By and large, Amgen shareholders are not a happy bunch. The biotech’s stock is down about one-third in the past year, thanks to various FDA warnings and health risks associated with its Aranesp and Epogen anemia meds, not to mention reduced Medicare reimbursement. For awhile, ceo Kevin Sharer appeared in denial, until he began slashing jobs a few months ago. The poor performance ate away at his compensation last year by 27 percent, but Sharer still managed to get $13.2 million. Not bad for a bad year. All this has frustrated Steve Silverman,* a retired insurance executive who holds an undisclosed amount of Amgen stock in a family trust. A vocal critic of Amgen management, he wants Sharer to go. He explained his views…

Pharmalot: Beyond the usual sort of research, how have you gained your insights?
Silverman: I’m a large, private shareholder - I don’t like to say exactly how many shares I own - but it’s substantial. And I’m from Los Angeles. Spent most of my life there. And you know, Amgen is based in the area. And to be honest, I’m sociable and became friendly with some of their people over the years. So I would go there for a lunch now and then, and I took escorted tours around the facilities. Back then, it was like a kid’s club. You don’t have what you see now. They were busy, but not uptight about worrying about which problems were lurking around each corner. Things like patent expirations. Anyway, I’ve known or met with all the ceo’s.

Pharmalot: You say you’ve held Amgen shares for about 20 years now. But when did the disenchantment begin exactly?
Silverman: For me, it really started in 2001, after Amgen bought Immunex, which really offered one drug, Enbrel (a biologic used to treat arthritis and psoriasis). They thought it’d fit right with their program and goals. But to me, it seemed like a one-trick pony and they wouldn’t make their money back. Sure enough, within just a few years, they faced a lot of competition. And a couple of years ago, in his quarterly reports, Sharer acknowledged that it wasn’t exactly working out as they thought.

Pharmalot: What about Sharer then?
Silverman: Not much rapport there. I managed to corner him once. He’s proven himself to be a poor manager. He’s cowed the board. He should be a guiding light and know his products, but doesn’t. And the bottom line is that he hasn’t done well by shareholders. I’ve argued with his vice presidents that all their share buybacks haven’t proven beneficial or effective. Just look at the share price. Every time they buy the stock, it drops. They throw good money after bad. A dividend would create loyal shareholders. If they did that, they can attract more investors, especially those who like to stay, because it would provide a fixed income.

Pharmalot: But why don’t you have confidence in him?
Silverman: It’s his style. It’s not a transparent company. Look at the way he handled that clinical trial (which was halted in October 2006, but not disclosed publicly until February 2007, after a newsletter published the negative results). He had his hands on those results, but didn’t do anything about it. Then, the SEC and several states want to know what happened. He didn’t handle it properly. And he’s the ceo.

Pharmalot: What do you think of the product strategy?
Silverman: Not much. Take Nplate (which was just recommened for approval by an FDA panel). It’s for a rare blood disorder. Well, I talked to Amgen about this a couple of years ago and wasn’t impressed. I understand it will help people, but it’s fewer than 100,000 patients, something like 60,000 or 70,000. And it’ll bring in maybe $100 million-plus a year. This is a company making billions of dollars and this amounts to nickels and dimes. It isn’t going to help. Have they come up with any blockbusters? No.

Pharmalot: I take it you’re following the patent battle with Roche (in which Amgen won patent ligitation over its Aranesp anemia med, although a federal judge is trying to broker a compromise that would allow Roche’s product on the market over public health concerns). Do you agree with Amgen’s decision to reject Roche’s offer?
Silverman: No, Amgen just doesn’t get it. If they can get a 25 percent royalty (from Roche), plus an additional time beyond the patent expiration as an incentive to close the deal, they have that “bird in the hand.” This would give them a good measure of income they don’t have to work for. You can blame most of this on Kevin’s hard headiness. If Amgen is so worried about the potential damage by Roche’s Mircera, they can avoid a lot of costly expense by simply “competing” with Mircera’s reduced price.

Pharmalot: So as a big shareholder, do you favor a merger or acquisition?
Silverman: I’ve been discussing that with some of their people for awhile, but Pfizer is probably the only one that afford to buy them. But the dollar is so low, maybe an Asian company would consider it. What I really think should happen is they should get rid of Kevin. I’d like to see them bought out, but if that’s not going to happen, we should have a stronger ceo.

* No, he is not a relative.