There's a long-running argument about whether companies are better off spending their money on R&D or repurchasing their shares in the open market. Whatever the answer, share repurchases enabled Amgen (AMGN) to meet its first quarter consensus EPS numbers.

Investors didn't seem to notice, as the stock added $2 to $56 on the week. Most of AMGN's move came several hours after the earnings release when a federal judge granted one of AMGN's motions for summary judgement in its EPO patent suit against Transkaryotic (TKTX) and partner Aventis over their GA-EPO erythropoietin product. AMGN gained $2.938 to $57.25 on Wednesday, while TKTX fell $3.938 (12 percent) to $28.188 on 485,900 shares, and rebounded slightly to close Friday at $29.938 (see Noteworthy, A8).

The stock repurchasing proved crucial in the numerical rounding. The diluted EPS on the earning statement read $0.25, but doing the math provides an actual number of $0.245. The company would have had to round the number down to $0.24 if it hadn't repurchased 3.5 million shares (0.3 percent of shares outstanding) during the quarter - the additional shares outstanding would have resulted in diluted EPS of $0.244.

AMGN spent $225 million to repurchase the shares, at an average price of $64.29. The company, which still has $1.48 billion in cash, may repurchase up to $1.4 billion of its common through the remainder of the year under the plan.

AMGN did post a 12 percent increase in sales of Epogen EPO for anemia ($440 million vs. $395 million), but first quarter Neupogen sales were $250 million, down 13 percent from $287 million in the 1999 quarter. Going forward, the company raised its guidance on the year to $1.06-$1.08 from $1.05-$1.07.

Earnings watch

In other earnings news, BioChem Pharma (TSE:BCH, BCHE) posted first quarter EPS of C$0.36 (US$0.24), beating the Street estimate by US$0.02. Revenues rose 16 percent to C$72.5 million, up from C$62.7 million in the first quarter last year, reflecting increased sales of 3TC for HIV and chronic hepatitis B. BCHE was flat at $23 on the week . . . Elan (ELN) dipped $0.188 to $43.50 after beating the Street by a penny. Its EPS of $0.34 was driven by an 18 percent rise in product sales to $150.3 million from $127.5 million in the first quarter of 1999

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