Amgen Posts Net Loss After Big Merger-Related Charge

Amgen Inc. of Thousand Oaks reported a hefty third-quarter loss Wednesday due to a $3-billion charge related to its acquisition of Immunex Corp.

The world’s largest biotechnology company reported a net loss of $2.6 billion, or $2.10 a share, reversing net income of $330 million, or 30 cents a share, a year earlier. The write-off exceeded Amgen’s July estimate of $2.4 billion.

The one-time charge swamped improved operating results led by higher sales of Amgen’s newest drugs. Amgen said that excluding the write-off and other noncash charges, it would have reported earnings of $437 million, or 34 cents a share, for the third quarter.

Revenue rose 49% to $1.5 billion from $1 billion, a result of the acquisition and the launch of new medications. Drug sales rose 53% to $1.3 billion.

Amgen said it expects drug sales to grow in the high-30% range for 2002, up from the previous estimate of mid-20% growth.

Chairman and Chief Executive Kevin Sharer said the company had a strong quarter with sales of Neulasta, a medication for chemotherapy-related infections, exceeding expectations. “It indicates a strong future,” he said in an interview.

Regarding the write-off, Sharer said the higher figure reflected a closer examination of Immunex’s business and did not contain any surprises.

Amgen said combined sales of its anti-anemia drugs Epogen and Aranesp rose 29% to $672 million. Aranesp sales for the quarter were $114 million, driven by use in oncology. Amgen has high hopes for Aranesp, a competitor to Procrit, a $4-billion-a-year drug that Johnson & Johnson markets under a license from Amgen.

Sales of Neulasta and its first-generation product, Neupogen, rose a combined 32% to $474 million. Amgen said it expects sales of the anti-infection drugs to grow in the low- to mid-30% range, up from its previous estimate of mid-20% growth.

Sales of Enbrel, a rheumatoid arthritis treatment acquired in the Immunex deal that closed July 15, were $158 million. Amgen said it expects sales to be at or below the low end of its previous 2002 sales estimate of $800 million to $850 million, in the midst of a year-long shortage.

Amgen confirmed the number of patients on Enbrel fell from 79,000 in June, but did not provide an new number. In early November, the Food and Drug Administration is scheduled to inspect a factory in Rhode Island that will double the amount of Enbrel available, Amgen said. Sharer said he continues to believe the FDA will approve the factory in the first quarter of 2003.

Amgen did not affirm previous Enbrel sales estimates of $1.2 billion to $1.4 billion in 2003 and $3 billion in 2005. The company said it would update its forecast near the end of November.

Also on Wednesday, Chiron Corp., the fourth-largest biotechnology company, said third-quarter income rose 58% on higher sales of its blood-testing equipment and a cancer drug.

The Emeryville-based company reported profit of $83.6 million, or 44 cents a share, up from $52.9 million, or 27 cents, a year earlier. Revenue rose 22% to $368.5 million from $302 million.

Chiron said sales of its newest product, the Proclex blood-screening test for HIV and hepatitis C, more than doubled to $36 million. Sales of Proleukin, for skin and kidney cancer, also doubled to $32 million.

Vaccine sales rose 9% in the quarter to $126 million. Chiron said it expects sales of its flu vaccine to increase by 25% during the flu season, which peaks in February.

Amgen and Chiron announced results after the markets closed. In Nasdaq trading, Amgen shares rose 20 cents to $50 and Chiron shares sank 86 cents to $41.36. In after-hours trading, Amgen rose to $51.49 and Chiron fell to $40.