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Amgen (AMGN) Outperforms Industry Year to Date: What's Next?

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Amgen (AMGN - Free Report) has a diverse and growing portfolio of medicines in large therapeutic categories that it expects will help it drive growth through the end of the decade despite a declining pricing environment.

Amgen stock has risen 6.4% this year so far against a decrease of 23.6% for the industry.

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Amgen’s key drugs like Prolia, Repatha and Xgeva are aiding sales, driven by volume growth. These drugs are gaining consistent approvals for label expansions.

Moreover, Amgen is evaluating Prolia/Xgeva, Vectibix, Enbrel, Aranesp, Kyprolis, Nplate and Blincyto for additional indications. Importantly, new drugs Lumakras and Tezspire are off to an encouraging start. Lumakras (sotorasib) was approved for advanced non-small cell lung cancer (NSCLC) in the United States in May 2021 and EU in January 2022. It is now approved in 40 countries. Also, label expansion studies on Lumakras, with the potential to significantly expand the currently addressable patient population, are progressing rapidly. Tezspire (tezepelumab) was approved to treat severe asthma in the United States in December 2021.

Amgen is also rapidly advancing its robust pipeline of early and late-stage assets. Several phase III readouts are due in the second half of 2022, which could act as catalysts for the stock.

Amgen also boasts a strong biosimilars portfolio, which is an important long-term growth driver. Amgen markets Kanjinti (a biosimilar of Roche’s [(RHHBY - Free Report) ] Herceptin) and Mvasi (a biosimilar of Roche’s Avastin) in the United States and Amgevita (a biosimilar of AbbVie’s [(ABBV - Free Report) ] Humira), Kanjinti and Mvasi outside the United States. In 2020, Amgen launched Avsola, a biosimilar of J&J (JNJ - Free Report) /Merck’s blockbuster immunology medicine, Remicade and in January 2021, the company launched Riabni, a biosimilar of Roche’s Rituxan. In the United States, AbbVie’s Humira biosimilar, Amjevita is expected to be launched in 2023.

Biosimilars of J&J’s Stelara (ABP 654), Alexion’s Soliris (ABP 959) and Regeneron’s Eylea (ABP 938) are in late state development. The top-line data from a phase III study on ABP 654 showed no clinically meaningful differences between ABP 654 and J&J’s Stelara. The top-line data from the phase III studies on ABP 959 and ABP 983 are expected in 2022.

Amgen’s biosimilars revenues are annualizing at over $2 billion in sales and are expected to more than double from 2021 to 2030. supported by the Amjevita launch and other biosimilars in late-stage development.

In August, Amgen announced a definitive agreement to acquire ChemoCentryx for $52 per share in cash, which amounts to a total enterprise value of approximately $3.7 billion. The acquisition of ChemoCentryx, if successfully closed, will add a strategic new growth asset in Tavneos to Amgen’s portfolio. Tavneos was approved for treating antineutrophil cytoplasmic antibody (ANCA) associated vasculitis, a serious systemic autoimmune disease, in October last year.

Amgen has its share of problems. Increased pricing headwinds and competitive pressure are hurting sales of many of Amgen’s products, including some biosimilars.

Amgen’s net selling price has declined for the past few years, with the trend continuing in 2022 due to increased competition. In addition, foreign exchange headwinds, increasing interest rates, inflation, supply chain pressure and the war in Europe are creating an uncertain macro environment

Nonetheless, continued strong growth of key drugs, higher sales from ex-U.S. markets, increased contribution from its high-quality biosimilars and costs savings should keep the stock afloat in the second half of 2022.

Zacks Rank

Amgen currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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