Free Annual Reports
Amgen's New Double-Play Drug
Biopharmaceutical company Amgen Inc.'s (Nasdaq:AMGN) just-approved drug for osteoporosis, Prolia, generically known as denosumab, has also just been shown to diminish the risks of bone problems in prostate cancer patients. Amgen hopes for a boost in revenue from this multi-purpose drug.
IN PICTURES: Learn To Invest In 10 Steps
Amgen's Direction
Amgen has been known for its medicines for the blood, such as Aranesp and Epogen, its erythropoietin compound, as well as its arthritis medicine, Enbrel. Erythropoietin, or EPO, is used for patients undergoing hemodialysis, or kidney dialysis, to increase the low red blood cell count due to anemia. EPO is also used as an adjunctive treatment for chemotherapy patients with anemia due to cancer. Epogen continues to be an important part of Amgen's product line.
With Prolia, Amgen enters into the area of osteoporosis treatment with a medicine that will compete in a $7 billion field filled with many competitors already. GlaxoSmithKline's (NYSE:GSK) Boniva and Eli Lilly's (NYSE:LLY) Evista and Forteo are some of the other well-known names. Prolia will cost $825 per injection and will be given twice yearly. The generic version of Merck & Co.'s (NYSE:MRK) Fosamax, alendronate, is widely available for $100 to $200 per year. Other brands cost between $1,000 and $1,400 per year.
Prolia and Cancer Treatment
In a study presented at the latest American Society of Clinical Oncology (ASCO), Prolia was shown to delay fractures more effectively than Zometa, a Novartis (NYSE:NVS) drug approved to treat skeletal cancers. If the drug Prolia is approved for cancer treatment as expected, it's projected to add up to $3 billion or more in revenue by mid-decade for Amgen. Amgen's 2009 revenue was $14.6 billion.
Prolia has already been shown to be effective in preventing fracture in post-menopausal women, and it has milder side effects. The prescribing channel for most of Amgen's drugs is usually through specialists, while its competitors' osteoporosis drugs are usually prescribed through primary-care physicians. So the less common prescribing channel may blunt some of the revenue gain for Amgen. The potential, however, for the multi-uses of Prolia is promising.
Blockbuster Potential
While the drug Prolia has been cited for its blockbuster potential, investors should always remain wary regarding such claims. Although the study for Prolia in its prostate cancer application is promising, the drug has not been approved yet for cancer treatment. Also, the vagaries of competition with the approved use of Prolia in osteoporosis do present challenges. The glut of competitors and the lack of ease mentioned in Prolia being prescribed, as well as its price, might slow down an expected revenue gush.
Amgen The Investment
Amgen, whose earnings growth has been described as "tepid," and "flagging," had annual diluted normalized earnings per share of $4.16 in 2008 and $4.60 in 2009, with a projected $5.02 for 2010 and $5.36 for 2011.The growth in earnings is actually encouraging, yet in the biotech arena, investors often expect blockbuster numbers.
The Bottom Line
Amgen certainly could use the addition of another mainstay product to go along with its blood strengthening and arthritis meds. The biotech space is a high-stakes game, so there are no sure things. There's medical efficacy, and then there's revenue production, and they are two different things. Amgen has been a successful company developing cutting edge treatments which are also big revenue producers, so investors should closely monitor how its latest products affect the top and bottom lines. (Learn more about investing in drug companies, see Stocks On Drugs: What It Takes To Get High).
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
IN PICTURES: Learn To Invest In 10 Steps
Amgen's Direction
Amgen has been known for its medicines for the blood, such as Aranesp and Epogen, its erythropoietin compound, as well as its arthritis medicine, Enbrel. Erythropoietin, or EPO, is used for patients undergoing hemodialysis, or kidney dialysis, to increase the low red blood cell count due to anemia. EPO is also used as an adjunctive treatment for chemotherapy patients with anemia due to cancer. Epogen continues to be an important part of Amgen's product line.
With Prolia, Amgen enters into the area of osteoporosis treatment with a medicine that will compete in a $7 billion field filled with many competitors already. GlaxoSmithKline's (NYSE:GSK) Boniva and Eli Lilly's (NYSE:LLY) Evista and Forteo are some of the other well-known names. Prolia will cost $825 per injection and will be given twice yearly. The generic version of Merck & Co.'s (NYSE:MRK) Fosamax, alendronate, is widely available for $100 to $200 per year. Other brands cost between $1,000 and $1,400 per year.
Prolia and Cancer Treatment
In a study presented at the latest American Society of Clinical Oncology (ASCO), Prolia was shown to delay fractures more effectively than Zometa, a Novartis (NYSE:NVS) drug approved to treat skeletal cancers. If the drug Prolia is approved for cancer treatment as expected, it's projected to add up to $3 billion or more in revenue by mid-decade for Amgen. Amgen's 2009 revenue was $14.6 billion.
Blockbuster Potential
While the drug Prolia has been cited for its blockbuster potential, investors should always remain wary regarding such claims. Although the study for Prolia in its prostate cancer application is promising, the drug has not been approved yet for cancer treatment. Also, the vagaries of competition with the approved use of Prolia in osteoporosis do present challenges. The glut of competitors and the lack of ease mentioned in Prolia being prescribed, as well as its price, might slow down an expected revenue gush.
Amgen The Investment
Amgen, whose earnings growth has been described as "tepid," and "flagging," had annual diluted normalized earnings per share of $4.16 in 2008 and $4.60 in 2009, with a projected $5.02 for 2010 and $5.36 for 2011.The growth in earnings is actually encouraging, yet in the biotech arena, investors often expect blockbuster numbers.
The Bottom Line
Amgen certainly could use the addition of another mainstay product to go along with its blood strengthening and arthritis meds. The biotech space is a high-stakes game, so there are no sure things. There's medical efficacy, and then there's revenue production, and they are two different things. Amgen has been a successful company developing cutting edge treatments which are also big revenue producers, so investors should closely monitor how its latest products affect the top and bottom lines. (Learn more about investing in drug companies, see Stocks On Drugs: What It Takes To Get High).
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
by
Greg Sushinsky
Greg Sushinsky is a passionate independent investor, who has done his own research, analysis and investing for 20 years. One of his earliest investing memories was when he first saved and bought U.S. Savings Bonds with his own money as a small child. From there, he studied investing on his own and made small stock purchases as he grew as an investor.
Sushinsky still follows the markets, studies and reads widely in financial literature, and has written over 75 articles on investing. He is also a professional editor, whose work is published extensively in large-circulation magazines, digests and across the internet. In other pursuits, Sushinsky writes fiction and has a university degree in philosophy. To see more of Sushinsky's literary work, see http://writing.gregsushinsky.com/.
Sushinsky still follows the markets, studies and reads widely in financial literature, and has written over 75 articles on investing. He is also a professional editor, whose work is published extensively in large-circulation magazines, digests and across the internet. In other pursuits, Sushinsky writes fiction and has a university degree in philosophy. To see more of Sushinsky's literary work, see http://writing.gregsushinsky.com/.
Free Annual Reports
http://sp.fastclick.net/ad/tr/10858-64082-15546-0?mpt=c18ed0b91b955cecd25e221b9b917966
