12:00 AM
 | 
Aug 20, 2007
 |  BioCentury  |  Finance

Making do at Amgen

Investors did not rush to the exits after Amgen Inc.'s announcement that it would restructure last week, as the move was expected. And while some are nervous about where the bottom is for sales of the company's Aranesp and Epogen erythropoiesis-stimulating agents, in general they say the company is making the best of a bad situation.

"Do they do something, or nothing at all" said Kurt von Emster of MPM Capital. "Clearly, they have to do something."

Amgen (AMGN, Thousand Oaks, Calif.) closed the week unchanged at $50.08. Nevertheless, AMGN has shed about one-third of its market cap so far in 2007. The company was valued at $54 billion on Friday, down about $26 billion on the year.

Last week, AMGN lowered its FY07 EPS guidance to $4.13-$4.23, which is still well above 2006 EPS of $3.90. The company had started the year with guidance of $4.30-$4.50 and already had trimmed guidance in the wake of label and reimbursement changes in the U.S. for all ESAs.

Investors told BioCentury the company has assured them it will maintain EPS of at least $4 through cost cutting and share buybacks.

The restructuring "definitely had to be done so they'll be able to have an additional dollar or so in EPS," said Maxim Jacobs of Mehta Partners.

Sven Borho of OrbiMed Advisors said the company's commitment to about $4 "makes me comfortable that the management is bottom line-oriented - they don't want to fall into a bottomless pit."

"As long as they don't get any competition and the kidney disease restrictions aren't too severe, I don't think that'll be too tough for them," said Jacobs.

Nevertheless, the...

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