Updated from 5:40 p.m. EDT

Finally, there's some good news to talk about in biotech land.

Amgen

(AMGN) - Get Report

reported higher first-quarter profits Thursday, bolstered by generally strong drug sales and a reduced tax rate.

Better yet, the No. 1 biotech firm -- in the midst of a $16 billion takeover of

Immunex

(IMNX)

-- boosted guidance for total product sales growth for the rest of the year.

The upbeat chatter coming out of Amgen comes on a day when the battered American Stock Exchange biotech index came dangerously close to the post-Sept. 11 doldrums. The sector mustered a small recovery at the close, so Amgen's strong first quarter report could provide some much-needed fuel for a continued rally Friday.

The No. 1 biotech firm said first-quarter net profits rose 12% to $340.9 million, or 32 cents per share, compared to $304.9 million, or 28 cents per share in the year-ago period. Amgen's earnings, which matched Wall Street estimates, were helped by reduced tax rates in the quarter, as well as lower research and development spending, the company said.

Total product sales increased 14% to $909 million in the quarter, compared with $798 million in first quarter 2001. Total revenue reached just over $1 billion.

First-quarter sales of Epogen, the company's anemia-fighting drug, reached $512 million -- a bit lower than Wall Street estimates of about $540 million. The company says sales were impacted negatively by inventory drawdowns.

But sales of Aranesp, Amgen's next-generation version of Epogen, totaled $39 million in the first quarter -- in line with somewhat-reduced Wall Street expectations. Aranesp has been on the market for only about six months, and Amgen has warned that the sales ramp-up could be slow. The company said Thursday that it still expects the Epogen-Aranesp franchise to produce sales growth in the low-20% range this year, compared with 2001.

But Amgen raised growth targets for its other blockbuster drug franchise -- Neupogen and Neulasta, which are used to treat infections caused by chemotherapy. The company now says it expects sales growth in the midteens for the two drugs, compared with previous guidance of midsingle digit growth for Neupogen alone.

In the first quarter, Neupogen sales rose 21% to $355 million, in line with Wall Street estimates. Amgen only launched Neulasta in early April.

Looking forward, Amgen now says it expects total 2002 product sales to grow in the low 20% range, higher than its previous guidance of high-teens growth. On its conference call with analysts, Amgen CEO Kevin Sharer called the boosted sales forecast a "signal of confidence in our future."

The company did not update expense or earnings guidance, however, due to ongoing decision-making regarding new product launches and the impact of the Immunex acquisition. Amgen has previously forecast earning growth in the low 20% range.

Analysts are looking for Amgen to earn $1.40 per share in 2002, according to consensus estimates compiled by Thomson Financial/First Call.

If there was one potentially negative issue on the conference call, it was Amgen's ability to meet its own expectations for Enbrel, the anti-inflammatory drug that it will acquire when the Immunex deal closes this summer. Amgen has forecast 2003 Enbrel sales of $1.6 billion, but Thursday, the company's executives seemed to hedge a bit on that number. The problems: Immunex may take longer than expected to get a new Enbrel manufacturing plant up and running, which is required to erase the drug's supply problems; and

Abbott Labs

(ABT) - Get Report

is expected to get a rival drug, D2E7, approved earlier than expected, in April of 2003 rather than the end of 2003.

Sally Yanchus, a now-retired biotech hedge fund manager, believes that the bright spots in Amgen's first quarter report far outweigh any potential negatives, especially considering how bleak the sector looks these days.

"Yes, there are risks the rest of the year? but these are minor compared with the situations at many of

Amgen's biotech brethren," Yanchus wrote today on RealMoneyPro.com, a companion web site to TheStreet.com. "Amgen has a pipeline and several blockbuster drugs, and perhaps more importantly, they have high-quality, capable management. And this came through loud and clear on tonight's conference call." Yanchus is long Amgen.

Amgen shares closed Thursday down 91 cents to $55.20, but shares were up about $1 in after-hours trading as investors liked what they heard about the bump in the company's sales growth.

For the year, Amgen is down about 2%, which qualifies it for red-hot biotech status, especially because the broader sector is down about 25% for the year.