Tags: Amgen | AMGN | biotechnology | stocks

New Drugs Strengthen Amgen’s Pipeline

By Dan Weil   |   Tuesday, 23 Aug 2011 11:08 AM

Amgen (AMGN), the world’s largest biotech firm, is reaping the rewards of a strong drug pipeline. While sales of its anemia drugs have started to slip, its new medicine Denosumab is going great guns. Regulators approved that drug in 2010 as Prolia for women with osteoporosis and Xgeva for cancer victims with bones vulnerable to breaking.

U.S. sales of Xgeva soared 74 percent in the second quarter, to $73 million from $42 million in the first quarter. Christopher Raymond, an analyst at Robert W. Baird, predicts that Xgeva sales will reach $1.8 billion in 2014.

Prolia sales jumped 63 percent in the second quarter, to $44 million from $27 million in the first three months of the year. Sales also gained for Neulasta and Neupogen, which fight infections in cancer payments on chemotherapy, and Enbrel, which treats rheumatoid arthritis.

Those results helped push Amgen’s sales up 4.1 percent in the second quarter to $3.96 billion from a year earlier, though acquisitions and restructuring costs sent profit down 3 percent to $1.17 billion.

Buybacks, dividend

Amgen’s strong performance has allowed it to buy back shares and implement a dividend this year. Its dividend yield recently totaled 2.2 percent.

Sales of Amgen’s anemia drugs are dropping amid safety risks. Its No. 1 selling anemia drug Aranesp saw revenue slide 3 percent to $585 million in the second quarter, while revenue for Epogen plunged 17 percent to $543 million.

But Amgen’s future continues to look strong. “Despite near-term headwinds from U.S. healthcare reform, we expect the market roll out of Denosumab . . . to shift investor focus to AMGN's long-term pipeline and what we view as its attractive valuation,” writes Standard & Poor’s analyst Steven Silver, who has a four-star buy rating on the stock.

“While we forecast more than $3 billion in peak annual sales, we see AMGN being reliant
on the drug's commercial success and ultimate expansion into additional cancer indications,
given a mature core product roster.”

The company next reports around Oct. 29.

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Amgen (AMGN), the world s largest biotech firm, is reaping the rewards of a strong drug pipeline. While sales of its anemia drugs have started to slip, its new medicine Denosumab is going great guns. Regulators approved that drug in 2010 as Prolia for women with...
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