AMGEN SWINGS FOR THE FENCES INVESTORS BIT COOL TO HIGH R&D PRICE.

Byline: Brent Hopkins Staff Writer

THOUSAND OAKS - Biotech behemoth Amgen Inc. reported strong sales and earnings increases to close its fiscal year on Thursday, but missed Wall Street expectations and suffered a minor stock slump.

The world's largest biotechnology company reported that it closed out 2005 with fourth-quarter earnings of $824 million, or 66 cents per share, on sales of $3.27 billion, up from a net income of $689 million, or 53 cents per share, with $2.9 billion in sales. It vowed to plow nearly $1 billion of that money back into research and development in the coming year, up to a 40 percent increase from 2005.

``We're asking you to support us in spending a lot of your money on the future,'' Kevin Sharer, chairman and chief executive officer, told investors via a Webcast before the market opened. ``Our company's in a good position right now. We're optimistic about the future.''

But the investment community, not sharing his enthusiasm, chose to focus on a softer-than-anticipated fourth-quarter earnings report and Sharer's comments about increased competition. Analysts polled by Thomson/First Call expected earnings of 76 cents per share on sales of $3.3 billion. Excluding charges related to Immunex and Tularik acquisitions, the company would have recorded 75 cents in earnings per share, but even that miss of one penny was enough to send the stock down $3.57, nearly 5 percent, to close at $71.90.

Steven Harr, who follows the company for the brokerage Morgan Stanley's New York office, took a balanced view in his analysis, noting that the disappointment with the fourth quarter overshadowed promising news about research potential.

``We expect net income growth to slow over the next two to three years (roughly 10 percent annually on average),'' he wrote in a note to clients. ``Amgen has one of the best pipelines in the biopharmaceutical industry, but there are few updates on any compounds until 2007.''

For all of 2005, Amgen earned $3.67 billion, $2.93 per share, on sales of $12.43 billion. That's up sharply from 2004, when the company saw net income of $2.36 billion, $1.81 per share, with sales of $10.55 billion.

In the coming year, Amgen projects total revenue in the range of $13.9 billion to $14.4 billion, with earnings per share between $3.55 and $3.70.

Sharer acknowledged the company has bet heavily on its drug pipeline, which he called ``a swing-for-the-fences strategy.'' Though pushing so much money into development, along with a $1 billion investment in new facilities announced earlier this week, cuts into earnings, he pledged that investors' long-term faith would be rewarded.

``It will test Amgen to our limits to be able to conduct all of the clinical trials, continue to integrate acquisitions and bring innovative new molecules into the clinic,'' he said. ``We are absolutely up to that task, but we don't delude ourselves as to the nature of that challenge.''

Separately, the company also announced a deal with its rival Genentech on Tuesday. Under the agreement, terms of which were not disclosed, the San Francisco-based company will allow Amgen to use its patented antibodies related to producing immunoglobins.

Brent Hopkins, [phone]

brent.hopkins(at)dailynews.com