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[DewDiligence]

AMGN Slides as Roche Accepts Mircera Terms

[AMGN closed at 41 and change, the lowest level since the depths of the 2002 bear market.]

http://www.reuters.com/article/marketsNews/idUKN1821425720080318

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Tue Mar 18, 2008 1:58pm EDT

By Deena Beasley

LOS ANGELES, March 18 (Reuters) - Amgen Inc (AMGN) shares fell to their lowest level since 2002 on Tuesday after rival Roche Holding agreed to a judge's conditions clearing the way for U.S. sales of its anemia drug and the federal government cut the rate it pays for Amgen's Aranesp.

Amgen's shares, which have been battered over the past year by safety concerns related to its top-selling anemia drugs Epogen and Aranesp, were down nearly 5 percent.

Last October, a federal jury in Boston found that patents on Amgen's anemia drugs were valid and that Roche drug Mircera infringed three of them. Amgen then asked the court to permanently bar U.S. sales of Mircera, which is already on the market in Europe.

But U.S. District Court Judge William Young declined to grant a permanent injunction and said last month he would consider imposing a settlement under which Roche would pay a 22.5 percent royalty to Amgen and meet other conditions, including a Medicare sales price below that of Epogen.

Switzerland-based Roche said on Tuesday it filed documents accepting the conditions, which would apply to U.S. sales of Mircera as a treatment for anemia related to kidney disease and it is now awaiting a final decision by the court.

Amgen said in its filed response that the U.S. patent system would be harmed if the company's rights are not upheld.

The Thousand Oaks, California-based company also said the proposed royalty would not compensate it for the operating profit that would be lost to market share taken by Mircera.

Bear Stearns analyst Mark Schoenebaum said in a research report that he expects Amgen to prevail in the longer run, but the risk/reward for the shares ahead of a final court decision in late March or early April "is likely not favorable."

He said Amgen's U.S. Epogen and Aranesp sales for kidney disease represent about $1.50 per share of the $4.00 per share he expects the company to earn this year.

Meanwhile, the U.S. Centers for Medicare and Medicaid Services released late Monday new pricing for drugs given in doctors' offices, including a 4.2 percent cut in payments for Aranesp, which is used to treat kidney disease patients, as well as cancer patients undergoing chemotherapy.

The pricing covers patients enrolled in Medicare, the health-care plan for the elderly and disabled with about 43 million beneficiaries.

A federal advisory panel last week voted to recommend further restrictions in use of the anemia drug in cancer patients after some studies found that high doses of the drug may promote tumor growth.
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