analysts' estimates. Analysts were expecting sales of Aranesp of roughly $739 million and Epogen of $595 million.

CEO Kevin Sharer warned on the conference call Thursday night that 2008 will bear the full-year impact of the 2007 ESA changes. Aside from carryover of 2007 events, the year may also bring

more

changes as a Food and Drug Administration panel is soon to meet to discuss the drugs and labeling once again with regard to recent data.

In December, data from the interim analysis of the PREPARE study, which was set up to research Aranesp's ability to support chemotherapy in the treatment of cancer, showed numerically more deaths and tumor progression events on the Aranesp arm compared with the control group in the long-term follow-up. However, Aranesp was used in the study to maintain hemoglobin levels in patients at a higher level than what is considered safe today.

In light of those results and follow-up data from the Gynecologic Oncology Group study in cervical cancer, Amgen is in discussions with the FDA to figure out revised ESA labels, and the FDA will hold an Oncologic Drugs Advisory Committee (ODAC) meeting in the first quarter of 2008 as part of the ongoing pharmacovigilance review of ESA therapies.

Away from the anemia drugs, sales of the company's biologic Enbrel rose 8% year over year but came in below estimates, at $856 million, vs. $870 million. The product is faced with a potential black-box warning in 2008, the most serious warning issued by the FDA, but Amgen said on the call that it still expects the new labeling will not hurt in comparison to competition.

Looking ahead, Amgen expects 2008 adjusted earnings in the range of $4 to $4.30, on revenue ranging from $14.2 billion to $14.6 billion. Analysts were expecting $4.37 a share on revenue of $14.48 million.

The company refrained from saying on the conference call whether possible outcomes from ODAC panel on its ESAs are factored into the low end of the guidance but did say that a potential black box warning on its Enbrel is.

"2007 was Amgen's most challenging year," said Amgen CEO Kevin Sharer in the earnings release. "Despite the unexpected reduction in revenues of our erythropoietin products, we delivered earnings per share very close to the low end of our original guidance.

Separately, Amgen surprised investors with the early release of positive phase III trial data from osteoperosis drug sumab. The company said the drug met all primary and secondary endpoints and resulted in greater bone mineral density improvement than

Merck's

(MRK) - Get Report

Fosamax. The company said the incidence and types of adverse events that occurred in each arm of the study were similar.