FDA advisory vote favors Amgen

FDA panel votes against label changes on Amgen's anti-anemia drugs Aranesp and Epogen.

By Aaron Smith, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- FDA advisers voted against requiring Amgen, the struggling biotech giant, to add a certain red blood cell level on product labels for its anti-anemia drugs - a move that could boost sales of the medications.

At issue in the 14-5 vote by a panel of experts for the Food and Drug Administration are Amgen (up $1.76 to $55.64, Charts, Fortune 500) anti-anemia drugs Aranesp, Epogen and Procrit. The vote is non-binding and will be taken into consideration at a later date by FDA regulators, who have the power to change the product label.

Amgen's stock was up 4 percent prior to the vote. It closed up more than 5 percent to $53.88.

The advisors voted "nay" when asked whether the label on these drugs should specific a red blood cell limit of 11 grams for deciliter, which would directly influence the dosage of the anti-anemia drugs, and their sales, as well.

The FDA is still expected to make some changes to the label, said agency spokesman Karen Riley. But when asked to recommend a red blood cell limit for the label, the answers from the panelists varied widely.

Analysts didn't laud the vote as a major victory for Amgen, but portrayed it as a problem averted.

James Reddoch, analyst for Friedman, Billings, Ramsey, referred (in a published note) to the vote as a "bullet dodged" and "the lack of a new negative, more than as a positive."

Christopher Raymond, analyst for the firm R.W. Baird, wrote in his note that "our worst fears did not come true" but said Amgen's franchise is not "out of the woods" because FDA scrutiny is expected to continue.

Aranesp, Epogen and Procrit are used in conjunction with chemotherapy to keep a cancer patient's red blood cell count from falling to dangerously low levels.

Sales of Aranesp and Epogen exceeded $3.2 billion in the first six months of 2007, nearly half of Amgen's $7.4 billion total sales for that period. Procrit is manufactured Amgen but sold by Johnson & Johnson (up $0.46 to $62.51, Charts, Fortune 500), which does not break out sales figures for Procrit.

Earlier this year, the Centers for Medicare and Medicaid Services made it harder to get reimbursement for use of the drugs by requiring that patients' red blood cell counts drop to a specific level before being eligible for coverage.

Amgen executives blamed the new CMS rules for a 19 percent decline in U.S. sales of Aranesp in the second quarter. Epogen sales were up 2 percent in that period but the company said an expanding patient pool and other factors offset the hit it took because of the CMS change.

On Aug. 15, Amgen said it would cut its staff by 12 to 14 percent, or 2,200 to 2,600 workers, and reduced its 2007 earnings guidance to a range of $4.13 to $4.23 from $4.28. The company cited lower Aranesp sales for these changes.

The analysts quoted in this story do not own shares of the stocks mentioned here, but R.W. Baird did manage securities for Amgen in the last 12 months, and FBR makes a market in the company. Top of page