Amgen: Is the 'A' for Anemia or Acquisition?

The morning after Amgen (AMGN) reported its first quarter earnings, my inbox runneth over with analyst research reports on the biotech behemoth. The company beat the Street by eight cents a share. But the focus remains on the anemia drug franchise.

Sales of Aranesp and Epogen continue to go down. One saw a sequential (fourth quarter to first quarter) drop of $66 million and the $84 million, respectively. The Food and Drug Administration has yet to announce its new guidelines/restrictions on the use of the drugs on certain cancer patients who get fatigued from chemo and that, analysts say, could put even more pressure on sales.

Meantime, Amgen and some investors are pinning their hopes for the future on an osteoporosis drug that will roll out major data this year. However, several analysts are raising red flags about potential safety hurdles for that twice-a-year treatment.

But at least a couple of analysts are using the "A" word in their notes to clients. Leerink Swann's Bill Tanner writes, "We believe the shares are approaching a critical juncture where denosumab (the bone drug, aka D-mab, for short) fracture data in postmenopausal osteoporosis could revive top and bottom line growth or drive the company into the arms of an acquiror." (I checked and that word can apparently be spelled with an "er" or an "or".)

Bernstein's Geoffrey Porges is much more bearish and direct. He writes, "Amgen is now like a trouble magnet." Ouch. But he doesn't stop there. "We think this painful cycle can only be ended by the emergence of an important and compelling new product, or products, or by changes in its structure, management and ownership of the company." Amgen is going through a major restructuring, cost-cutting program.

Bernstein and Leerink Swann make a market in AMGN.