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AMGEN SHOWS NERVE; COMPANY TO PAY UP TO $465 MILLION FOR RIGHTS TO MOLECULES.

Byline: Ben Sullivan / Daily News Staff Writer

In potentially the biggest biotechnology licensing agreement ever, Thousand Oaks-based Amgen Inc. announced Thursday that it will pay a Baltimore company up to $465 million for the rights to a family of molecules designed to repair nerve damage.

Under terms of the agreement, Amgen will invest as much as $60 million in Guilford Pharmaceutical and pay $13.5 million over three years to support research on drugs to be derived from the molecules. Guilford also could receive up to $392 million in so-called ``milestone'' payments if drugs for each of 10 specified diseases are developed and approved.

``If they all work out, it'll be an enormous price tag,'' said Montgomery Securities analyst David Crossen. ``But, ironically, if they all work out, it'll also be an incredible bargain'' for Amgen.

Amgen will pay Guilford $15 million in cash up front. It also will buy $15 million in Guilford stock and buy 700,000 warrants for $5 million. If the warrants are exercised, it would mean an additional investment of nearly $25 million.

In exchange, Amgen will receive worldwide rights to Guilford's class of molecules that researchers hope will be effective in treating neurodegenerative disorders. The molecules are orally active, meaning they can be taken in pill form, as opposed to via injection, potentially broadening their applications and marketability.

The Amgen agreement anticipates development of drugs for Parkinson's disease, Alzheimer's disease, stroke, traumatic brain injuries, traumatic spinal cord injuries and multiple sclerosis.

While combined the diseases represent a potentially huge market, it is uncertain whether all or any of the anticipated drugs will come to fruition, said Charles Engelberg, an analyst at AmeriCal Securities in San Francisco.

And because Amgen has been developing its own nerve growth factors, Engelberg said, the Guilford deal may signal that Amgen is uncertain about the prospects of its in-house products.

``At the very least they're hedging their bets,'' Engelberg said. ``Or from the most cynical interpretation, they've looked at what they've got and it's not much.''

Amgen spokesman David Kaye denied the company is disappointed with its own neurological products.

``The Guilford thing is a long-term supplement to our pipeline,'' Kaye said. ``Though we certainly hope in the years ahead they will be providing us with important, big products.''

Analysts said the deal is intriguing but does not justify a return to the high-$50s that Amgen shares were trading at before a massive sell-off last week.

Amgen closed at $52.56 Thursday, up 18.75 cents.

``I'm not entirely reassured,'' Crossen said. ``I think we've established another level for the stock that makes more sense now.''

Amgen shares fell 12 percent last week amid fears that new Medicare rules will hurt sales. Company officials hoped Thursday's announcement would reassure investors about the firm's long-term prospects.

CAPTION(S):

Chart

CHART: FLUCTUATIONS

Shares of Thousand Oaks-based Amgen have fallen on recent news of lower sales and a marketing deal.

Low: 48 9/16

Thursday's Close: 52 1/2

SOURCE: Bloomberg News
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Title Annotation:BUSINESS
Publication:Daily News (Los Angeles, CA)
Geographic Code:1USA
Date:Aug 22, 1997
Words:501
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