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AMGEN TINY FIRM BECAME WORLD BIOTECH LEADER.

Byline: Brent Hopkins Staff Writer

THOUSAND OAKS - Back in 1980, they drove beat-up cars and rode their bikes to work. They worked until midnight, they drank beer and talked science. Just a bunch of kids fresh out of grad school.

They were the men and women who founded Applied Molecular Genetics Inc. and helped crack open a field of science that was barely known when they set up shop.

Twenty-five years removed from fighting for lab space in a crowded Thousand Oaks office building, this group of scientists have created what is now called simply Amgen - the world's largest biotechnology company, with 14,000 employees.

But at the start, none of the people who filled out the tiny payroll of the upstart company knew they were doing anything all that special.

``Everyone was a scientist just looking for something that worked,'' remembered Tom Boone, now vice president of protein sciences. ``We'd heard this technology could save lives, but we were venturing into uncharted territory.''

They were working on the relatively unknown science of biotechnology, which manipulates DNA and molecular biology to create wonder drugs that save lives and ease human suffering.

At the outset, the company wasn't very impressive. It was eating its way through venture capital and the $40 million raised off its initial public offering.

``When I started, we had a third of Building One,'' said Tim Osslund, one of Amgen's first employees and now its principal scientist. ``We used to put tape on the benches - you had 2 feet of space to yourself.''

The researchers had tried numerous projects, ranging from the accidental creation of indigo dye, studying frog skin and work on developing a growth hormone for pigs. They also developed a drug called Epogen, a protein that increased production of red blood cells to fight anemia, that became the focus of their effort to transform the startup into a viable company.

That day came in 1989 after the company won approval to distribute Epogen for widespread use. Success came so quickly that Osslund and the rest of the team had to head down to shipping and receiving to help get the drug out to customers.

Last year, Epogen alone brought Amgen $2.7 billion in sales, part of a run that's brought in more than $18 billion over the years. The small building where Osslund used to have to cram in his experiments is now surrounded by 43 others.

The 130-acre Thousand Oaks campus boasts five restaurants, a fitness center and its own farmers market. It employs more than 7,000 workers at its headquarters, with another 7,000 in its facilities all over the world.

One out of every 10 employees in Thousand Oaks works at Amgen, accounting for $759 million in local payroll every year. It's Ventura County's largest employer, giving the region a major foothold in an industry largely based in San Diego, the Bay Area and Boston. Competition for its jobs is stiff, pulling in researchers fresh from undergraduate and graduate schools and luring them away from rivals.

``They create a magnet for other biotech firms and a lot of the people who work there have a profound effect on what goes on at Cal Lutheran (University) and (California State University) Channel Islands,'' said Howard Smith, chairman of the Ventura County Economic Development Association. ``They have a very positive effect on the business community.''

In Ernst & Young's annual biotech survey, Amgen absolutely dominated the Los Angeles-Orange County region. Though the area claims 13 public and 63 private biotech companies with $86.8 billion worth of market capitalization, Amgen accounts for more than 93 percent of the total. It also brings in more than 80 percent of the total biotech revenue.

With a quarter century behind it, Amgen sells nearly $10 billion worth of goods annually, and kept $2.3 billion as profits last year. Shares of its stock, which didn't even hit its $18 price target for several years after it went public in 1983, now trade above $60 apiece - making many of the workers multimillionaires.

``It's a challenge every day,'' Osslund said. ``I've got projects from rheumatoid arthritis to inflammatory bowel disease. We can't believe we get paid to do this, it's such a hoot.''

Today, employees refer to the early crew, like former Chief Executive Officer George Rathmann and Epogen researcher Fu-Kuen Lin, in reverential tones normally reserved for royalty or rock stars. Back then, they were just a part of a bunch of regular guys who'd work deep into the night, then blow off steam the next day drinking beer and eating pizza. Rathmann took an office in a nearby trailer rather than take up precious lab space.

When Epogen began shipping in bulk July 6, 1988, things took off. Rathmann retired and handed the reins to Gordon Binder, who guided the company as it obtained a patent for its follow-up, the white blood cell production stimulator Neupogen. Fortune magazine called Epogen its product of the year in 1989 and soon the company was booming.

``In the beginning of the company, organization charts didn't exist,'' said Wayne Pearl, vice president of operations for the Thousand Oaks campus. ``Titles? Who paid attention to that? It was all about the team and what they were working on.''

The company was getting pretty big, with 350 employees, and costly, with $300 million in development costs for its first big product. In 1989, it showed revenue of $148 million, squeaking by with a profit of $3.8 million.

``None of us thought about making a lot of money,'' Pearl said. ``We wanted to take a new technology and address patient suffering. We radically changed the way science was done and money was never even discussed.''

But it certainly was once Epogen hit the market, followed by the FDA's 1991 approval of Neupogen. By 1992, the company hit the billion-dollar annual sales mark, which it doubled within four years.

While that was a major boon for Amgen and its investors, Pearl was indeed correct about its even greater effect on the scientific and medical communities. Though there were other companies racing against the company to break into the nascent industry, its Epogen discovery represented one of the sector's biggest early breakthroughs. Prior to Epogen, a blood transfusion provided the only treatment for patients with low red blood cell counts.

