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Amgen (AMGN), the world's largest biotechnology company, reported fourth-quarter results that missed Wall Street's expectations, as a 2% increase in sales failed to translate into a stronger bottom line. The quarter was a somewhat expected disappointment, as its adjusted earnings per share decreased 1% to $1.05 per share, below analyst estimates of $1.16 per share, according to Thomson Reuters.

For the full year, Amgen earned $4.91 per share versus $4.55 in 2008, and below consensus of $4.99 per share. Total revenue increased during the quarter to $3.81 billion versus $3.75 billion in the fourth quarter of 2008, but was slightly below estimates of $3.85 billion. For the full year 2009, total revenue decreased 2% to $14.64 billion from $15 billion in 2008, and slightly below projections of $14.68 billion.

Anemia Drugs' Sales Mostly Decline

Investors, who worried about Amgen's anemia drugs ahead of the release found their concerns warranted. Worldwide sales of anemia drug Aranesp decreased 8% to $648 million in the fourth quarter of 2009, with U.S. Aranesp sales down 20% to $288 million. Amgen blamed the lower demand on several factors, including the product label change in August 2008 to add a warning, and a decrease in average net sales price.

But new study data published in October further heightened safety concerns, showing that Aranesp nearly doubled the risk of stroke in people with diabetes and chronic kidney problems. The U.S. Food and Drug Administration plans to re-examine safety issues on the drugs

Sales of another anemia drug, Epogen, however, increased 9% to $703 million in the quarter, primarily due to an increase in demand coming from patient population growth, increased dose utilization and an increase in average net sales price. But sales of Enbrel were relatively unchanged in the fourth quarter of 2009 at $912 million.

Combined worldwide sales of Neulasta and Neupogen, drugs that stimulate the production of neutrophils (a type of white blood cell) in the blood, increased 2% to $1.20 billion in the fourth quarter. There was a slight decrease in the U.S. as a mid-single digit increase in demand, caused by an increase in sale price, was offset by unfavorable changes in wholesaler inventories.

Company's Hopes Rest On Bone Drug

Going forward, investors are looking at Amgen's osteoporosis drug denosumab for growth. Indeed, Kevin Sharer, Chairman and CEO said, "We delivered solid performance in 2009 and look forward to growing our top and bottom line meaningfully in 2010." He added, "We are ready and look forward to launching denosumab worldwide this year."

But that, for now, has proven easier said than done. Denosumab, or its brand name Prolia, is a potential future blockbuster osteoporosis drug and so far it has met with some resistance by the FDA in October, with the agency requesting more information, specifically, a risk-mitigation plan.

Amgen announced that it has submitted the information requested by the FDA, which is crucial for the process. It also said the results from the prostate study are expected in the first quarter of 2010. The company discussed the worldwide submission of a Biological License Application later this year for the treatment of skeletal related events in advanced cancer patients.

In addition, Amgen announced that it anticipates data from the late-stage bone metastasis prevention study in prostate cancer in the second half of 2010. Also, the FDA has approved Amgen's bone metastasis study in breast cancer patients. As well, a male osteoporosis study is enrolling subjects.

It's these latest studies that give some investors hope for a mega-blockbuster potential with analysts throwing such numbers as $14 billion in annual revenue by 2014 for the drug.

Other Matters

With regards to its other pipeline potentials, Amgen says it anticipates the completion of a late-stage trial for cardiovascular drug Sensipar/Mimpara. It says that it's nearly complete in the late-stage, first-line non-small cell lung cancer study on Motesanib. It also announced it will initiate AMG 386 late-stage program in ovarian cancer. Management sounded very confident about its pipeline.

Amgen expects total revenue for 2010 to be in the range of $15.1 billion to $15.5 billion and adjusted earnings per share to be in the range of $5.05 to $5.25, excluding certain expenses. These are in line with Wall Street's expectations.

Over the last 12 months, Amgen stock has risen 4.7%, underperforming its peers and broader market. The company has lowered Wall Street's expectations recently despite managing to deliver solid results in previous quarters and in this one. With Amgen's $5 billion in stock buyback plan and possible good news from the denosumab front, Amgen stock could see better days ahead.


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