BIOENGINEERED FOR SUCCESS; AMGEN'S NEXT CEO READY TO LEAD BIOTECH GIANT INTO THE NEXT MILLENNIUM.

Byline: Jason Z. Cohen Staff Writer

THOUSAND OAKS - Kevin Sharer, incoming chief executive of Amgen Inc., says the company is doing so well he doesn't need to shake things up at the Thousand Oaks-based biotechnology giant.

And why would he?

In May, he will take over the top job at the nation's largest, most profitable biotech company.

For seven years, he has played a major role in building Amgen into one of the largest companies in Southern California, both as its president and as a member of its board of directors.

Sharer will take over just as Amgen appears ready to explode into a new financial stratosphere, thanks to two biotech drugs that each churn out $1 billion annually in revenue and a half-dozen new products in late stages of development.

In his first in-depth interview since being named successor to the company's long-time chief executive, Sharer used such words as "sustain" and "maintain" to describe his goals in the company.

He will continue to foster a corporate culture that rewards creativity, Sharer said, and to help bring products to the marketplace that analysts say could make Amgen one of the nation's elite companies.

"Going forward, our success is going to depend on our ability to discover and develop and bring to patients successful new products," he said.

Sharer's reign will begin at the company's annual shareholders' meeting in May, when Gordon Binder, 64, Amgen's CEO for 11 years, will hand over control to the man who for most of that time has been his heir-apparent.

The transition began seven years ago for Sharer, 51, who was hired away from a division presidency at MCI Communications with the understanding he would succeed Binder.

Sharer was given a seat on the board and a major role in determining the direction of the company. But it wasn't until a few weeks ago that he was officially named Binder's successor.

"I think he must have felt comfortable that he was the selected successor and it was a matter of finding the appropriate time," said Dennis Harp, biotechnology analyst with Deutsche Banc Alex. Brown in Baltimore. "The timing is absolutely excellent because he's stepping in at a time when the company is doing very well."

Sharer is quick to point out that the job of chief executive at Amgen does not involve being a top-down manager. A military style wouldn't work at this company, he said.

"It's not a command-and-control system where someone in my job tells everyone else what to do."

It's a tradition dating back to the company's first CEO, George Rathmann, that Amgen's top executive isn't someone who micromanages, but nurtures creativity, said Tony Gringeri, a product development team leader at Amgen.

"Gordon and Kevin are leaders, but they aren't on the spot telling everyone how to do it," Gringeri said.

Sharer identifies four primary challenges: sustaining the company's current franchises, Epogen and Neupogen; maintaining an ongoing pipeline of in-development products; successfully launching new products; and holding on to Amgen's corporate values.

Sharer speaks reverently about one of Amgen's primary corporate tenets: "Compete intensely and win." It's a philosophy that has played itself out in the legal system as much as it has in pharmacies and the stock market.

The largest legal challenge facing Amgen is a patent infringement case it is prosecuting against Transkaryotic Therapies Inc., a subsidiary of drug giant Hoechst.

TKT has developed an alternate way of making the substance behind the drug Epogen and is seeking approval to market it as a distinct drug. Amgen contends erythropoietin, or EPO, is its intellectual property, the manufacturing process notwithstanding. The company wants the court to declare TKT's efforts to market the drug an infringement of its patent.

"Winning that case is very important to us," Sharer said. "We're intensely focused on defending our intellectual property."

Trial is set for April in Boston.

In the meantime, Amgen continues to search for the next blockbuster drug. Among the new products closest to the market is novel erythropoiesis stimulating protein, NESP, a longer-dose successor to the blockbuster Epogen.

While Epogen is a billion dollar-plus seller, NESP has the potential to double that, Harp said.

NESP is even more attractive for Amgen because the company doesn't have to share profits on it with Johnson & Johnson, as it must on Epogen. When Amgen first created Epogen, it needed the marketing muscle of J & J to sell the product to doctors.

Now, thanks to Amgen's track record and a 1998 court ruling, the company can market NESP as a new drug that will compete directly with J&J's Epogen-based product, Procrit.

NESP's potential makes Amgen an attractive stock to hold going into the 21st century, said Richard Dahlberg, a fund manager with Pioneer Mutual Funds in Boston.

"The intrigue of the company is that all of the second-generation products are free of the J&J marketing rights," said Dahlberg, who manages the Pioneer II Growth Fund, which holds about 5 million shares of Amgen.

Doug Christopher, an analyst with Los Angeles-based investment firm Crowell Weedon, had high praise for Binder, whom he credits for Amgen's tenacious legal strategy.

"I think he's a wonderful person," Christopher said. "Any management team that can stand up to Johnson & Johnson and pull through, it says a lot about a company."

Binder, only the second CEO in Amgen's history, recently was named one of Business Week's top 25 managers.

He presided over the company's most dynamic years, supervising the launch of its three revenue-generating products and building Amgen into a company valued around $60 billion on Wall Street. The company is challenging Disney as the largest publicly traded company headquartered in the Los Angeles region.

In the 1990s, Amgen has grown from 500 employees to 6,000. Its stock price has increased from a split-adjusted $1 per share to $60, turning $1,000 of Amgen shares bought Dec. 31, 1989, into approximately $60,000 today.

Sharer stands to succeed as CEO in large part because of the timing on his takeover and the condition in which Binder is leaving the company, Dahlberg said.

"He's just riding a very good horse here, and it's hard to see him upsetting it," Dahlberg said. "It looks like the company has made all the right moves."

Sharer inherits a company on the verge of launching three drugs with multimillion-dollar potential, Harp said.

On the immediate horizon, in addition to NESP, are Abarelix, a prostate cancer treatment, and a rheumatoid arthritis drug, Kineret. Further down the road is SD-01, the longer-dose follow-up to the white blood cell stimulator Neupogen.

NESP and Abarelix are both likely to exceed $1 billion in annual sales, Harp said.

Both Dahlberg and Harp predict a strong future for Amgen, but not without its bumps.

In 2000, the company is not expected to have a brilliant year because the drugs it has been developing will be under FDA review. There are other potential perils as well, Dahlberg said.

"It's not a stock without some dangers, should something happen in the patent suit coming up in the spring, for example," he said.

Assuming all of Amgen's candidate drugs are approved, they are likely to hit the market in 2001.

"The future looks very, very bright for the company," Harp said. "They are entering the new millennium with three products that could be major blockbuster drugs."

Harp said he sees an interesting parallel in the company's history and its CEO transitions. Binder became the chief executive officer in 1988, a few months before the company's first product, Epogen, was introduced.

"He was selected and promoted to the CEO position at a time when the company was poised for significant growth," Harp said. "In a similar fashion, Kevin Sharer is being set up for success."

BIOGRAPHY

--Kevin W. Sharer, 51

--Joined Amgen in 1992 as president and chief operating officer.

--Previously, he was executive vice president and division president of the business markets division for MCI Communications, now MCI WorldCom Inc. He also held a number of executive positions at General Electric.

--Holds a bachelor's degree in aeronautical engineering from the U.S. Naval Academy and master's degrees in aeronautical engineering and business administration.

--After his graduation from Annapolis, he served on two nuclear attack submarines.

--President of the Los Angeles County Museum of Natural History, member of the Unocal Corp. board of directors and the board of directors for California Healthcare Institute.

--Married, with two adult children. Lives in Los Angeles.

CAPTION(S):

photo, box

Photo: (color) Kevin W. Sharer 

Andy Holzman/Staff Photographer

Box: BIOGRAPHY (see text)