Monday, August 18, 1997
Amgen's discouraging revelations for Epogen sales sent surprised analysts scrambling to adjust their earnings projections last week (see chart), but it was an exercise done largely without guidance from management.
The stock dropped $6.9375 to $50.1875 on 22.9 million shares on Tuesday, after the company disclosed in its second quarter 10-Q that the growth rate for Epogen will be below previous company expectations for the remainder of 1997. AMGN, which was the most active NASDAQ issue on Tuesday, closed the week at $48.562, down 15 percent.
Epogen erythropoietin, which AMGN sells to treat anemia associated with chronic renal failure in dialysis patients, posted sales of $1.1 billion in 1996. AMGN sold $295 million of the product in the second quarter.
In June, Medicare unveiled new reimbursement guidelines that deny reimbursement for Epogen to Health Care Finance Administration contractors for patients with hematocrits above 36 percent (normal is 40-42 percent). At the time, AMGN said the guidelines could affect 10-15 percent of patients on the drug. The company said it remained comfortable with analyst consensus EPS estimates of $2.80-$2.85 per share for 1997 (see BioCentury June 23).
2Q conference call
On July 15, AMGN's guidance on its second quarter conference call "had been that EPO would grow at 15 percent or more over the second half of 1997," said Robert LeBoyer, analyst at Brown Brothers Harriman. "Now they are saying they are no longer comfortable with the analysts' consensus of $2.80 to $2.85."