AMGEN PROFITS UP 20% ANEMIA, ARTHRITIS DRUGS BOOST BOTTOM LINE.

Byline: Evan Pondel Staff Writer

THOUSAND OAKS - Amgen Inc. posted a 20 percent increase in fourth-quarter profits Thursday, though analysts worry about the company's long-term strength after the results fell short of expectations.

The Thousand Oaks-based biotechnology giant reported fourth-quarter net income of $547 million, or 41 cents a share, compared with $456 million, or 34 cents a share, in the same period a year ago. Analysts polled by Thomson First Call expected the company to earn 48 cents a share.

Bolstered by strong sales of anemia-fighting therapies and solid returns on arthritis treatments, Amgen's fourth-quarter revenue increased 33 percent to $2.3 billion versus the like period in 2002. The company's 2003 profit rose to $2.3 billion, or $1.69 a share, on revenue of $8.4 billion, reversing a $1.4 billion, or $1.21 a share, acquisition-related loss for 2002.

Amgen executives were upbeat on a relatively short conference call with analysts Thursday afternoon. The company characterized 2003 as an ``extraordinary year'' in which Amgen received seven worldwide regulatory approvals.

But the general enthusiasm expressed by the world's largest biotechnology company was not echoed by analysts who are beginning to question the company's long-term prosperity. The most imminent concern is Amgen's product pipeline, which is often accused of lacking breadth.

To dispel such woes, Amgen's chief executive officer quickly defended the company's progress. ``The pipeline is better than it was a year or two ago ... and we are advancing molecules internally,'' Sharer said during the conference call. ``In terms of the challenge we face ... we can never be comfortable or complacent about the pipeline. (But) there are molecules we have optimism about.''

Amgen's pipeline consists of at least three products that are relatively close to federal approval. Cinacalcet, a drug that has been linked to reducing bone loss in patients with kidney disease, is in its third phase of clinical trials. Palifermin, also in its third phase, helps treat sores that form in the mouths of patients who are undergoing chemotherapy. And finally, Enbrel, which has already been approved for the treatment of rheumatoid arthritis, will soon likely be allowed for treatment of psoriasis.

``This is the golden age for Amgen,'' said Craig West, analyst with A.G. Edwards & Sons in St. Louis. ``But we think the slowdown is inevitable. The three franchises they (Amgen) have grown - Aranesp, Enbrel and Neulasta - have already penetrated markets. A repeat of that is not going to happen.''

Of those products, worldwide Aranesp sales were $503 million in the fourth quarter, compared with $207 million in 2002. The company said the anti-anemia drug's growth was primarily driven by demand. International Aranesp sales were $181 million in the fourth quarter, versus $57 million in the same 2002 period.

Enbrel sales were $380 million in the fourth quarter, versus $204 million in the year-ago period. Amgen added Enbrel to its arsenal after acquiring Immunex in 2002.

Combined sales of infection-fighting Neulasta, and earlier generation Neupogen, were $553 million in the fourth quarter of 2003, compared with $451 million in the fourth quarter of 2002.

Analyst West referred to Aranesp, Neulasta and Enbrel as ``hits for Amgen. And this is a very hit-driven industry,'' he said. ``But hits get harder and harder to come by.''

As for Amgen's future, ``we think they are going to buy something, maybe several somethings, and pump up the organic growth,'' West said.

Amgen's results arrived the same day drug maker Wyeth announced its fourth-quarter earnings fell to $335 million, or 25 cents a share, from $1.57 billion, or $1.18 a share. Wyeth's 2002 net income was boosted by the sale of its shares to Amgen. The companies currently have a marketing pact for arthritis drug Enbrel.

Also reporting a decline, drug behemoth Pfizer saw its fourth-quarter net income slide 79 percent to $602 million, or 8 cents a share.

Amgen shares fell $1.34, or 2.13 percent, to $61.47 Thursday on the Nasdaq market.

Evan Pondel, [phone]

evan.pondel(at)dailynews.com