Washington Editor

Amgen Inc.'s stock rose 11.8 percent Thursday after the company reported that its third-quarter earnings and revenue exceeded Wall Street's expectations, including sales of its embattled anemia drugs Aranesp (darbepoetin alfa) and Epogen (epoetin alfa).

Shares of the Thousand Oaks, Calif.-based firm (NASDAQ:AMGN) gained $5.85, to close at $55.55.

The company reported a net profit of $1.16 billion, or $1.09 per share, compared with $201 million, or 18 cents per share, a year ago.

Amgen reported $9.8 billion in cash, cash equivalents and marketable securities as of Sept. 30.

"I'm very pleased with our performance to date, and I've never been more energized and enthusiastic about our prospects," CEO Kevin Sharer declared during a conference call with investors and analysts.

Worldwide sales of Aranesp were up 3 percent to $845 million in the third quarter vs. $818 million a year earlier, while sales of Epogen were up 5 percent to $634 million, compared with $602 million for the same period last year.

However, U.S. sales of Aranesp were down slightly at $458 million vs. $460 million last year.

Amgen said the decline in U.S. Aranesp sales reflects the negative impact on demand, primarily in the supportive cancer care setting, from regulatory and reimbursement changes, which principally occurred in the second half of 2007, and additional product labeling changes, which occurred in the third quarter of this year.

The labeling for Aranesp and other erythropoiesis-stimulating agents (ESAs) has undergone four changes since March 2007. The most recent labeling revision, which was imposed on July 30, warns that the drugs should not be used in patients undergoing chemotherapy intended to cure their cancer. (See BioWorld Today, Aug. 1, 2008.)

The latest warning also stated that patients should not start the anemia therapies if their hemoglobin levels are greater than or equal to 10 g/dL - a requirement that falls in line with payment restrictions imposed last year by the Centers for Medicare & Medicaid Services. (See BioWorld Today, Aug. 1, 2007.)

Sharer said his firm's ability to "adapt to a very challenging environment and demonstrate resilience" following the ESA fallout has given him "more confidence than ever in our strategy, staff and ability to execute."

While U.S. Aranesp sales were down, international sales increased 8 percent to $387 million vs. $358 million last year, due to changes in foreign exchange, noted George Morrow, Amgen's executive vice president of global commercial operations.

However, he warned that Aranesp could face another revenue "step-down of the same magnitude we experienced previously" as a result of new contracts, the FDA's required risk evaluation and mitigation strategy and potential additional reimbursement changes.

Marrow said the rise in Epogen sales was due primarily to an increase in the average net sales price, favorable changes in wholesaler inventory levels and revised estimates of dialysis demand - primarily spillover - for prior quarters.

Amgen reported that combined worldwide sales of Neulasta (pegfilgrastim) and Neupogen (filgrastim), drugs used to reduce infection in patients administered anticancer agents, increased 8 percent to $1.2 billion in the third quarter vs. $1.1 billion last year. The firm said that growth was driven mainly by increased demand for Neulasta. Combined U.S. sales of Neulasta and Neupogen were $856 million vs. $830 million for the same quarter last year, an increase of 3 percent.

Combined international sales of the two drugs increased 24 percent to $336 million vs. $270 million from a year earlier. Amgen said that growth reflected changes in foreign exchange, which positively impacted third-quarter 2008 combined international sales by about $33 million, and the increased demand driven by the continued conversion from Neupogen to Neulasta.

Analyst Christopher Raymond, of Robert W. Baird & Co., said that pressure from biosimilars of granulocyte-colony stimulating factors in the European Union could affect sales of Neupogen and Neulasta in 2009 more than what has been seen with ESAs.

Meanwhile, sales of Enbrel (etanercept) increased 9 percent in the third quarter to $893 million vs. $821 million a year ago. However, Raymond said that while Enbrel still dominates the psoriasis market, share of Abbott's Humira (adalimumab) "has grown considerably in recent quarters, with physicians indicating this may accelerate."

Horsham, Pa.-based Centocor Inc.'s ustekinumab, a human monoclonal antibody that targets the cytokines interleukin-12 and interleukin-23, is expected to gain FDA approval in December and could launch in the first quarter of 2009. That would bring further pressure to Enbrel, Raymond said.

In addition to the firm's strong revenue and earnings, Amgen's launch of Nplate (romiplostim), which gained FDA approval in August to treat chronic immune thrombocytopenic purpura, as well as strong denosumab clinical results are a "real testimony to our ability to innovate and advance science and medicine for the benefit of patients," Sharer told investors and analysts. (See BioWorld Today, Aug. 25, 2008.)

The company in September presented long-awaited full data results from its pivotal Phase III FREEDOM fracture study that showed that subcutaneous injections of denosumab resulted in a statistically significant reduction in the incidence of new vertebral fractures compared with placebo, the primary endpoint. (See BioWorld Today, Sept. 17, 2008.)

But analyst Joel Sendek, of Lazard Capital Markets, said that despite the strong potential for denosumab, the risks to Amgen's ESA franchise and competitive threats to Enbrel Neupogen and Neulasta limit the upside of the company's earnings report.

In other earnings reports:

• Celgene Corp., of Summit, N.J., posted net income of $136.8 million, or 29 cents per share, in its third-quarter earnings, compared with 38.8 million, or 9 cents per share, a year ago. Third-quarter revenues rose to $592.5 million, a 69 percent increase from the $349.9 million in revenues from the same period last year. The increase was driven by net sales of Revlimid (lenalidomide), which rose 72 percent to $342.6 million. The company also reported sales of Thalomid (thalidomide) at $132 million and Vidaza (azacitidine) at $64 million. Shares of Celgene (NASDAQ:CELG) gained $4.76 Thursday, to close at $58.05.