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Tuesday, Feb 7, 2023

Movement on Several Fronts at Amgen

Despite accounting for expenses related to U.S. healthcare reform, business has been on the upswing for Thousand Oaks-based biotechnology giant Amgen. In the first quarter of 2010, revenues increased for most of the company’s drug lines. And Amgen inched closer to gaining approval to market its osteoporosis drug Prolia (denosumab) in the U.S. and Europe. In late April, Amgen also announced a number of executive changes: Robert A. Bradway is now president and chief operating officer; George Morrow, executive VP of Global Commercial Operations, is retiring; and Michael Kelly is interim CFO. “We felt that we started the quarter in a positive way,” said Amgen spokesperson David Polk. “The main takeaway is that revenue was up.” But Amgen recorded $33 million dollars in expenses related to U.S. healthcare reform, he added. Total product sales for Q1 increased nine percent to $3,528 million from $3,238 million for the first quarter of 2009, according to Amgen’s latest earnings report. Sales in the U.S. totaled $2,677 million, an increase of seven percent. International sales increased 16 percent to $851 million. Sales increased for all of the company’s products except Aranesp. Worldwide sales of the latter, which has dealt with a number of FDA warnings over the years, were unchanged for the quarter and decreased eight percent in the U.S. Earnings per share increased 20 percent in Q1. And adjusting for expenses related to health care reform, 2010 total revenue and adjusted earnings per share were $15.1-$15.5 billion and $5.05-$5.25, respectively. Expenses to increase “Sales were in line with analysts expectations,” said Polk. But Amgen anticipates that healthcare reform expenses will increase to $200 million-$250 million by year’s end, he added. The latter expenses are tied to seven key elements, said Polk. A few of those include: a Medicaid based rebate increase; Medicaid rebates to managed care organizations; and expansion of public health services program eligibility. Regardless, Amgen publicly stated that it supports the new legislation. Recent executive changes are significant, said Polk. “This is an important leadership move for the company, and the reason is to maximize Amgen’s potential for success.” The board of directors chose Bradway, formerly executive VP and CFO, as president and COO because of his industry and leadership experience. He joined Amgen in 2006 as VP, Operations Strategy. Prior, he was managing director at Morgan Stanley in London. Morrow, executive VP of Global Commercial Operations, will retire effective Jan. 31, 2011. Until then, he will be involved in preparations for Amgen’s launch of Prolia and work on a variety of strategic projects, according to a press release. And Michael Kelly, VP of Finance and chief accounting officer, will serve as interim CFO. He joined Amgen in 2003 and has served as chief accounting officer since 2005. The company will conduct an external search for a permanent CFO. Uncertainty The big “what-if” for Amgen is whether or not it will gain approval to market the osteoporosis drug Prolia in the U.S. and Europe. On March 18, the Committee for Medicinal Products for Human Use of the European Medicines Agency re-issued a positive opinion for the marketing authorization of Prolia. If approved, Amgen will be able to market the drug in all European Union Member States. In October 2009, the FDA requested several items related to Prolia, including further information on the design of Amgen’s post-marketing surveillance program and updated safety data related to the drug. It did not require additional pre-marketing clinical trials. Amgen submitted the information in January. The company said the FDA has evaluated the submission related to use of the drug in treating postmenopausal osteoporosis. And the agency set an action date of July 25, 2010. If approved, total worldwide revenues for Prolia could be in the billions of dollars over the next few years, according to analyst estimates. Amgen is also seeking approval from the European Medicines Agency to market Vectibix for the treatment of colorectal cancer.

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