Amgen Shares Gain on Aranesp Results

Amgen shares gained 3.9% to close at $62.32 yesterday after the company reported its Aranesp antianemia treatment has been shown not to reduce chances of survival among lung cancer patients. The "145" study of 600 patients with small-cell lung cancer receiving chemotherapy showed no significant difference in death risk between those on Aranesp and those on placebo. It did indicate a lower risk of blood transfusions in Aranesp users, which is what the drug is intended for. "We view the neutral outcome as a positive for Amgen that calms investors' fears," said William Blair analyst John Sonnier. The shares have been under pressure recently on data showing that Aranesp is linked to a higher risk of death and heart problems under certain circumstances. Aranesp is Amgen's best-selling drug; sales were up 26% in 2006 to $4.1 billion. Aranesp is approved by the FDA to treat anemia in patients with kidney disease or undergoing chemotherapy, but last month, the agency strengthened the safety warning for Aranesp's class of drugs (erythropoiesis-stimulating agents, or ESAs) to discourage "off-label" uses. Meanwhile, Amgen has sued Roche Holding for copyright infringement in the hope of stopping its pending sale of a rival antianemia treatment, Mircera, in the U.S.

Sources: Wall Street Journal, MarketWatch, New York Times, Business Week
Commentary: Stifel Likes Amgen From a Valuation Standpoint • Amgen: Bad News Priced In, Growth On The Horizon • SEC Queries Amgen on Aranesp Anemia Medication
Stocks/ETFs to watch: Amgen, Inc. (AMGN), Johnson & Johnson (JNJ). Competitors: Roche Holding Ltd. [ADR] (RHHBY), Novartis AG (NVS), Baxter International Inc. (BAX). ETFs: Biotech HOLDRs (BBH), PowerShares Buyback Achievers (PKW), PowerShares Dynamic Large Cap Growth (PWB)
Conference call transcripts: Q4 2006

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