WASHINGTON, April 20 (UPI) -- Amgen, the world's largest biotechnology company, announced a 17 percent rise in its first-quarter profits, but analysts were split on whether the company's future looks bright or bleak.
Chris Raymond, an analyst with Robert W. Baird, said he didn't see any downside for Amgen going forward.
"All the negative sentiment has sort of washed out here," Raymond told United Press International.
Raymond reiterated his "outperform" rating in a research report to investors this week and set a target price of $90.
"We continue to recommend Amgen," he said. "We really like it."
Raymond said he thought some investors were mistakenly discounting Amgen's pipeline.
"Amgen has one of the best pipelines among the large caps," he said. In addition to denosumab and panitumumab, "they have three or four other phase 3 candidates in the oncology and inflammatory disease areas that will be real headline grabbers in 2007 and beyond," he said.
Panitumumab, or p-mab, will probably do very well, Raymond said. "It will probably surprise people in terms of how fast physicians migrate to it once it's approved," he said. In addition, "you have probably the best oncology sales force in the business that's going to be promoting it and that shouldn't be discounted," he said.
One potential challenge is Roche's Cera, but Raymond noted that Roche filed for approval today and Amgen's stock remained up, which is seen as a positive sign for the company. Amgen filed a claim last week with the U.S. International Trade Commission, alleging that Cera infringes on Amgen's patent on Epogen, in an effort to block U.S. imports of Roche's drug.
Amgen said this week its first quarter revenue was $3.2 billion, an increase of 14 percent from the 2005 first quarter. Net income was $1 billion for the quarter.
"We are off to a good start in 2006," said Kevin Sharer, Amgen's chairman and chief executive officer. "We saw continued growth in our marketed products, and we completed our FDA submission for panitumumab in third-line metastatic colorectal cancer, bringing us another step closer to making this important medicine available to patients."
Product sales for the quarter increased 14 percent from 2005 to $3.1 billion. U.S. sales increased 15 percent to $2.6 billion and international sales rose 10 percent to $556 million.
Global sales of Aranesp increased 24 percent to $893 million, with U.S. sales amounting to $596 million.
Sales of Epogen rose 4 percent to $604 million. Combined worldwide sales of Neulasta and Neupogen increased 13 percent to $896 million.
Enbrel sales rose 11 percent to $658 million and global sales of Sensipar jumped 126 percent to $61 million.
Ed Nash, analyst with Stifel, Nicolaus & Company, also saw good things in Amgen's future. Nash maintained his "buy" rating, telling UPI, "We think Amgen should be able to pull this out. They always seem to do that."
Nash also thought p-mab would do well. "We expect this to be a pretty big driver or revenue for Amgen in the future," he said, noting that he projected it to be on the market in the second half of this year and generating $1.2 billion in sales in 2009.
Amgen will probably continue to see attrition in Epogen and Neupogen, but that's not surprising, Nash said. Enbrel is facing challenges from other drugs, such as Johnson and Johnson's Remicade, but Amgen can probably increase its marketing and keep Enbrel strong, he said.
Nash noted that some investors have been wary of Amgen because its growth rate had declined from traditional biotech levels to pharma levels. However, he said, the company is now back to being lean and mean and it's going to fight to get back to the growth rate where it was before.
"Amgen has a much better chance of accomplishing that than a smaller biotech company that's never been profitable, so buy on the weakness now," he said.
One wild card is the Cera litigation, he said, noting that nobody can predict how that will end. Nash said he's already assuming Amgen will lose Europe, but he thinks it will be late 2007 before it becomes a big issues in the United States.
However, Jim Reddoch, an analyst with Friedman, Billings, Ramsey Group, said he didn't see many reasons for optimism about Amgen.
"They have a couple of hurdles in front of them that will probably keep investors out of the stock especially in the absence of any obvious positives," Reddoch told UPI.
He lowered his rating to "market perform" and reduced the price target to $70.
In addition to the Cera competition from Roche, several of Amgen's products will face generic competition in Europe next year, Reddoch said.
Denosumab and p-mab could also turn out to be less successful than anticipated, he said. Other competitors, such as Roche's Boniva, could challenge denosumab, he said.
While p-mab could generate $1 billion in global sales, that would be below Amgen's estimate of $2 billion, he said.
"I'm not very impressed with data on panitumumab," he said. "The data for that drug has not looked any better than ImClone's Erbitux, which is already on the market and could create even more of an advantage over the next six months," he said.
"'Is Amgen a growth company?' is the real question people are struggling with right now," Reddoch said. "To get a biotech multiple ... you have to be a 15 percent per year grower, and Amgen is more like a 10 percent per year grower, which is more like a pharma company," he said.
Some have said they offset this because they don't have patent expiration issues like a traditional pharma company, "but now they do, because they're about to have two big patent expirations in Europe next year: Epogen and Neupogen," he said.
