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By SARA FISHER
Staff Reporter
After spending an extended stretch in the doldrums, biotech stocks have roared back over the last few weeks and helping drive that resurgence is Thousand Oaks-based Amgen Inc.
Amgen stock has risen 51 percent year to date, and it has been especially strong since July 13, when the company reported unexpectedly robust sales of its two flagship drugs for the second quarter ended June 30.
The stock closed on Tuesday, Aug. 3 at $76.63, up 114 percent from a year ago.
“Biotech has been on fire for the last couple weeks as the Amgens of the world, the big biotech companies, report tremendously strong second quarters,” said David Molowa, an analyst at Bear, Stearns & Co. “Their strong fundamentals are driving up the big-cap companies’ stock, a trend that should continue for the medium term.”
Second-quarter sales for the two flagship products epogen (a drug for anemia), and neupogen (a drug to stimulate the immune system) were $428 million and $304 million, respectively.
That led to the seventh-straight period of quarterly earnings growth. Net income was $267.6 million (50 cents per diluted share), compared with $216.3 million (41 cents) for the like period a year ago. Revenues were $820.5 million vs. $656.9 million.
Spokesman David Kaye attributed the improved financial performance to an aggressive new marketing program aimed at doctors. Also, a 1999 study documenting the improved effectiveness of epogen in higher doses also boosted sales, as doctors adjusted their prescription levels upward.
“Amgen had an exceptionally strong second quarter, with epogen sales up 27 percent year over year, and neupogen up by 12 percent,” said Dennis Harp, an analyst at Deutche Banc Alex. Brown. “Meanwhile, Amgen is showing significant progress in developing their new products, several of which have billion-dollar (sales) potential.”
Wall Street has a uniformly bullish outlook on the biotech company most especially, the four new drugs nearing governmental approval. While three of the drugs in late-stage human trials have been well publicized, the company surprised analysts when it announced on July 13 that a new rheumatoid arthritis drug would be filed with the Food and Drug Administration for approval by the end of the year.
“Most analysts, including myself, had written off that drug for dead,” Molowa said.
In addition, the company has 11 new products in various phases of human trials, for disorders ranging from prostrate cancer to obesity. Amgen invests an unusually high percentage of its revenues 30 cents on the dollar back into research and development.
“In this business, you can’t rest on success,” Kaye said. “We’re in the fortunate position of having two solid drugs continuing to grow and generate revenues to support a broad portfolio of products.”
In fact, one of the drugs in development has the potential to make a pending patent infringement lawsuit virtually a no-lose situation for the company.
At the end of July, the U.S. District Court in Boston announced that Amgen’s patent lawsuit against competitors Hoechst Marion Roussel and Transkaryotic Therapies Inc. will begin in April 2000. The suit alleges that the processes with which the competitors make a gene-activated drug, not yet on the market, violate Amgen patents.
Harp, who said he has closely examined the lawsuit’s merits and consulted with independent patent experts his employer had hired, expects Amgen to successfully defend its patents on U.S. soil but not necessarily in European markets.
Yet even if the competitors are allowed sell their products in Europe, Amgen expects to introduce a second-generation version of the drug, which could be sufficiently more attractive than the original so as to prop up European sales.
“You can never fully predict what a patent judge is going to do, but we’re fairly confident,” Kaye said.
