AMGEN PRESSES AHEAD PURCHASE OF IMMUNEX AFFECTS EARNINGS.

Byline: Evan Pondel Staff Writer

THOUSAND OAKS - Amgen Inc. posted a third-quarter loss Wednesday as the biotechnology juggernaut's $14 billion acquisition of Immunex weighed on an otherwise profitable period.

The Thousand Oaks-based company reported a net loss of $2.6 billion, or $2.10 a share, compared with a net income of $329.9 million in the same period a year ago. Amgen said the loss was ``principally due to the one- time write-off of in-process research and development ... related to the acquisition of Immunex.''

Excluding the one-time charges, Amgen's earnings rose 32 percent to $437 million, in line with Wall Street's expectations.

``It was a very strong quarter right across the board,'' said Dennis Harp, analyst with Deutsche Bank in New York. ``And looking at Amgen's product line, Aranesp did especially well.''

The company received federal approval in July to treat cancer patients with its anemia drug Aranesp. Sales of the next-generation form of Epogen increased 29 percent to $672 million from $520 million for the third quarter of 2001. Aranesp sales alone accounted for $114 million.

Considered Amgen's pre-eminent product, Aranesp has magnified competition with rival Johnson & Johnson. Eprex and Procrit, both marketed by Johnson & Johnson, also treat anemia. Although these drugs have completely different structures under a microscope, analysts say Aranesp has a significant advantage over the other anemia products.

Amgen's rivalry with Johnson & Johnson recently peaked after an arbitrator intervened over an Epogen-licensing agreement. Amgen won a $150 million judgment against Johnson & Johnson for marketing violations. But the arbitrator refused to terminate the licensing agreement between the two companies.

In the third quarter, Epogen sales alone were $558 million. Aranesp is poised to cannibalize Epogen sales once the drug gains more popularity.

``But what's surprising to me is that everyone expects Aranesp sales to be extremely strong when they're not compared with Neulasta,'' said Fariba Ghodsian. ``I don't necessarily think this is a bad thing, just a noteworthy phenomenon.'

U.S. regulators approved Amgen's infection-fighting drug Neulasta in February. A more potent form of Neupogen, Neulasta is used to boost the immune system of cancer patients receiving chemotherapy. The approval of Neulasta could lead to sales, when combined with Neupogen, of $2 billion a year by 2005, Amgen officials have said.

Combined sales of Neupogen and Neulasta increased 32 percent to $474 million in the third quarter. Neupogen sales alone were $332 million. The company attributed the sales growth to strong demand.

Both Neulasta and Aranesp have won approval by the European Commission, while Aranesp has also been OK'd in Canada for the treatment of anemia associated with chronic renal failure.

Another force for Amgen is Enbrel.

In August, Amgen applied for regulatory approval of an Enbrel manufacturing facility in Rhode Island - an important step to alleviate shortages of the arthritis drug. The 250,000-square-foot facility stems from Amgen's purchase of Seattle-based Immunex Corp., which received approval from U.S. regulators in July.

``News that the FDA has scheduled and accepted a visit to the facility in November is certainly positive given the current shortage,'' Harp said. ``It's possible the FDA will give the go-ahead to manufacture Enbrel at the facility within the next 30 to 60 days.''

Enbrel recorded third-quarter sales of $158 million. The company previously expected sales of Enbrel to range between $350 million and $400 million for the period beginning July 16 and ending Dec. 31 and $800 million to $850 million for the full year 2002.

Kevin Sharer, chairman and chief executive officer, said he was pleased with Amgen's overall performance in the quarter.

Sharer personally thanked Amgen employees in a conference call Wednesday. ``Thank you for letting us tell your story, which was damn strong for this quarter,'' he said.

Amgen rose 20 cents to close at $50 Wednesday on the Nasdaq market. In after-hours trading, Amgen shares rose $1.29, or 2.6 percent, to $51.29.