Amgen Gains on Aranesp News

The biotech announced favorable results for a new study of its anemia drug

Amgen (AMGN) announced on Apr. 19 that results from a study of its Aranesp compound supported recent efforts to prove the anemia drug's safety for uses beyond those already approved. The news relieved investors, who have worried during recent months after other Aranesp research disappointed.

In an effort to find more uses for the drug, Amgen has been studying Aranesp's impact on cancer patients who suffer from the deficiency of red blood cells. The "145 study" involved 600 previously untreated patients with extensive-stage small-cell lung cancer who were on platinum-containing chemotherapy.

Researchers, who wanted to find out whether increasing or maintaining hemoglobin concentrations with Aranesp could improve such patients' survival, learned that the people who received Aranesp had the same risk of death as those on placebos. Meanwhile the Aranesp-treated patients had improved levels of hemoglobin and significantly lower risk of blood transfusions.

"These results contribute to the growing body of evidence on ESA safety," said Roger M. Perlmutter, M.D., Ph.D., executive vice president of Research and Development at Amgen, in a press release Apr. 19.

After the news investors bid up Amgen's stock 3.9% to $62.32 per share on the Nasdaq Apr. 19. The Thousand Oaks, (Calif.) biotechnology company's shares have fallen nearly 9% year to date.

"This alleviates some of the recent concern that has weighed on the biotech's stock," Morningstar analyst Karen Andersen said in a research note. "However, the news has a neutral effect on our fair value estimate, as we've stood by our belief that the drug is safe for approved uses." She kept her estimate at $83 per share.

In July 2002, Aranesp was approved by the Food and Drug Administration to treat cancer patients who suffer from anemia due to chemotherapy use. But Amgen has suffered other setbacks on developing Aranesp during recent months, even as its rival Roche is seeking approval for a rival drug called Mircera this May. In January, Amgen announced results from a study that suggested the drug could increase the risk of death when used in other ways or higher doses that have not had approval yet. Then in March the Food and Drug Administration said Amgen should include more information on Aranesp's labels, warning doctors about the risks associated with different doses of the drugs.

News also hit in January that when patients used Amgen's colon cancer drug Vectibix while undergoing a chemotherapy treatment with Avastin, the attempt only succeeded in giving some people diarrhea, dehydration and infection.

"Safety concerns have weighed on AMGN shares since the negative data from Aranesp in January and Vectibix in March. We see this news as helping to restore investor confidence," said Standard & Poor's equity analyst Steven Silver in a research note. "While we expect competitive challenges to remain, we view AMGN's long-term fundamentals as intact."