Wong’s BioTech Stock Report - Earning Season Genentech, Amgen, Abbott Laboratories
January 27th 2003. Corporate year-end earnings season have began which many of the companies who have made their announcements have meet Wall Street’s expectations. But the news is overshadowed by the uncertainty surrounding Iraq and the potential for military action by the United States. The global situation has led to mixed trading of equities, which continues to pressure the overall market sentiment. For the biotech sector, Genentech (NYSE: DNA) did not disappoint Wall Street with its earnings results. Amgen (NASDAQ: AMGN) followed the same suit, recently announcing strong results after delivering a steady stream of good news to its investors throughout the month, setting high expectations for the company. Wall Street’s focus is on Amgen’s Enbrel, as analysts question if Amgen will get its money worth. (If you recall Amgen paid a hefty price for Immunex to get Enbrel.) Amgen is hopeful that they will be able to expand Enbrel’s label. In a recent Phase III clinical trial, Enbrel proved to be very effective as a psoriasis treatment.  Nearly 60 percent of patients achieved the 75 percent goal of improving their disease condition after using Enbrel for 24 weeks. Undoubtedly, Amgen will pursue to market Enbrel in the U.S. and compete with other biotech companies for market share and who have not received FDA approval, Biogen’s (NASDAQ: BGEN) Amevive and Genentech/Xoma’s (NASDAQ:  XOMA) Raptiva. Earlier in the month, the Food and Drug Administration (FDA) had cleared Abbott Laboratories’ (NYSE: ABT) drug for rheumatoid arthritis (RA), known as Humira, which some industry analysts see as a potential blockbuster product. Despite the approval of Humira, Amgen has maintained its earnings estimate. While Humira will intensify the competition in RA, Enbrel has a long history and is well positioned for the non-RA markets such as psoriasis. Even though Humira may be easier to administer, Enbrel has the better efficacy profile. The FDA’s decision had minimal impact on Amgen’s 2003 earnings’ guidance as the company took into account this potential outcome. Amgen is a top-notch biotech company whose growth will come from three key drugs, Aransep, Nestula and Enbrel. Amgen will continue to deliver. The next exciting drug for Amgen is recombinant human keratinocyte growth factor (rHu-KGF) to treat oral mucositis. Phase III studies were positive, indicating that rHu-KGF decreased the duration and incidence of severe oral mucositis in patients undergoing bone marrow transplantation treatment for hematologic malignancies such as lymphoma, multiple myeloma, and leukemia. We look forward to learn more about the clinical benefit of this drug in the coming month.
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