Amgen's Future Is Bright

Terry is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Amgen (NASDAQ: AMGN) has gone up a lot in share price over the last few years. Amgen has climbed up 91% over the past three years, leaving long-term investors with a lot of gains. In the same time period the Dow Jones has only gone up 64%. Despite the big run, the company can still see its share price rise higher in the coming years. The company has been known for producing big blockbuster drugs, and will continue to do so in the future. I attribute a lot of the success on these three particular drugs: Epogen, Neupogen/Neulasta, and Enbrel. 

Amgen has a nice pipeline of drugs. This is especially true when Amgen had acquired Decode for $415 million back in 2012. Decode was researching genetics to target diseases. Amgen liked how Decode was able to find a gene that was the cause of Alzheimers disease, and to target it with drugs. From this year until 2016, Amgen plans to report eight late-stage trials. Two important ones are talimogene use to treat Melanoma, and AMG 145, which is supposed to lower cholesterol. I would say that the most important of the late-stage pipeline drugs would be AMG 145, because the cholesterol market is now estimated to be a $20 billion dollar market, or larger. 

Blockbuster drug to the rescue

Epogen was first approved by the FDA back in 1989 for use in dialysis patients with Anemia. The drug has made the company over $37 billion since its approval. The only downside with Epogen is that the patent for it is set to expire this year in 2013. As you can imagine, this will be a huge hit to the company in sales, as there are about 400,000 or more dialysis patients that need to use this drug. 

There was a slight bit of competition in 2012, when the FDA approved Omontys from a biotech name known as Affymax. The competition from Affymax was short lived as the company announced removal of Omontys off the market to investigate deaths, from patients who took the drug. This situation now allows Amgen to be the sole provider for dialysis patients with Anemia. 

Intense competition

The other drug from Amgen that had big sales was Enbrel. One key thing to note is that Amgen's research and development team didn't create the drug at all. Amgen had acquired small-cap biotech stock Immunex back in 2003. The acquired company was working on Enbrel, which is used to treat Rheumatoid Arthritis. I would say that Amgen has had decent success with Enbrel, but the downside is that it has to share its profits with Pfizer (NYSE: PFE)

Pfizer has its own drug currently out on the market that treats many types of arthritis, called Celebrex. Celebrex is a big money maker for Pfizer, because the drug produced  $2.72 billion in profit in 2012. Another good thing for the company is that in March of 2013, it won a patent ruling. This ruling gives Pfizer market exclusivity for Celebrex until 2015. 

Amgen has a drug called Neupogen which boosts white blood cells in patients who have cancer and take chemotherapy. There is an increased version of Neupogen known as Neulasta. I say increased version because Neulasta is the same drug as Neupogen, but it requires fewer injections. Amgen obtains more money per treatment for Neulasta. 

Teva Pharmaceuticals (NYSE: TEVA) has a bio-similar version of Neupogen, which was approved by the FDA in August of 2012. Teva has already launched in Europe, but will have to wait to launch the drug in the United States. The reason being is because Teva entered into an agreement with Amgen to be able to launch the biosimilar drug in November 2013. This is just a bit of time before Amgen's patent expiration on the Neupogen drug. 

Final thoughts

Amgen is an outstanding company with many drugs that have made it billions over the years. The company is specialized in many areas of the biotech sector, and has been able to acquire companies as well to expand its pipeline. For instance the acquisition of Immunex back in 2003, which allowed Amgen to be able to sell Enbrel in the open market. These blockbuster drugs continue to make billions for the company for the foreseeable future, as there is limited competition. 

Pfizer will be a big competitor going forward, but Amgen has the pipeline to be able to compete. Affymax is no longer a problem in terms of competition, because of the company having to remove Omontys off the market for the time being. Amgen will continue to acquire small-cap biotech companies that fits in with its long-term plan. Also, Amgen has pumped some money into another small-cap biotech stock, because of the potential value, known as Cytokinetics. Cytokinetics has trials going for heart failure, and ALS, commonly called Lou Gehrig's disease. Going forward, long-term investors have plenty to be happy about as Amgen's future is very bright! 


Terry Chrisomalis has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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