Amgen Inc. reported a 61% drop in third-quarter profit Wednesday as the purchase of rival Tularik Inc. offset strong sales growth of anemia and arthritis drugs.
Thousand Oaks-based Amgen, the world's biggest biotechnology company, reported net income of $236 million, or 18 cents a share, compared with $612 million, or 46 cents, in the third quarter of 2003.
Revenue for the three months ended Sept. 30 rose to $2.7 billion, up 23% from $2.2 billion a year earlier.
Excluding one-time charges, notably a $554-million write-off related to the Tularik purchase, Amgen earned $839 million, or 64 cents a share, beating Wall Street analysts' estimates of 62 cents, according to a survey by Thomson First Call.
Amgen executives raised their full-year profit forecast to between $2.38 and $2.43 a share on an adjusted basis; the previous range was $2.30 to $2.40 a share. They also increased the company's revenue forecast for the year to between $10.3 billion and $10.6 billion, up from $9.7 billion to $10.4 billion.
In the third quarter, sales of Amgen's anemia drug Epogen, used to increase red blood cells in patients suffering from cancer and kidney disease, rose 9% from a year earlier to $681 million. Patents related to the drug were the subject of a federal court ruling last week that favored Amgen over rivals Transkaryotic Therapies Inc. and its partner, Aventis Pharmaceuticals Inc.
Sales of Aranesp, Amgen's newer anemia drug, jumped 39% from a year earlier to $608 million, and sales of Enbrel, a drug for rheumatoid arthritis and psoriasis, grew 45% to $496 million.
However, Aranesp sales were down slightly from second-quarter levels, and the drug's performance may have disappointed investors, said Geoffrey Porges, an analyst with Sanford C. Bernstein & Co.
"This is a key growth driver, and investors were expecting $650 million to $660 million," Porges said, noting that "the difference was due to the rebate payments due to physicians." Still, he said, the company has gained market share from Johnson & Johnson, maker of rival medication Procrit.
Amgen released its results after the close of the stock market. The company's shares, which fell 23 cents to $56.41 in regular trading on Nasdaq, dipped more than 1% after hours.
Another development that may have spooked investors, Porges said, was Amgen's announcement that it would issue earnings guidance for 2005 at the end of January, rather than in December as the company did last year. The change comes as an anticipated drug reimbursement rate change by Medicare causes uncertainty among cancer drug manufacturers.
"I think the company is being appropriately cautious," Porges said.