Amgen - Repatha not as effective as hoped

On Friday before the US market opened we had the results from a large scale study on the effectiveness of Amgen's Repatha drug which lowers cholesterol. The results from the drug were positive but not positive enough for traders, the stock fell 6.4% on Friday (Amgen is getting whacked after disappointing study results for its $14,000 cholesterol drug). The big thing to note about this drug is that it costs between $8 000 - $15 000, depending on the dosage required. As you can imagine, insurance companies are not keen to shell out that kind of money without proof that the drug has benefits. The main benefit needed is a reduction in the number of people having heart attacks and needing to be hospitalized, which could cost insurers more than the cost of Repatha.

Analysts are expecting the drug to have a huge take up, currently one of the smaller drugs that Amgen creates but expected to be their second biggest with 15% of revenues by 2020. That sort of growth only happens with insurance company approval. One of the biggest positives about the drug is that it seems to become more effective as time goes on, which means that next year this time when the next wave of study numbers is released we should see an even greater impact and effectiveness from the drug. Another factor is that the regulators may list Repatha as a drug option of high risk cholesterol patients, which would basically force the insurers to start using the drug or face being sued by patients for negligence.

Amgen creates many life changing drugs, the reason that we own them. This will be a damper on the share price because it creates a bit more uncertainty about the future but given the vast drug portfolio that Amgen has, this is not a make or break moment. We are still holders here.