Amgen, Genentech Report Better-Than-Expected 2nd-Quarter Results

Amgen Inc. said Monday that its second-quarter earnings jumped a better-than-expected 24%, and in another pleasant surprise for investors, the company unveiled plans to seek U.S. approval to market a new arthritis treatment by year’s end.

Amgen, which is the world’s largest biotechnology company, said net income for the period rose to $267.6 million, or 50 cents a share, from $216.3 million, or 41 cents, a year ago. Those results exceed the 46-cent average estimate of analysts surveyed by First Call Corp. Revenue grew 25% to $820.5 million, led by a 27% increase in sales of its anemia drug Epogen to $428 million.

The news boosted confidence that the Thousand Oaks-based company is doing well in promoting current products and is making progress in bringing new drugs to market. Amgen has come under fire in recent years for taking too long to push medications with large market potential out of its pipeline.

Separately, Genentech Inc., the world’s second-largest biotechnology company, also reported second-quarter earnings well above estimates. Profit from operations for the South San Francisco-based company jumped 81% to $73.2 million, or 55 cents a share, on soaring sales of two breakthrough cancer drugs.

According to the average estimate of analysts polled by IBES International, Genentech was expected to earn 41 cents. Revenue rose 47% to $395.2 million. Genentech said its latest results exclude $1.15 billion in charges related to the decision by Roche Holding last month of Switzerland to buy the third of the company that it did not already own.

Amgen on Friday said it would move up the release of its second-quarter results to Monday, saying it was concerned about the recent movement in its shares, which soared 14% last week.

Amgen said it expects to file an application with the Food and Drug Administration to gain approval for use of its experimental drug IL-1ra as a treatment for rheumatoid arthritis. That would put the company into competition with Immunex Corp.’s Enbrel and Centocor Inc.’s Remicade, which is expected to win approval for treatment of rheumatoid arthritis later this year.

Investors had not expected the company to file for approval so quickly because the drug has yet to enter Phase 3 trials, which are the last stage of testing usually required by the FDA before it will consider a new drug for approval. Amgen said the FDA decided that Phase 3 trials were not necessary in light of the strong results for the two Phase 2 trials.

IL-1ra works by blocking a compound known as IL-1 that scientists think plays a major role in causing diseases such as rheumatoid arthritis. Immunex’s Enbrel and Centocor’s drugs work by blocking another compound, dubbed tumor necrosis factor.

“We know there’s a sizable percentage of non-responders to both” types of drugs, said Amgen Chief Executive Gordon Binder. “One thing doctors and patients would hope is with the choice of two of them there would be one of each that’s right for each person.”

The company plans to conduct “supplemental” studies of the drug to further assess its safety and effectiveness.

The IL-1 rheumatoid arthritis trials have found the drug’s only common side effect to be injection-site reactions, Amgen said. Details of those studies will be presented at the American College of Rheumatology meeting in November.

Amgen also announced a delay in plans to seek FDA approval of the experimental prostate-cancer drug abarelix to late 2000. The agency has asked it to increase the number of patients in the trial pool so that regulators will have more data for evaluation.

The company also said that it has decided to begin a Phase III trial of an extended-release version of its Neupogen cancer drug in the current quarter.

Amgen said it expects earnings per share for the full year to be at the high end of the range of $1.90 to $1.95 a share. That will be fueled by Epogen percentage sales growth “in the mid-20s” and sales of the cancer-drug Neupogen in the “high single- to low double-digit range.”

Amgen stock fell $3 to $66.31 in Nasdaq trading before the results were released, then rose as high as $71.50 after U.S. exchanges closed.