Monday, April 02, 2007

Calls of Note Part 5

- JP Morgan says that in conjunction with MedPanel, wtheyconducted a proprietary survey of 50 high volume oncologists to gauge future trends for Amgen's (NASDAQ:AMGN) Aranesp. They view the survey as robust as it represents almost 200,000 pts. On the positive side, the data indicate that hemoglobin (Hb) targets in chemotherapy induced anemia (CIA) pts are not expected to markedly decline going forward. This has been a widespread concern on the Street. On the negative side, new patient starts and overall utilization of Aranesp in CIA may be pressured going forward.

Use of erythropoietin stimulating agents (ESAs) may decline in 12 mo with 58% of respondents expecting decreases b/t 0 and 20%+. In addition to lower ESA growth, Aranesp may lose as much as 5% of CIA share in 12 mo driven by oncologists opting out of ESA therapy.

JPM has lowered their 2007-2010 Aranesp forecasts by 10-12% and EPS by 2-4%, which in their view reflects realistic assumptions based on the survey results. 2007-2008 Aranesp estimates are now $4.12B (0% growth) and $4.49B (9% growth) respectively, from $4.60B and $5.1B prev. 2007-2008 EPS ests are now $4.25 and $4.61 respectively, down from $4.33 and $4.81 prev.

Reiterates OW. They're comfortable recommending AMGN shares at current levels as they believe that their anemia assumptions are reasonable and grounded by data (not sentiment). Firm sees more upside than downside to revised forecasts, and finds AMGN's risk/reward attractive at 13X their 2007 ests (versus 16.8X for US Big Pharma).

Notablecalls: AMGN sure looks like it wants to bounce here. I'm going to call the JPM's call as actionable. The analyst Geoffrey Meacham has gone the extra mile for investors here and his estimates are likely rock solid in terms of quantifying the ESA risk.

No comments: