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Amgen Meets Estimates

But it guides full-year earnings to the low end of expectations.

Updated from 4:24 p.m. EDT

Amgen

(AMGN) - Get Amgen Inc. Report

posted higher first-quarter earnings but said the financial outlook for its anemia drug franchise is still unclear and profit for the full year would be at the low end of expectations.

The Thousand Oaks, Calif.-based biotech firm reported first-quarter net income of $1.11 billion, or 94 cents a share, compared with net income of $1 billion, or 82 cents a share, in the year-ago quarter.

On a non-GAAP basis, excluding stock option-based compensation, Amgen earnings rose 19% year over year to $1.08 a share in the first quarter, which matched analysts' consensus expectations, according to Thomson Financial.

Revenue in the quarter was $3.69 billion, up 15% from the year-ago quarter but shy of analysts' consensus of $3.73 billion.

Amgen's earnings report shares the spotlight with last Thursday's release of

positive data from an important clinical trial involving its anemia drug Aranesp. Results from that closely watched study showed that Aranesp did not contribute to the deaths of small cell lung cancer patients undergoing chemotherapy.

The study's results are expected to quiet recent worries about the

safety of Aranesp when used to treat anemia in cancer patients. Aranesp sales account for about 30% of Amgen's total product revenue, so the potential loss of significant Aranesp sales in the cancer market has spooked investors and caused the company's stock price to underperform.

But resolution of the Aranesp situation isn't over, evidenced by the fact that Amgen guided 2007 earnings to the low end of its previously stated range of $4.30 to $4.50 a share. The company also said it was taking steps to "reduce operating expenses in order to offset revenue impact."

The Street's expectations call for Amgen to earn $4.31 a share on revenue of $15.4 billion in 2007.

Amgen's previous revenue guidance for the year was in the range of $15.4 billion to $16 billion. On Monday, the company said that revenue forecast was under review because of uncertainty around the Aranesp franchise. Updated guidance is expected on the company's second-quarter conference call.

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Amgen does appear to have operating leverage to meet its profit targets in the face of slacking revenue. In the first quarter, adjusted EPS growth of 19% outpaced 15% revenue growth. The company said earnings leverage was driven largely by a lower share count and a reduced tax rate.

Amgen bought back 8.8 million shares in the first quarter at a total cost of $537 million and has $6 billion remaining in currently authorized stock repurchase programs.

Shares of Amgen were up 42 cents to $62.61 in recent after-hours trading.

Amgen is down 9% for the year, even accounting for a recent relief rally fueled by the new Aranesp data.

First-quarter sales of Aranesp totaled just over $1 billion, and Epogen sales were $625 million -- both a touch light of Wall Street expectations. On a sequential basis, Aranesp sales fell 8%. Most analysts tracking Aranesp prescriptions through the quarter were forecasting a slip in the drug's sales, especially given all the recent concern about both the drug's use in cancer and the tightening of treatment guidelines in the kidney disease market.

Sales of Neulasta and Neupogen, used to fight chemotherapy-induced infections, totaled $719 million and $299 million, respectively. First-quarter Enbrel sales totaled $730 million. Enbrel is used to treat rheumatoid arthritis and other autoimmune diseases.

Sales of Vectibix were $51 million in the first quarter, a 31% sequential increase. The colon cancer drug, which competes with Erbitux from

ImClone Systems

(IMCL)

, was launched late last year.

After months of what seemed like a constant drumbeat of negative news, Amgen had some positive things to say about its drug pipeline. The company said it is on track to file its drug AMG 531 in 2007 with the Food and Drug Administration for immune thrombocytopenic purpura, a condition in which patients' immune systems attack and destroy their own platelets.

Amgen also said it received new, positive data from a phase III study of its osteoporosis drug denosumab. Additional clinical data on the drug is expected later this year.

Adam Feuerstein writes regularly for RealMoney.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;

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