Amgen Fails, Yet Again
by Michael Shulman
BiotechBlitz
Amgen (AMGN) fails again.
The comapny's PREPARE trial failed to show any positive response in breast cancer patients treated with chemotherapy and its drug Aranesp before surgery.
Why am I not surprised? The only thing this dog has been successful at doing is giving investors fleas.
Amgen is the biotech everyone asks me about at conferences and in e-mails. I dislike the company, would sell it and see the stock going to $40 in the coming months. Why?
• It has a terrible pipeline and older drugs that are under pressure.
• This pipeline is a direct result of, arguably, the world’s worst R&D program – Despite 6,000 researchers and a $3 billion-plus research-and-development budget, the last time it introduced a drug that became a blockbuster, the Berlin Wall was still standing.
• Their anemia drugs are under severe pressure from several wings of the government and payers. Medicare is restricting payments; the FDA has issued guidelines to reduce use and dosing of patients; the company has spent millions on lobbying -- not a good sign for a supposed technology powerhouse. I see a big slowdown in revenue and a fall of as much as 25% of profits due these problems.
• Symptomatic of the company’s weakness and future failures was Friday’s announcement – conveniently made after the market close – that its drug Aranesp failed to perform in trials for treating breast cancer patients. The drug was used as part of a pre-operative regimen of chemotherapy.
I normally don’t spend a lot of time discussing the truly lousy companies -- although I do run a shorting service, ChangeWave Shorts, but Amgen is one of the godfathers of biotech, widely held and with near-mythical support form individual and institutional investors.
Right now, the stock is a "value trap.”
Many uninformed or optimistic investors, individuals and professionals look at the fall in the stock price, and past revenue and earnings growth, and assume the company will find a way to reclaim all of these.
It will not.
AMGN has a weak pipeline, its core anemia drugs (60% of revenue) will see slowing revenue growth or even sales declines in the coming quarters, the company has already used financial tools such as layoff announcements and stock buybacks to prop up the stock price, and there is little left in its quiver. The only thing left is more disappointing earnings and a falling stock price. Stay away.
BiotechBlitz is a regular contributor to BioHealth Investor
______________
BiotechBlitz
Amgen (AMGN) fails again.
The comapny's PREPARE trial failed to show any positive response in breast cancer patients treated with chemotherapy and its drug Aranesp before surgery.
Why am I not surprised? The only thing this dog has been successful at doing is giving investors fleas.
Amgen is the biotech everyone asks me about at conferences and in e-mails. I dislike the company, would sell it and see the stock going to $40 in the coming months. Why?
• It has a terrible pipeline and older drugs that are under pressure.
• This pipeline is a direct result of, arguably, the world’s worst R&D program – Despite 6,000 researchers and a $3 billion-plus research-and-development budget, the last time it introduced a drug that became a blockbuster, the Berlin Wall was still standing.
• Their anemia drugs are under severe pressure from several wings of the government and payers. Medicare is restricting payments; the FDA has issued guidelines to reduce use and dosing of patients; the company has spent millions on lobbying -- not a good sign for a supposed technology powerhouse. I see a big slowdown in revenue and a fall of as much as 25% of profits due these problems.
• Symptomatic of the company’s weakness and future failures was Friday’s announcement – conveniently made after the market close – that its drug Aranesp failed to perform in trials for treating breast cancer patients. The drug was used as part of a pre-operative regimen of chemotherapy.
I normally don’t spend a lot of time discussing the truly lousy companies -- although I do run a shorting service, ChangeWave Shorts, but Amgen is one of the godfathers of biotech, widely held and with near-mythical support form individual and institutional investors.
Right now, the stock is a "value trap.”
Many uninformed or optimistic investors, individuals and professionals look at the fall in the stock price, and past revenue and earnings growth, and assume the company will find a way to reclaim all of these.
It will not.
AMGN has a weak pipeline, its core anemia drugs (60% of revenue) will see slowing revenue growth or even sales declines in the coming quarters, the company has already used financial tools such as layoff announcements and stock buybacks to prop up the stock price, and there is little left in its quiver. The only thing left is more disappointing earnings and a falling stock price. Stay away.
BiotechBlitz is a regular contributor to BioHealth Investor
______________
posted by Nico at
4:55 PM
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