And while Amgen didn't invent biotechnology, its discoveries throughout its first 25 years went a long way toward establishing the field. If the protein-based approach that it originally relied on doesn't work, it can attack diseases through small molecule and monoclonal antibodies.

``It's like a race to see who can do it first,'' Pearl said. ``As technology races forward, Amgen's got the financial firepower to go after it.''

And though the company struggled to follow up its two megadrugs, it continued to grow based on their sales success for much of the 1990s. Former naval officer Kevin Sharer took the helm in 2000, just before the company's hefty research and development investment bore major fruit.

In 2001, the new anemia drug Aranesp got approval for treatment in chronic renal failure patients. This set up a hot four years, during which rheumatoid arthritis fighters Kineret and Enbrel, infection drug Neulasta and hyperparathyroidism treatment Sensipar all moved onto the approved list.

Amgen has squared off with rivals such as Johnson & Johnson in court, battling its onetime ally for years over who had the right to sell Epogen in the United States. It also repeatedly fought with Transkaryotic Technologies over both domestic and international marketing for the anemia treatment.

But with other competitors, such as Tularik Inc. and Immunex Corp., Amgen just opened its ample wallet and bought them. It gobbled Tularik for $1.3 billion in 2004 and integrated Immunex, another giant of the biotech world responsible for Enbrel, in 2002 in a deal valued at $17.8 billion.

Along the way, Amgen has faced lawsuits, the quirks of the stock market and even the pointed finger of consumer advocate Ralph Nader, who alleged that the company suppressed an invention that would have allowed for lower doses of Epogen.

And in an odd sign of the power the company's drugs wield, Amgen was recently named in a lawsuit by a pair of Parkinson's disease patients. The duo participated in a trial of the drug known as GDNF, then sued the company last month when it halted trials because it believed the drug to be too dangerous. A federal judge ruled June 6 that the company doesn't have to continue providing the drug, saying the patients had acknowledged the trial could be cut off when they signed consent forms.

An attorney for the patients vowed to appeal. A second group of patients filed suit Tuesday.

Analyst Sena Lund sees the company - having survived its first 25 sometimes tempestuous years - as well-positioned to build on this foundation in the next decade.

``The key asset they have is a good management team,'' said Lund, a senior analyst with Cathay Financial in New York. ``Their products are for broader use and they've got control of the price. The markets are literally untapped because very few patients used the products at first. There's tremendous growth opportunities.''

In addition to its stable of approved drugs, Amgen has more than two dozen in the pipeline. Teams are working on everything from cancer treatment to arthritis to asthma, as well as adapting already approved drugs for treatment of new symptoms.

In that way, the sprawling company still feels the way it did in the old days for Tom Boone. Though he's an executive now, managing a team more than he manages experiments, he still tackles formulating new treatments as he did when the company was just a struggling startup.

And he still bikes to the office, just as he used to.

``Until we've treated all the patients with grievous illnesses, we've still got work to do,'' he said. ``And that's hundreds of years' worth.''

Brent Hopkins, (818) 713-3738

brent.hopkins(at)dailynews.com

CHANGING MEDICINE

In its 25 years, Amgen Inc. has produced a series of drugs that have changed medicine dramatically and brought tens of billions of dollars in revenue.

--Epogen: Approved in 1989, the drug stimulates red blood cell production to help treat anemia.

--Neupogen: Approved in 1991, it helps reduce infection in chemotherapy patients.

--Aranesp: Another anemia fighter, both for dialysis patients and those undergoing chemo, the FDA gave it the OK in 2001. It's also in Phase 2 trials to treat anemia for congestive heart failure patients.

--Kineret: Used to treat rheumatoid arthritis since 2001.

--Neulasta: Also targeted toward chemo patients, the drug that won approval in 2002 fights infection.

--Enbrel: The anti-inflammatory treats psoriasis, rheumatoid arthritis, arthritis of the spine and psoriatic arthritis.

--Sensipar: The metabolic disease drug has been approved to treat various parathyroid disorders and is in two trials to treat hyperparathyroidism.

--Kepivance: Used to treat oral mucositis.

--AMG 162: In trials to treat osteoarthritis, bone cancer and rheumatoid arthritis.

SOURCE: Amgen Inc.

CAPTION(S):

5 photos, box

Photo:

(1 -- color) ``It's a challenge every day,'' said Tim Osslund of his job as principal scientist.

(2 -- color) Yas Hashimura performs a cell growth experiment in a laboratory at industry leader Amgen in Thousand Oaks.

(3 -- color) Tom Boone, vice president of protein sciences, recalls in the early days Amgen was ``venturing into uncharted territory.''

(4 -- color) Umbrella tables are lined up outside Amgen's Thousand Oaks campus, which started 25 years ago as a single building.

(5 -- color) ''Wayne Pearl is vice president of operations for the Thousand Oaks campus. ``It was all about the team and what they were working on,'' he said of Amgen's origins.

Michael Owen Baker/Staff Photographer

Box:

CHANGING MEDICINE (see text)
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Publication:Daily News (Los Angeles, CA)
Geographic Code:1USA
Date:Jun 27, 2005
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