Amgen to Investors: 'Trust Us'

The biotech's CEO is confident the company can meet 2008 guidance.
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Amgen

(AMGN) - Get Report

reported mixed results after the market close Thursday, with a variety of factors -- reimbursement, demand, stocking and foreign exchange -- affecting sales in what one analyst dubbed a "strange" quarter.

Those quarterly details, however, aren't the only things on investors' minds. In a wait-and-see position, Amgen is postponing its upcoming analyst meeting (originally planned for June 6) because it doesn't yet have the data to answer key shareholder questions related to its bone drug denosumab, pending litigation with

Roche

, and the label changes to its anemia drug franchise resulting from its meeting with the Food and Drug Administration's ODAC panel earlier in the quarter.

Looking to appease investor uncertainty, the company relayed confidence multiple times in its first-quarter conference call Thursday.

When asked how Amgen plans to meet 2008 guidance, CEO Kevin Sharer responded, "We let revenue lead expenses -- I want to give investors confidence that we have a sophisticated and experienced team analyzing

trends." Sharer said he's highly confident in Amgen's ability to project the numbers, later explaining, "Maybe that's a long-winded way of saying, 'Trust us.'"

Shares of the Thousand Oaks, Calif.-based biotech company edged up 10 cents, or 0.2%, to $42.50 in after-hours trading. But some on Wall Street were underwhelmed: "Overall we view the first-quarter performance as low quality, and we are retaining our neutral rating," wrote JPMorgan analyst Geoffrey Meacham in a note to investors.

The First Quarter

On a GAAP basis, the company earned $1.13 billion, or 94 cents a share, in the first quarter, compared to $1.11 billion, or 94 cents a share, a year ago.

Adjusted net income fell 4% to roughly $1.2 billion. But on a per-share basis, the company reported adjusted profit of $1.12 a share, compared to $1.08 a share in the year-ago quarter.

With some help of lower-than-expected operating expenses -- $2.07 billion vs. the $2.2 billion Wall Street consensus -- Amgen beat on profit, but revenue fell slightly shy of Wall Street views, decreasing 2% to $3.613 billion, from $3.687 billion in the year-ago quarter.

Wall Street analysts had expected adjusted earnings of $1.05 a share on revenue of $3.624 billion.

Individual Drug Sales

Aranesp sales fell 25% to $761 million, from $1.02 billion in the year-ago quarter, including a 4% benefit from foreign exchange. Amgen said the drop was primarily due to U.S. sales, which fell 38% to $405 million. Analysts were looking for worldwide sales of $760 million.

Bear Stearns analyst Mark Shoenebaum, who characterized the quarter as "strange," noted: "Aranesp is the principal focus, and the number was directly in-line with consensus."

Amgen executives said during the conference call that Aranesp sales, which have fallen sharply since 2007, are now "relatively stable." The company is in discussions with the FDA to hammer out new label revisions based on the decisions of the aforementioned advisory panel. But, Amgen said, any changes are likely to take months to play out.

In addition, Amgen's Sharer said he was "very confident" that the pending patent litigation with Roche will end favorably for it, and that Roche will not launch before Amgen's patent expiry.

In other sales data, Epogen revenue fell 11% to $554 million, falling short of the $604 million consensus target. Amgen said sales were affected by dose reductions, revised demand estimates and unfavorable inventory changes. However, Amgen said it expects full-year Epogen sales to decline only slightly.

Combined sales of Neulasta and Neupogen increased 7% to $1.08 billion, shy of the $1.1 billion Wall Street estimate.

Sales of Enbrel increased 30% to $951 million, much higher than the $855 million consensus. However, the company said the increase included $120 million in stocking.

One place Amgen saved: Research & Development expenses decreased 18% to $661 million. The company said the decline was primarily due to lower staff-related costs because of restructuring, cost recoveries from licensing deals and also lower clinical trial costs. Executives on Thursday night's call noted that in the start of 2007 the company was enrolling 10 clinical studies, but was enrolling only four at the start of 2008.

Amgen said it remains committed to maintaining R&D spending at industry leading levels and that this quarter's reduction doesn't mark a departure to that commitment.

And finally, looking ahead, the company reaffirmed its 2008 guidance of adjusted profit between $4 and $4.30 a share, and revenue in a range of $14.2 billion to $14.6 billion.

Analysts surveyed by Thomson Financial are looking for earnings of $4.18 a share on revenue of $14.5 billion.

Know What You Own:

Amgen's Epogen competes with Procrit from

Johnson & Johnson

(JNJ) - Get Report

, which last week also reported a

decline in sales of the anemia drug

.

Also, Amgen is awaiting results from an FDA review

for romiplostim

, a platelet-increasing therapy for treatment of adults with immune thrombocytopenic purpura (ITP), an auto-immune disorder.

GlaxoSmithKline

(GSK) - Get Report

and partner

Ligand

(LGND) - Get Report

also have a platelet-increasing candidate, Promacta, that is up for FDA review.