By Ben Levisohn
Investors love biotech stocks, but heading into July, Amgen (AMGN) was unloved, especially compared to its other biotech giants like Regeneron Pharmaceuticals (REGN), Gilead Sciences (GILD) and Biogen (BIIB). No longer. Shares of Amgen have jumped nearly 6% after reporting better than forecast earnings and raising its guidance. UBS analyst Matthew Roden has the details:
Amgen reported another strong quarter ($51m beat on product sales, $0.14 beat on EPS) and increased 2015 revenue and EPS guidance… With the beat, 2015 revenue and EPS guidance has been increased to the ranges of $21.1bn to $21.4bn (from $20.9bn to $21.3bn) and for EPS to $9.55 to $9.80 (from $9.35 to $9.65), respectively. Operating margin was 48.8%, 140bps lower than the previous quarter, and is expected to be lower in 2H with a modest increase in opex over prior years due to the launch of new products.  Enbrel, which produced the greatest beat, had a sequential inventory impact that caused a 21% QoQ growth. Mgmt. still believes the drug could produce $5bn in annual sales.  The Repatha CV imaging study, which will read before the outcomes trial, has a precedent for being added to statin labels. We spoke with mgmt. and note that Amgen’s Repatha program had a more varied patient population, including variances in statin use, than the Praluent program, but didn’t disagree with Regeneron’s estimate that 8-10m are addressable.  Duration of Kyprolis therapy in 3 rd line is 5.6 months, and mgmt. expects this to double over time with more data.  Epogen market share declines are from competition (1/3) and Aranesp switches (2/3), which is now used by 15k patients.
While operations (and expectation management) continue to deliver, we think the primary debate will be the strength of the Repatha launch vs. the uncertainty as to how impactful biosimilar competition will be to Amgen’s base business…
Its not just the beat that has Amgen’s stock soaring. The company also added Fred Hassan to its board of directors, increasing speculation that Amgen could be a takeover target. JPMorgan’s Cory Kasimov and team aren’t so sure:
Despite the results and all of the pipeline progress, in our eyes the quarter was overshadowed by the addition of Fred Hassan to Amgen’s board of directors, which we believe will only fuel the recent M&A speculation (as highlighted by Bloomberg, etc.)…Management cautioned to not “over read the tea leaves” with Fred Hassan joining the BoD. However, Hassan is well known in the biopharmaceutical industry as having involvement in organizations that were acquired (i.e. Pharmacia, Wyeth, etc.), and this was a key point of investors following this evening’s announcement.
Through the first six months of the year, Amgen has dropped 2.6%, while Regeneron had climbed 24%, Biogen had gained 19%, Gilead had risen 25%, and the iShares Nasdaq Biotechnology ETF (IBB) had jumped 22%. Today, Amgen has jumped 4.9% to $180.08 at 10:58 a.m., while Regeneron has gained 1.9% to $557.40, Gilead has advanced 0.6% to $118.64, has risen 0.8% to $319.50, and the iShares Nasdaq Biotechnology ETF is up 1.6% to $384.87.
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