J&J said in its drug unit that growth was impacted by lower sales of anemia drug PROCRIT, primarily due to a decline in the market related to a labeling change made this past March and a decision memorandum issued by the Centers for Medicare & Medicaid Services under its national coverage analysis process.  J&J licenses PROCRIT from Amgen.  If you review the sales of this in J&J’s release, PROCRIT sales in the U.S. were down year over year by 27% to $380 million (from $522 million), although international PROCRIT sales rose 9% to $302 million.  Total PROCRIT sales were down 14.6% to $682 million.

The good news is that this was mostly a known event, at both companies.  Wall Street has systematically trimmed earnings and revenue projections for Amgen throughout 2007.  The key difference in these companies is that Amgen is much more dependent upon on anemia drug sales for about half of its sales, whereas J&J’s 5% exposure to anemia sales is relatively just a line-item on a long-term basis.

We’ll find out Amgen’s earnings on October 24: analysts are looking for total revenues of $3.56 Billion (down from $3.612 Billion in Q3 2006).  We’ll follow up with a more detailed Amgen preview using some of these interpolations for the bigger picture ahead of its earnings release.  Amgen shares are only down 0.2% at $57.55, and the 52-week trading range is $48.30 to $77.00.  In late 2005, Amgen traded over $80.00. 

• Amgen diversifies, through acquisition;
• Amgen may be on a path to recovery;
• Anemia review could have been much worse;
• We noted Amgen is just another ‘Big-Pharma’ now.

Jon C. Ogg
October 16, 2007

Last week 24/7 Wall St. outlined developments creating an "If, Then" scenario that could take Amgen’s stock significantly higher.  This move will act as the first catalyst in this scenario, and this stock was battered and tattered after it couldn’t catch a break anywhere.  If the Medicare reimbursement help from Congress stays as is, then the road to a partial recovery is set.  We even compared this to a situation that plagued Biogen-Idec (NASDAQ:BIIB) back in 2005.  The circumstances are of course different, but the impact and path surrounding the stock reactions and future paths is just too difficult to not notice.

This follows the March decision out of the FDA to put a black box warning on the label of these erythropoiesis-stimulating agents, or ESAs.  As sales of the three leading drugs in this subset exceeded $10 Billion, these had been seeing a sharp decline in sales as the FDA had been investigating higher doses.  A formal hemoglobin level was not reached by the FDA panel and the verbage is still unclear, but this is still far better than original fears of lower hemoglobin rates.

So far UBS is the only upgrade that was noticed on Amgen (AMGN), although its sell rating was only raised to Neutral.  The August short interest was more than 28 million shares, up from 26.9 million shares in July.  If those shorts haven’t started covering yet, they have to at least be thinking about it.  Amgen is still going to be treated more like a Big Pharma drug company in the future rather than one of the greatest biotechs on the planet, but this is a clear path to recovering some of its huge losses.

Amgen saw shares rise over 5.5% yesterday to $53.88 on the win, and shares are trading north of $55.00 in pre-market trading. 

Jon C. Ogg
September 12, 2007

Jon Ogg produces the 24/7 Wall St. SPECIAL SITUATION INVESTING NEWSLETTER; he does not own securities in the companies he covers.

Following a planned meeting of the independent Data MonitoringCommittee of its ASSERT trial of senicapoc (formerly ICA-17043) for thetreatment of sickle cell disease in adults, the DMC recommended thatthe trial be terminated because of the low probability of achieving areduction in crisis rate, the primary endpoint. The DMC noted that datafrom the trial indicated the expected increases in hemoglobin andhematocrit and decreases in reticulocytes as well as LDH and bilirubin,both markers of hemolysis. There were no statistically significantdifferences in safety measurements between the senicapoc and placebotreatment groups. The Company has informed the FDA of its plan toterminate the study based upon the DMC’s recommendation. Ouch.

It still has some pre-clinical studies, which we noted over theweekend, in compounds that are being studied in Dementia andAlzheimer’s Disease.  Unfortunately, pre-clinical studies are onething. Failing a PHASE III is kick where it counts.  This company onlyhad a $69.5 million market cap before the drop, so now it is indicatedaround $46 million.  It had $25.1 million in cash as of 12/31/06 andwas burning roughly $6 million per quarter, so it is not in a greatcash spot and this news has the shot of closing off the capital marketsvia traditional financing terms. 

Jon C. Ogg
April 3, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.