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Amgen is our favoured biotech pharma stock. The company released results this week and it's my job to unpack them for you.
You really need a chemistry degree to understand the ins and outs of their existing portfolio and their new drug pipeline. Even the experts don't know which experimental treatments will finally get FDA approval to be sold, and which will go on to become blockbusters. In addition, some products sell well for a while, but are superseded by better ones. Really popular drugs can sell well after the normal 20-year patent period, but others face generic competition.
We own Amgen because it is one of the biggest and best in the industry with a strong and diversified portfolio. We also like their focus on cancer and heart disease, which are two of the biggest killers in modern-day society. They have 12 branded drugs which brought in $6.9 billion of revenues during the quarter. The biggest is Enbrel (treats rheumatoid arthritis) with just over $1 billion in sales.
Quarterly revenues slightly missed expectations but earnings were a comfortable beat. The stock now trades on a price-to-earnings ratio of 14 and a dividend yield of 3.2%. This is by far the cheapest share in the Vestact portfolio, on these fundamental metrics.
Where is future growth going to come from? Repatha (for statin-resistant cholesterol) grew sales by 31% to $406 million and is becoming very influential. One of their more recently approved drugs Tezpire (asthma relief) grew by 21% and has good potential.
The anti-obesity drug program is probably the most exciting of the lot. Amgen have had considerable success with their compound code-named AMG 133 which demonstrated a 14.5% reduction in body weight vs baseline after 85 days. The drug has gone to a second phase trial which is expected to be completed in October 2024.
There will probably another trial after that and then FDA approval is required, only expected in 2027. This is a long waiting game but when you see the success of these weight-loss drugs for Eli Lilly and Novo Nordisk, we say it is worth "weighting" on Amgen.
