FDA states anemia drugs tied to deaths — Amgen falls but J&J rises
Posted by: in Products and ServicesFiled under: Bad news, Products and services, Johnson and Johnson (JNJ), Amgen Inc (AMGN)
It is interesting to see how one piece of news can have a different impact on two stocks. The news? The Food and Drug Administration found that anemia drugs are tied to increased risks of death and faster-spreading tumors at high doses.
Amgen Inc. (NASDAQ: AMGN) makes Aranesp and Epogen, while Johnson & Johnson (NYSE: JNJ) makes Procrit, all used to help cancer and kidney disease patients overcome anemia. But now the FDA states these drug show greater risks for patients with certain cancers on tumor progression and survival, as well as blood clots. While both companies believe the dangers were seen when the drugs were given for unapproved uses, including higher-than-recommended doses, it is possible that following the study, the FDA may suggest to end the use of these drugs for patients whose anemia is caused by cancer chemotherapy, or who are at greater risk, but still grant it for kidney disease patients.
Still, as some analysts believe, with the recent updates both companies had on product prescribing and labeling, it is unlikely the drugs will be completely inadvisable for use in cancer patients as they allow the cycle of chemotherapy to continue more smoothly, helping to strengthen them after each treatment. It is more likely the companies will work with the FDA for better regulation on these drugs.
On the news, Amgen shares fell almost 2%, while JNJ shares climbed over 1%. Surprising? Not really.
Aranesp sales totaled $827 million in the fourth quarter, while sales of Epogen (marketed more to kidney disease patients) totaled to $638 million in the same period, together record-keeping for 40% of the $3.7 billion of the company’s overall revenue. And these figures are already showing significant declines (25% and 3% respectively) over the year ago period as the drugs were tied to higher risks of heart attack, stroke and death at high doses.
Meanwhile, at Johnson & Johnson the situation isn’t all that bad, as one can surmise from the stock reaction. The company had announced $61 billion in overall sales for 2007, of which about 40% was pharmaceutical. Procrit only had $1.69 billion in U.S. sales in 2007, an 18% drop from the previous year, but only accounting for less than 3% overall sales. I have the ability to only assume that worldwide sales of Procrit are at most double, still bookkeeping for a relatively smaller portion of JNJ sales when compared to Amgen.
It is interesting to see the impact of this news on both companies and how diversification can be key, not only in one’s personal portfolio, but in companies as well.
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