Amgen Inc. (NASDAQ:AMGN) is seeing shares trade up another 2% pre-market after yesterday’s decision where an FDA panel rejected a proposal to set a specific target for red blood-cell levels in kidney-failure patients being treated with anti-anemia.  The panel suggested a slightly broader range for hemoglobin values that are used to measure red blood-cell levels.  This should remove part, once again part, of the anemia woes that have been hampering Amgen every day and should even remove a sore on Johnson & Johnson (NYSE:JNJ).

Last week 24/7 Wall St. outlined developments creating an "If, Then" scenario that could take Amgen’s stock significantly higher.  This move will act as the first catalyst in this scenario, and this stock was battered and tattered after it couldn’t catch a break anywhere.  If the Medicare reimbursement help from Congress stays as is, then the road to a partial recovery is set.  We even compared this to a situation that plagued Biogen-Idec (NASDAQ:BIIB) back in 2005.  The circumstances are of course different, but the impact and path surrounding the stock reactions and future paths is just too difficult to not notice.

This follows the March decision out of the FDA to put a black box warning on the label of these erythropoiesis-stimulating agents, or ESAs.  As sales of the three leading drugs in this subset exceeded $10 Billion, these had been seeing a sharp decline in sales as the FDA had been investigating higher doses.  A formal hemoglobin level was not reached by the FDA panel and the verbage is still unclear, but this is still far better than original fears of lower hemoglobin rates.

So far UBS is the only upgrade that was noticed on Amgen (AMGN), although its sell rating was only raised to Neutral.  The August short interest was more than 28 million shares, up from 26.9 million shares in July.  If those shorts haven’t started covering yet, they have to at least be thinking about it.  Amgen is still going to be treated more like a Big Pharma drug company in the future rather than one of the greatest biotechs on the planet, but this is a clear path to recovering some of its huge losses.

Amgen saw shares rise over 5.5% yesterday to $53.88 on the win, and shares are trading north of $55.00 in pre-market trading. 

Jon C. Ogg
September 12, 2007

Jon Ogg produces the 24/7 Wall St. SPECIAL SITUATION INVESTING NEWSLETTER; he does not own securities in the companies he covers.

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