Does Amgen Have a Genentech-Like Cancer Arsenal? (AMGN, MRK, RHBY, DNDN)

September 29, 2010 · Filed Under Anemia, Cancer, dendreon, fda, osteoporosis, R&D, vaccine · Comment 

Amgen Inc. (NASDAQ: AMGN) may have a recent trading history of being dead money.  There is at least a small chance that this could finally change through time.  If the implications end up coming to fruition, Amgen could be sitting on perhaps what could be the next Avastin-like franchise.

Two recent pre-clinical mice studies show that the osteoporosis drug Prolia from Amgen may actually treat breast cancer in a manner that is separate from its bone-related function.  While you will hear “may” and “could” a lot, this is something to watch for Amgen due to a long-standing range bound stock price.

Bisphosphonates as a class, from Merck & Co. (NYSE: MRK) with Fosamax and even from Roche Holding AG (RHHBY) with Boniva, could reduce the risk of breast cancer.

Prolia was approved in June as an osteoporosis treatment and it is expected to add to the growth of the biotech giant.  Amgen is seeking to expand its approval for the bones of cancer patients. Additional data is not expected until late in 2010.  Prolia is already approved to treat osteoporosis, but Amgen also has filed for FDA approval to help bone complications in cancer patients at much higher doses.

One study published by the journal Nature showed that RANK Ligand and its receptor seemingly play a key role in hormone-induced breast cancer and the study shows an indication so far that it decreased and delayed breast cancer onset.

Another Nature article may be a bit more pointed or less independent due to ties with Amgen.  That article follows the same lines and implies that the blocking RANK Ligand lowers or weakens breast tumor development.

The implication today is that the studies suggest that Prolia could actually help to delay or prevent cancer rather than just treating bone-related issues that come up in cancer treatment.

Whether Prolia is a Holy Grail treatment is not going to be known in the immediate future.  Maybe years.  Amgen is in a long-term clinical study aimed at testing Prolia’s efficacy in early stage breast cancer that has a higher risk of recurrence and the study will measure if Prolia extends the time period that women live before breast cancer returns and before it ultimately spreads into bones.

Why do we call this an Avastin-like ‘potential’ franchise?  Amgen is still studying whether or not the drug helps to prevent advanced prostate cancer (in men, obviously) from metastasizing and entering the bone structure.  That data is also due in the fourth quarter per our expectations.  Treating cancers in men and women can often be very different because of hormonal differences.  If Prolia is a success in one cancer, the theory would be that it has other cancer treatments in hiding.

Again, all of these points are highly dependent upon success from the start, and human data often is grossly different than in mice, monkeys, and in static environments.

Dendreon Corporation (NASDAQ: DNDN) and others have signaled multiple cancer treatments from the same process. Dendreon noted that other cancer cell antigens play a role in immune reactions that may help the body’s resistance against cancer and noted that CA9 is present on approximately 75% of cervical and colon cancers and 95% of renal cancers.  It also noted that the carcinoembryonic antigen is present on 70% of lung cancers, virtually all cases of colon cancer and about 65% of breast cancers. Does that mean a treatment for one is a treatment for another?  No, but it keeps the door open to endless treatment avenues.  Oncolgists have always said that each person’s cancer treatment will vary drastically from another’s.

IF… THEN… Amgen finds itself in a giant “IF THEN” scenario.  The good news is that these revenues are not apparently factored in for finite revenues in the years beyond 2011.  New potential uses can bring great expansion in revenues.  It has happened with Avastin, and ultimately Genentech was acquired.

Amgen may be too large to ever be acquired because its market cap is roughly $52.5 billion.  At $54.75, its 52-week trading range is $50.26 to $61.85.  Amgen peaked around $80 in 2005 to 2006 and the trading band since early 2007 has for all practical  purposes been $50 to $60 for most of the time.  There is also a value component here despite its market cap.   Thomson Reuters has estimates of $5.11 EPS and $15.02 billion in revenues for 2010 and $5.38 EPS and $15.43 billion in revenues for 2011.

