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Amgen Kicks Off Week of Big Biotech Earnings

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Slow growth and competition are concerns for Amgen investors. Celgene, Gilead, and Biogen Idec will all report quarterly results in the next week.

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MINYANVILLE EXCLUSIVE: When Amgen (AMGN), the biggest of the big biotech companies, reports first-quarter earnings at the end of the day Tuesday, the focus will be on declining sales of key products, competitive threats, and plans for a mountain of cash.

Amgen is the first of the four biggest US biotech companies to report quarterly earnings. Celgene (CELG) releases earnings before markets open on Thursday and Gilead Sciences (GILD) will report its results after markets close the same day. Biogen Idec (BIIB) reports Tuesday, May 1 before markets open.

It's imperative that each company meets sales and profit targets for the past quarter, but investors are particularly interested in updates on drugs being developed as they represent future growth. At least that's the case in three of the four storylines.

For Amgen, it's a tale of an aging giant that is the least nimble of the four. CEO Kevin Sharer will preside over his last quarterly conference call with investors as he prepares to step down and make way for new chief exec Robert Bradway next month.

Bradway takes over a company that had only 4% sales growth in 2011 and 3% revenue growth in the fourth quarter as Amgen's largest products reported declines or single-digit increases. Sales of anemia drugs Epogen and Aranesp declined in the fourth quarter, raising investor concerns about how the company is going to maintain its dominance in this treatment area.

The strategy is key as Amgen faces new competition going forward following the recent approval of Affymax's (AFFY) rival drug Omontys, ISI Group analyst Mark Schoenebaum notes.

The fastest-growing drug at Amgen is denosumab for bone loss -- marketed as Xgeva for cancer patients and Prolia for osteoporosis. Sales of the two brands combined for just more than $550 million last year, which is a small contributor to 2011 revenue of $15.6 billion. However, the products are expected to increase to $3 billion - $4 billion by 2015, Schoenebaum says.

Finally, investors will want to know how Amgen intends to spend its cash hoard. At the end of 2011, Amgen had almost $21 billion in cash and liquid investments. Amgen is the only biotech to pay dividends, an unheard of practice in the industry until last year. It is also buying back its own stock, another sign of the company's maturity. Expect the company to be asked about acquisitions.

Shares of Amgen are up 7% this year, trading at $68.87 Tuesday morning.

Here's a snapshot of the other big biotech earnings over the next week.

Celgene's blood cancer drug Revlimid accounted for two-thirds of the company's $4.8 billion in 2011 sales. Revlimid sales will jump about 19% this year, Celgene predicts. So there's a great deal of focus on that one drug, which the company is testing for additional uses. Likewise, Celgene is testing breast cancer drug Abraxane for additional uses. The company has a number of other clinical trials in early to mid-stages of development. Expect full updates on the pipeline.

Celgene shares are up more than $15 this year, trading at $78.03 Tuesday morning.

Gilead, long known as the dominant player among makers of HIV treatments, is trying to develop the next big hepatitis C drug. Since buying hepatitis drug developer Pharmasset for $11 billion this year, the investor attention has largely been toward hepatitis. Recent study data raised investor hopes that Gilead will make its acquisition pay off, though any stumble will be duly noted. (See Gilead Sciences Soars on Hepatitis Drug Study.)

While it's still the biggest drug company in the HIV market, future growth will come from other treatment areas. "Gilead's core HIV franchise, with sales of $7 billion in 2011, will likely continue to grow, but not at historical rates," Stifel Nicolaus analyst Joel Sendek said in a recent note. The company's stock is up a whopping 27% this year, trading at $51.97 Tuesday morning.

Shares of Biogen are up almost 30% over the past year as investors are expecting an experimental multiple sclerosis drug to become a blockbuster. Today, the company released more data pointing to a safe, effective pill for multiple sclerosis (known as BG-12) . If approved, Biogen would go head-to-head with Novartis' (NVS) Gilenya and would complement a lineup of big-selling older medicines. MS drugs Tysabri and Avonex make up a majority of Biogen's sales.

Sendek says Biogen owns 38% of the MS drug market, a share he predicts will rise to more than half by 2015. Shares of Biogen rose more than 2% to $128.73 in morning trading today, following the drug data release. Expect BG-12 to dominate the conversation when Biogen holds its conference call next Tuesday.

Twitter: @brettchase

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No positions in stocks mentioned.
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