Amgen CEO says '07 profits beat forecast

Biotech company Amgen Inc. predicted Tuesday that its cost-cutting would push its 2007 profits higher than it forecast in October.

Amgen, the world's largest biotech company, now expects 2007 earnings near $4.30 per share, Amgen chief executive Kevin Sharer said in a presentation at this year's JP Morgan Healthcare Conference in San Francisco.

Last January, before the U.S. Food and Drug Administration raised concerns about side effects of some anemia drugs, Amgen had forecast 2007 earnings between $4.30 per share and $4.50 per share.

In October, after sales fell in response to an FDA warning, Amgen predicted 2007 earnings per share between $4.13 and $4.23.

Analysts surveyed by Thomson Financial forecast, on average, an annual profit of $4.24 per share, excluding some one-time expenses.

Amgen shares jumped 94 cents, or 2.1 percent, to $46.33 Tuesday. The stock has fallen from its 52-week high of $76.95, reached last January.

The company's stock price fell as the FDA's concerns about drugs intended to treat anemia by stimulating production of red blood cells, as Amgen's Aranesp and Epogen do, cut into sales. The drugs are used to treat the blood disorder when it is caused by kidney-failure or chemotherapy.

In August, Amgen said it would cut between 12 percent and 14 percent of its work force because of the downturn.

The FDA issued a "black box" warning, its most serious, on erythropoiesis-stimulating agents, include Aranesp and Epogen, after research suggested high doses increased patients' risk of tumors and death.

The Centers for Medicare and Medicaid Services changed the reimbursement policy for Aranesp and drugs in the same class so doctors would be paid only for prescribing a low dose of the drugs.

Amgen could see its sales take a hit in 2008 if private insurers follow suit, according to some industry analysts.

Still, "the changes in Medicare reimbursement have not, to date, had an adverse effect on key drivers of Amgen sales, such as Aranesp," biotech analyst Jim Reddoch of Friedman, Billings, Ramsey & Co., Inc. wrote in a research note released Tuesday.

Sharer also said Amgen is on track to deliver cost savings in 2008 as a result of the restructuring and expects research and development costs to decline slightly as a percentage of sales.