Amgen dodges bullet, but Aranesp sales seen falling

By Deena Beasley

LOS ANGELES (Reuters) - Amgen Inc (AMGN.O: Quote, Profile, Research) dodged a bullet on Thursday when a U.S. advisory panel recommended tighter use of anemia drugs, but said the medicines should remain on the market for most cancer patients, sending the biotechnology company's shares up nearly 5 percent.

Wall Street analysts said oncology sales of Amgen's top-selling Aranesp could fall by as much as half if the proposals are finalized, which could make it hard for the company to meet the low end of its 2008 earnings target.

"There appears to be a modest relief rally in the stock, as the worst case scenario is off the table," said Morgan Stanley analyst Steven Harr said in a research note.

He added that Wall Street analysts will now need to lower their sales and earnings estimate for Amgen. "We think there is more downside than upside over the next several months and we are not yet comfortable stepping in to buy the stock," Harr said.

Before Thursday, Amgen's shares had fallen about 20 percent since early December when the U.S. Food and Drug Administration panel review was announced.

The panel of outside advisors voted that the FDA should sharply restrict the use of Amgen's Aranesp and Johnson & Johnson's (JNJ.N: Quote, Profile, Research) Procrit in cancer patients after studies showed that they raised the risk of death for some patients.

The drugs, known as erythropoiesis-stimulating agents (ESAs), are genetically engineered forms of a protein that boosts production of red blood cells. The injectable medicines also are sold for patients with kidney disease.

The panel recommended against giving the medicines to patients undergoing chemotherapy or other treatment that could cure their disease, or to patients with advanced breast cancer or head and neck cancer.