Q We have owned shares of Amgen Inc. for some time, but we’re disappointed in the stock performance and are considering selling. What is your opinion of the company?
J.E., via the Internet
A. An advisory committee of the Food and Drug Administration recently seems to have improved the financial prognosis for the world’s largest biotechnology company.
The panel voted against a proposal that would have resulted in a decrease in the recommended dosage of anemia drugs given to many patients. No target amount for a preferred dosage was set.
A positive vote would have set the stage for severely curtailing profitability of the company’s blockbuster drugs Epogen and Aranesp, which are red-blood-cell boosters for treating anemia related to renal failure or chemotherapy. Concerns about potential side effects had resulted in warning labels, Medicare and Medicaid coverage restrictions and a subsequent decline in sales.
Amgen is cutting 2,200 to 2,600 jobs, or 12 percent to 14 percent of its workforce, with most reductions to take place this year. Earnings and revenue grew modestly in its recent quarter, with the most positive results occurring overseas.
Shares of Amgen (AMGN) are down 19 percent this year, following last year’s 13 percent decline. Thanks to a strong cash position, the firm recently increased its stock-buyback program by $5 billion. Acquisitions are possible.
Attention has shifted to trials of the company’s Denosumab drug in 2008 and a potential launch late that year. This treatment for post-menopausal osteoporosis, cancer and other diseases could provide up to $1 billion in annual sales within five years, experts said.
Amgen is a marketing powerhouse well known for the immune-system boosters Neupogen and Neulasta, as well as Enbrel for rheumatoid arthritis and psoriasis. It received approval for its first cancer therapeutic, Vectibix, a year ago.
The consensus analyst rating of Amgen shares is a weak “buy,” according to Thomson Financial. That consists of six “strong buys,” six “buys,” 18 “holds” and one “sell.”
Amgen must battle new generic versions of its drugs in Europe.
It also is involved in a patent-infringement lawsuit against Roche Holdings. If it loses, Roche could launch its Cera anemia drug in Europe, competing with Amgen’s Epogen and Aranesp.
In addition, Amgen has been sued by Johnson & Johnson, which makes an Aranesp competitor, regarding alleged discounts it gives on bundled sales of two drugs.
Earnings are expected to rise 8 percent this year versus the 14 percent predicted for the biotechnology industry. Next year’s projected 4 percent gain compares with 12 percent forecast industrywide. Its five-year annualized growth rate is expected to be 9 percent, in line with its peers.
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Andrew Leckey is a Tribune Media Services columnist.
E-mail him at yourmoney @tribune.com.