Amgen earnings, sales beat forecast

Fourth-quarter earnings rise; sales drop but still beat Wall Street expectations; bone disease drug study successful; stock edges up 5 percent in after-hours trading.

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By Aaron Smith, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- Biotech Amgen on Thursday reported an increase in earnings and a decrease in sales for the fourth quarter, beating Wall Street's forecast.

Amgen (AMGN, Fortune 500), based in Thousand Oaks, Calif., said its adjusted net profit rose 3 percent to nearly $1.1 billion, or $1 per share. Quarterly sales slipped 2 percent to $3.7 billion.

Analysts had forecast earnings of 97 cents per share without charges, and an 8 percent decline in sales to $3.5 billion, according to Thomson One Analytics.

Amgen also said that a late-stage study showed that its experimental drug denosumab was 40 percent more effective in treating bone disease than Fosamax, from its potential competitor, Merck (MRK, Fortune 500). Denosumab is the most important product in the biotech's pipeline, and some analysts believe it could become a blockbuster.

Amgen's stock rose about 5 percent in after-hours trading.

Amgen sales were squeezed by the extra-tough warning labels the Food and Drug Administration required for Aranesp and Epogen, drugs that are used to ward off anemia, a common side effect of chemotherapy. Aranesp sales plunged 25 percent to $827 million in the fourth quarter, compared with the same period in 2006. Epogen sales slipped 3 percent to $638 million.

"Needless to say, 2007 was a challenging year for Amgen and our shareholders," said chief executive Kevin Sharer, in a teleconference with analysts. "In fact, in my 16 years with the company, it tops out as the toughest one we ever faced. I think in 2007 we proved we're adaptive, we're resilient, and we're able to move the company ahead even under the most difficult circumstances."

Sharer said the study results comparing denosumab to Fosamax gave him "increased confidence."

"We could not have hoped for better results," said Sharer.

Bret Holley, analyst for Oppenheimer & Co., expects annual denosumab sales to peak at $2 billion by 2012. He said that the successful study, as well as the belief that declining Aranesp sales had bottomed out, pushed up the stock after hours.

Amgen could use some market resurgence, considering that its stock lost more than a third of its value in 2007.

The company reported sales increases for its other lead products. Combined quarterly sales for Neulasta and Neupogen, which are used to prevent infections in chemotherapy patients, jumped 9 percent to $1.1 billion.

Sales for Enbrel, a treatment for inflammatory diseases including psoriasis and rheumatoid arthritis, rose 8 percent in the quarter to more than $800 million. Amgen sells Enbrel in the U.S., and its partner Wyeth (WYE, Fortune 500) sells it overseas.

For the full-year 2007, Amgen reported a 4 percent increase in adjusted net income to $4.8 billion, or earnings of $4.29 per share, without expenses. Sales in 2007 increased 4 percent to $14.7 billion.

Looking ahead to the full-year 2008, the biotech expects earnings per share of $4 to $4.30 and total sales between $14.2 billion and $14.6 billion. Analysts expect $4.37 per share on revenue of $14.49 billion.

Amgen is the world's largest biotech in terms of annual sales. Rival Genentech (DNA) is the No. 1 biotech in terms of market capitalization.

--Holley does not own Amgen stock and Oppenheimer does not conduct business with them. To top of page

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