Shot In Arm For Amgen Stock
Shares of Amgen gained 22 percent Monday after several brokerages upgraded the stock on the heels of a court victory awarding the company worldwide rights to distribute and market a new drug to treat blood disorders.
Merrill Lynch, Morgan Stanley, Prudential, BT Alex. Brown and others upgraded Amgen after a decision by an arbitration panel late Friday gave Amgen exclusive rights to sell erythropoiesis stimulating protein (NESP) over Johnson & Johnson.
The drug could replace the best-selling EPO if it is approved by the Food and Drug Administration for treatment in dialysis and other therapies, including cancer treatment.Amgen rose 19 3/16 to 107 5/16 early Monday.
Johnson & Johnson fell 2 9/16 to 76 15/16 after Lehman cut its sustainable earnings-per-share growth rate for the company to 11 percent from 12 percent; other brokerages also trimmed numbers for Johnson & Johnson.
Merrill said its yearly revenue estimates for NESP from 2001 to 2004 are $165 million, $415 million, $820 million, and $1.1 billion.
Its three- to five-year earnings growth rate for Amgen is increasing to more than 15 percent with acceleration in later years. Merrill put a $117 price target on Amgen.
"The direct effect of NESP will be for it to take share from Johnson & Johnson," Merrill analyst Eric Hecht wrote in a bulletin. "We don't currently view NESP as superior to (existing drug) Procrit, so we are not expecting NESP to dominate Procrit's market."
Johnson & Johnson had claimed that it had worldwide rights to NESP under a 1985 license agreement with Amgen. EPO, with sales of $3 billion, produced 5 percent of Johnson & Johnson's revenue and more than half of Amgen's.
NESP is a synthetic substitute for EPO, which must be injected three times a week. Clinical trials for NESP indicated that hemoglobin counts were raised with weekly injections of NESP.