Amgen Inc. said Tuesday that its second-quarter profit climbed 47% as its anemia drug Aranesp made strong inroads against a rival medication from Johnson & Johnson Inc.
The Thousand Oaks-based biotechnology company said the pace of sales would continue and added $400 million to its 2003 product revenue forecast. The company said pro forma earnings would increase by 10 cents a share as a result. It was the second time Amgen raised its full-year projection.
Amgen reported net income of $607 million, or 45 cents a share, up from $412 million, or 38 cents, for the year-ago quarter. Revenue climbed 63% to $2 billion, the company said.
On a pro forma basis, excluding charges related to Amgen's acquisition of rival Immunex Corp. and other items, second-quarter income was $653 million, or 49 cents a share, beating Wall Street analysts' expectations by 3 cents, according to Thomson First Call.
Sales of Aranesp rose to $348 million from $56 million in the year-earlier quarter, as the injectable drug continued to find a market among patients with chemotherapy-induced anemia. The medication is a longer-lasting version of Procrit, an injectable anemia drug marketed by Johnson & Johnson under a license from Amgen.
Analysts said the Amgen medication is beginning to hurt Johnson & Johnson, which this month reported a drop in anemia drug sales and a restructuring of its Procrit sales force.
Aranesp grew despite unfavorable reimbursement from Medicare in hospital outpatient clinics, a segment that accounts for more than $100 million in sales. Amgen has been lobbying Congress and Medicare for higher reimbursement for the drug, and Chief Executive Kevin Sharer said Tuesday that he was "optimistic and hopeful" about a change.
Outside hospital outpatient clinics, Aranesp has a pricing advantage over Procrit, analysts said, because of a difference in reimbursement formulas. Amgen additionally is benefiting from an expansion of the overall anemia drug market, analysts said.
"It is a recipe for growth," said Mark Schoenebaum of U.S. Bancorp Piper Jaffray. "They will continue to take share from Procrit."
Amgen's anemia drug franchise faces a legal threat, however. Opening arguments are scheduled to begin Monday in Boston in a patent-infringement suit against Transkaryotic Therapies of Cambridge, Mass., and Aventis, the French drug firm, which want to launch a rival anemia drug. A federal appeals court in January ordered a rehearing on a lower court decision in favor of Amgen.
Sharer, during a conference call with analysts, said the company "remained confident" about its hold on the patent.
"People will take probing shots at our patent estate but we will ultimately prevail," he said.
The suit is a threat to Aranesp and to Epogen, a first-generation anemia drug that Amgen markets exclusively to kidney dialysis patients. Amgen expects sales of its anemia drugs to range from $3.4 billion to $3.6 billion this year.
Amgen said full-year total product sales would range from $7.5 billion to $8 billion, buoyed by its anemia drugs and drugs for chemotherapy-induced infections. Pro forma earnings for the year would range from $1.85 to $1.95 a share, up from $1.80 to $1.90.
Amgen announced its results after the market's close. Amgen shares rose as high as $70.20 in after-hours trading after closing at $68.93, down 15 cents, on Nasdaq.