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AMGEN BREWS $24 MIL. ERYTHROPOIETIN (EPO) HORMONE VENTURE WITH KIRIN, JAPANESE BEER MFR.; CLINICAL TRIALS ARE SCHEDULED TO BEGIN IN 1985

Executive Summary

Amgen has brewed a $24 mil. erythropoietin (EPO) hormone venture with Kirin, the Japanese beer mfr. According to a May 14 Amgen announcement, the two companies have agreed to a 50-50 joint venture operation for the worldwide manufacturing and marketing of "the third major hormone of man to be produced by genetic engineering techniques." EPO, "which is responsible for controlling production of red blood cells, is expected to find wide application in the treatment of kidney dialysis patients who are typically anemic due to low red cell counts," Amgen said. Human clinical trials of the hormone are scheduled to begin in 1985, Amgen noted, adding: "The total worldwide market for the product is estimated at $100 mil. annually." EPO is normally produced in the kidney and transported through the bloodstream to bone marrow where it regulates production of red blood cells, Amgen explained. "But in patients with severely diseased kidneys, EPO production is insufficient to produce the required red cells and the only known solution has been adding the red cells through frequent blood transfusions. By administering EPO, the need for transfusion is expected to cease." Under terms of the Kirin-Amgen Inc. joint venture "to be capitalized at $24 mil.," Kirin will market EPO in Japan, with Amgen responsible for U.S. marketing. Amgen, which will initially manufacture EPO for the joint venture, estimated that there are 66,000 dialysis patients in the U.S. and another 40,000 in Japan. Abbott Is Amgen's Largest Shareholder; Firms Have $19 Mil. Diagnostic Development Agreement In addition to the Kirin investment, Amgen also has a major $19 mil. arrangement with Abbott in the human diagnostic field. According to a registration filed with SEC, "In May 1983, Amgen entered into a five year R&D agreement with Abbott, the company's largest shareholder" with more than 15% of Amgen's common stock. Abbott President G. Kirk Raab is an Amgen director. Under the Abbott agreement, the registration states, "Amgen will develop several types of diagnostic products and certain related therapeutics which will be manufactured and marketed by Abbott worldwide. Abbott will pay Amgen approximately $19 mil. over the next five years and has the option to extend the agreement for one or two additional years at approximately the same annual funding levels. Amgen will receive a royalty on net sales to the year 2000 on products developed by Amgen or Abbott that use certain diagnostic techniques covered by the Abbott agreement." Other major shareholders in the four-year old company besides Abbott include Tosco, the petroleum refiner with about 9% of Amgen stock; Amgen founder and President George Rathbun with about 7%; and a number of accounts handled by Rothschild Inc., a venture capital investment firm whose senior VP James Blair is an Amgen director. The Rothschild group has about 6% of Amgen common stock. Amgen's gene cloning projects include alpha interferon and gamma interferon work. The company's work in human vaccines "has concentrated on an subunit vaccine for hepatitis B," according to the SEC filing. Amgen also said that it has "developed an organism capable of producing acetaminophen." The firm had FY 1983 revenues of $1.51 mil. and had a net loss of $7.08 mil.

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