Amgen Reports 13% Earnings Increase

Amgen Inc., the world’s largest biotechnology company, reported a 13% increase in second-quarter earnings amid solid sales of its blockbuster anemia drug Epogen, but said sales of its other key drug, the immune system stimulator Neupogen, fell short of expectations.

The Thousand Oaks-based company reported net income of $303 million, or 28 cents a share, up from $268 million, or 25 cents, a year earlier and 1 cent above the analysts’ consensus forecast as compiled by First Call/Thomson Financial.

Total revenue rose 11% to $914 million. The company’s main products are Epogen, used to treat kidney dialysis patients for anemia, and Neupogen, a medicine for cancer and AIDS patients.

“This is a transitional year for Amgen. There is less focus on growth for Epogen and Neupogen and more on building the pipeline for new drugs,” said Matt Geller, an analyst at CIBC World Markets. “They could become the first biotech to go from being a two-product company to being a seven-product company.”

Sales of lead drug Epogen, used to boost anemic patients’ red-blood-cell count, increased 15% to $493 million, within the range of what most analysts expected and what the company had predicted, Amgen Chief Executive Kevin Sharer said. Some analysts expected Epogen sales to rise as much as 19%.

Amgen said it continued to expect a sales growth rate for Epogen this year in the low teens.

Sales of Neupogen, used by cancer and AIDS patients to counteract low white-blood-cell count, rose 2% to $310 million, but analysts had expected an increase of about 10% to some $340 million.

Amgen said sales of the drug were hurt by foreign exchange factors, low inventory levels at major wholesalers and realignment of the company’s oncology sales force.

Amgen plans to launch four new drugs, including NESP, a new, more powerful red cell stimulator that the company will be able to sell in Europe in competition with a version of Epogen sold by Johnson & Johnson. Amgen shares European marketing rights for Epogen with Johnson & Johnson under a 14-year-old licensing agreement.

Amgen said it continues to expect earnings for the full year to be in a range of $1.06 to $1.08 a share, excluding a $78-million arbitration payment from Johnson & Johnson. The Wall Street consensus for the full year was $1.08, according to First Call/Thomson Financial.

Amgen shares fell $4.25 to close at $69.38 on Nasdaq, before the results were announced.

At a Glance

Other earnings from California-based companies, excluding one-time gains or charges unless noted, include:

* Allergan Inc. said surging sales of neuromuscular and anti-wrinkle drug Botox helped boost second-quarter earnings to $51.9 million, or 39 cents a share, up from $46.9 million, or 34 cents a share, including one-time costs and credits, a year earlier. The Irvine-based company’s results beat analyst expectations by a penny. Allergan, which also makes eye medicines, contact lens cleaners and pharmaceutical skin-care treatments, said sales rose 9.9% to $404.1 million. Sales of Botox climbed 40.7% to $60.1 million during the quarter.

* Bergen Brunswig Corp., said fiscal third-quarter profit fell 45%, mostly because its interest costs rose. The Orange-based drug wholesaler said profit from continuing operations fell to $19.7 million, or 15 cents, a penny better than expectations, from $36 million, or 28 cents, a year earlier. Sales from continuing operations, excluding bulk shipments to customers’ warehouses, rose 16% to $4.81 billion.

Bergen in the past month has said it’s selling two money-losing units and will use some of the proceeds to pay down debt, cutting its interest costs. It assumed $580 million in debt when it bought its poorly performing PharMerica business, a supplier of pharmacy services to nursing homes, for $1.1 billion last year.

* BioLase Technology Inc., a maker of dental lasers, said its second-quarter loss narrowed to $887,800, or 4 cents a share, from $1.25 million, or 7 cents, a year ago, boosted by the introduction of its WaterLase and TwiLite dental diode laser systems. The San Clemente-based company’s sales rose 61% to $2.26 million. Chief Executive Jeffrey Jones said he expects the company to break even in the fourth quarter or maybe have a small profit.

* Tenet Healthcare Corp., the nation’s second-largest hospital chain, said profit from continuing operations rose 23% in its fiscal fourth quarter to $160 million, or 51 cents a share, 2 cents better than expectations, as it cut costs and raised the prices it charges insurers. The Santa Barbara-based company’s revenue slipped 1% to $2.91 billion. Higher payments from managed care insurers helped make up for reduced payments from Medicare, Tenet said. For the full year, profit rose 37% to $340 million, or $1.81 a share. Tenet said it expects to raise prices next year and doesn’t expect further cuts in Medicare. The hospital chain cut costs by using outside contractors for food service and maintenance and consolidating regional clerical and billing functions, said Clifford Hewitt, an analyst with Legg Mason Wood Walker.

* 21st Century Insurance Group’s earnings plunged 85% to $5 million, or 6 cents a share, from $32.9 million, or 38 cents. Revenue was up 3% to $218.2 million. The Woodland Hills-based company said it had noted in the previous quarter that recent decreases in insurance rates and higher loss costs would hurt results.

* WellPoint Health Networks Inc. said second-quarter profit rose 18% to $83.7 million, or $1.30 a share, as the health insurer added customers in California. The Thousand Oaks-based company, parent of Blue Cross of California, said revenue rose 23% to $2.29 billion from $1.86 billion. WellPoint said it had 7.6 million customers in its insurance plans at the end of the quarter, up from 7 million a year earlier. About 5.4 million of those customers are in California, where WellPoint said enrollment was up 10%. Analysts expected earnings of $1.22 a share.