8
BioTech Stock Report, January 2004
to be in the middle or high end of guid-
ance ranges. For 2004, the total reve-
nue is expected to be $9.7-$10.4 billion,
consensus of $10.1 billion, and ad-
justed earnings per share expected to
grow low to mid-20% and will range
$2.30-$2.40, consensus of $2.39. Its
profit will rise 18% to 30%, aided by
stronger sales of its treatments for ar-
thritis, anemia and depleted infection-
fighting white blood cells. Amgen also
announced a $5 billion stock repur-
chase plan.
Another key event for Amgen will
be an upcoming R&D day scheduled
for March 23, 2004 at which the com-
pany is expected to highlight some of
its earlier-stage drug development pro-
jects. This event should provide in-
sight on Amgen's future.
As we see it, to buy Amgen below
$60 is an opportunity. In our opinion,
Amgen is an $80 stock because Am-
gen's fundamentals have never been
stronger. With a long-term growth rate
of more than 20%, we remain upbeat
on Amgen.
On December 8, Cell Genesys/
NASDAQ: CEGE (BSR #25: Gene
Therapy) reported interim clinical data
from a Phase II trial of GVAX as a can-
cer vaccine for acute myelogenous
leukemia. Patients with newly diag-
nosed leukemia were treated with che-
motherapy, and if responsive, subse-
quently received autologous bone
marrow stem cell transplantation and
GVAX leukemia vaccine. The prelimi-
nary findings of this trial indicate that
vaccine therapy is well tolerated and
may reduce residual leukemic cells that
persist after chemotherapy.
European launch should occur in late
2004.
Cinacalcet has equal efficacy and
less adverse side effects compared to
the market leader, Abbot's Zemplar
that is an IV and reimbursed by Medi-
care. But because Cincalcet is an oral
compound with no Medicare reim-
bursement, it could capture $100 mil-
lion or so of annual sales based on
dialysis patient use. The estimated
worldwide sales for drugs to help di-
alysis patients with anemia are esti-
mated at more than $500 million.
Should Cinacalcet be used in a pre-
dialysis setting, the annual potential
could be several times more, but addi-
tional studies are probably needed to
expand its usage. It is more than likely
Cinacalcet will be initially approved for
dialysis patients only.
In regards to Roche's Phase II
data for CERA (Continuous Erythro-
poiesis Receptor Activator), the data
suggested that the drug works rapidly
with once every three-week dosing for
the treatment of anemia. The drug is a
pegylated version of Neorecormon,
which is not sold in the U.S. as part of
a prior patent settlement with Amgen.
Amgen would likely argue that CERA
is merely erythropoeitin with the non-
inventive step of adding polymer,
while Roche would likely counter that
CERA is a novel invention superior to
Amgen's patented epogen. Roche will
eventually face a patent infringement
challenge from Amgen and this could
affect CERA's potential U.S. launch
down the road. Since CERA is only in
Phase II, with Phase III trials about to
begin, it is probably too early for a law-
suit.
With the suspension of several
Procrit/Eprex studies in early Decem-
ber, questions have arisen again re-
garding the potential impact to Ara-
nesp. Given that these suspended tri-
als were targeting elevated hemoglobin
levels that have previously been
clearly associated with adverse events
and which are already outlined in the
warning section of Aranesp's label we
do not believe the results of these tri-
als will adversely impact Aranesp's
adoption.
The next Amgen drug to receive
probable FDA approval is palifermin.
Phase III trial data showed palifermin
significantly reduces the mouth and
throat soreness in bone marrow cancer
patients undergoing high-dose chemo-
therapy. Oral mucositis is a common
side effect of some cancer treatments
and there is no treatment currently ap-
proved for the treatment of oral muco-
sitis. Amgen plans to submit the drug
for regulatory review sometime in 2004.
In a conference call on December
15, Amgen's management provided
2004 financial guidance and sales
ranges on its key product franchises.
The company forecasts a strong sales
growth for its key products, EPO/
Aranesp, Neuopgen/Neulasta and En-
brel. Nonetheless, Wall Street was
lukewarm to the company's 2003 and
2004 forecast as management did not
provide similar growth rates as seen in
earlier years for earnings and revenue.
The company said that its 2003 ad-
justed earnings per share is expected
to be in the middle of the company's
guidance range of $1.85-$1.95 versus
the market' expectation of $1.94. The
company indicated that for 2003 it ex-
pected sales in each of its franchises