How many biotech stocks trade at 10 to 11 times earnings?  Not many.  That is why we have called Amgen the biotech that trades like a stodgy Big Pharma company rather than a growth biotech stock.

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JON C.  OGG

Eli Lilly Earns Major Win As Appeals Court Upholds Evista Ban (LLY, TEVA)

September 1, 2010 · Filed Under osteoporosis · Comment 

According to Reuters, Eli Lilly & Co. (NYSE: LLY) won a major battle against Teva Pharmaceutical Industries Limited (NASDAQ: TEVA), which had been petitioning for a generic version of Lilly’s drug, Evista. The court upheld the patent on Evista, which is used to treat Osteoporosis.

-Michael B. Sauter

Amgen is Acquiring… But Who? (AMGN)

June 18, 2010 · Filed Under Anemia, M&A, osteoporosis · 1 Comment 

Amgen Inc. (NASDAQ: AMGN) is on the acquisition path.  Yesterday at a Goldman Sachs conference, CEO Kevin Sharer said that Amgen is aggressively looking for acquisition targets on an international diversification basis.  These acquisitions are not meant to be game changers and will not be any mega-deal as Sharer said that he won’t be betting the company’s future on any single deal.

The company was also noted as seeking to invest its growing offshore cash position on an intelligent basis and not in any companies that needed to be fixed or turned around with current problems.

As far as too much diversification, that might not be expected either.  Sharer shared that the clinical diagnostics acquisition belief does not really fit with the core operations of the company because it was noted that very few drugs have been directly linked to biomarkers that accurately patient suitability for drug responses.

At face value, Sharer also said that Amgen has a robust mid-stage drug pipeline.  As far as the woes of anemia drugs, Sharer of when or at what level the anemia drug sales of Aranesp and Epogen would come due to Medicare reimbursement changes, pricing pressures, and ultimately the patent expirations. It was just this week that new news came out that Medicare is revisiting anemia drug coverage, and throughout the election and start of the new administration President Obama had noted “generic biologicals” which target this anemia market.

An acquisition could of course be in teh cards here in the U.S. if the drugs have a large international presence and/or a large international opportunity.  The difference is that it seems that Amgen may be looking for new growth opportunities in new markets or in related markets rather than just more of the same.

The United Kingdom’s healthcare cost-effectiveness monitor has also just now recommended that Amgen’s newly-launched drug called Prolia for treating osteoporosis in post-menopausal women who are at increased risk for bone fractures.

We have been waiting for Amgen to make a diversification away into new or tangent markets.  Amgen is likely going to be acquiring.  The question is WHO? Or whom?  Stay tuned.

JON C. OGG

Things Looking Up At Amgen (AMGN)

June 4, 2010 · Filed Under analyst calls, Anemia, fda, Financial, osteoporosis · Comment 

Things are finally looking up for Amgen Inc. (NASDAQ: AMGN).  The stock has been a victim of stagnation and mediocrity for an extended period of time.  Today came a ratings agency almost-grade from Moody’s.  Earlier this week, we featured over at 24/7 Wall St. the return of three big biotech turnarounds.  That focused on Amgen, as well as on Biogen Idec and Genzyme.

Moody’s Investors Service has now raised its outlook on Amgen to positive, which is a bias-upgrade more than an actual upgrade.  The catalyst was the unexpected early FDA approval of Prolia this week. Moody’s believes that this approval will significantly improve the company’s longer term growth prospects and also believes that this catalyst now creates “an upward rating pressure” for the company.

As Amgen has been plagued by safety and reimbursement issues, as well as political risks of the politicos trying to get more generic biologic equivalents, the FDA action this week may limit some of its exposure to healthcare reform and other political risks.

On the financial side, Moody’s also noted that Amgen has a favorable operating performance and a strong base of free cash flows mixed in with its growing cash position.

The current rating from Moody’s is an “A3″ rating, which is four noteches above junk status.

The stock has been dead money for the last year and actually far longer.  Today’s 1% drop to $55.00 needs to be kept in relation to the notion that this was just at $50.76 on Tuesday before this FDA approval was known.

Amgen is one we believe will be the first of the major biotechs to offer up a dividend to shareholders.

JON C. OGG

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