Kidney Dialysis Business Expands Buyback Plan

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Shares of kidney dialysis center operator DaVita Inc. have been bobbing between $50 to $60 over the past year higher than the stock of all but the top dozen companies on the Business Journal’s index of 200 local stocks.

But DaVita’s leadership still sees a bargain in shares that are down 7 percent from the first of the year. Its board has authorized an increase to the El Segundo-based company’s stock repurchase program to $250 million, the company announced last week.

DaVita had 104.7 million shares outstanding as of May 1. If shares stayed around their May 8 close of $51.81, $250 million could buy roughly 4.8 million shares.

In its first quarter of 2008 the company spent $136 million to buy back 2.8 million shares, Chief Executive Kent Thiry said during the company’s first quarter conference call.

DaVita reported April 29 that its first-quarter profit rose 14 percent, with revenue up 4 percent to $1.34 billion on an increase in daily treatments.

Medicare and Medicaid reimbursement is an important revenue stream for dialysis clinics, and they are under increased federal scrutiny. Amgen Inc.’s anemia drugs Epogen and Aranesp, which are given to many dialysis patients, have been the subject of concern over their safety and potential overuse.

Even so, DaVita expects operating income this year to come in at the lower end of its earlier guidance of $790 million to $850 million, excluding the impact of any Medicare rate adjustment.


Biotech Bazaar

Biomarkers are hot stuff these days, particularly among researchers who want to pursue the goal of personalized medicine based on genetics. It will be a high-profile topic at an international biotechnology conference in San Diego next month.

For conference participant Amgen Inc., biomarkers have helped in the development of its drug pipeline. Now they may salvage its first cancer treatment drug, which has failed to meet expectations since its 2006 approval. Post-approval studies to expand allowed uses for Vectibix beyond advanced colon cancer didn’t pan out, and 2007 sales reached only $170 million in its first full year on the market.

Amgen officials hope that Vectibix can be repackaged as a niche drug in the personalized medicine space. There’s evidence that suggests it works better for patients with a certain genetic make-up. Fortunately for Vectibix, that make-up appears to be fairly common.

“Clearly it’s in the best interest of the patient to be receiving a drug from which they have a chance of benefiting,” said Scott Patterson, executive director of Amgen’s Medical Sciences unit, formed more than four years ago to help the company better vet drug candidates prior to human trials. Vectibix, also called panitumumab, was first developed with another company that Amgen eventually acquired in 2006.

Vectibix works by blocking a process in the body that fuels tumor growth. Clinical studies are under way to verify its effectiveness on niche patients, so the indication can be approved for use on the drug’s label. Amgen also is collaborating with a European company that needs U.S. approval to market a diagnostic test for the gene.

At the BIO conference in mid-June, case histories such as Vectibix will be discussed in a variety of forums, including special sessions with the Biomarkers Consortium, a collaboration leveraging government, academic and industry resources to advance a complex area of research. Amgen funds some of its research.


Trauma Time

The San Fernando Valley is closer to having its own hospital trauma unit able to handle the special needs of young children and Los Angeles Councilmember Richard Alarcon is closer to having closure on the tragic death of his 3-year-old son Richie in a Valley auto accident 21 years ago.

In an emotional press conference earlier this month, Alarcon and Northridge Hospital Medical Center announced plans to open a pediatric trauma unit by next year if the startup funding comes together.

Los Angeles County is contributing $2 million of seed money from a special “Richie’s Fund” that Alarcon enabled through legislation when he was a state senator. Children who are badly injured in the Valley now must be transported over the hill to one of only four pediatric trauma units in the county, often losing critical minutes of care.

“This effort gives purpose to my son’s life,” said the councilmember, who himself hopes to raise at least $100,000 a year for 10 years from the business community and other benefactors, starting with a June 5 benefit at the Sheraton Universal City.


Staff reporter Deborah Crowe can be reached at

[email protected]

or at (323) 549-5225, ext. 232.

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