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What News Will Drive Amgen Stock Next?

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Amgen (NASDAQ: AMGN  ) stock has been on a bit of a roller coaster lately. Shares are up 23% year to date, but 8% off the high set earlier this month before the company reported first-quarter earnings.

It wasn't pretty
Adjusted earnings per share was up 22% year over year, but the long-term health of a biotech company is always going to be measured in revenue growth rather than earnings growth, which is subject to additional factors.

Earnings in the first quarter were boosted by a tax benefit, which isn't exactly sustainable as a long-term growth strategy. The earnings-per-share growth was also aided by a buyback that created fewer shares outstanding, which I guess could be duplicated over and over again, but it's certainly not organic growth.

The top line wasn't pretty. Revenue was up just 5% year over year. That's not horrible, but it doesn't exactly justify the double-digit growth in the price of Amgen stock in just four months.

Anemia drug Aranesp was the big loser, down 10% year over year, and the flat sales of top-selling white-blood-cell booster Nuelasta dragged down the growth posted by bone drugs Xgeva and Prolia, which posted gains of 46% and 61%, respectively.

Enbrel, which the company sells with Pfizer (NYSE: PFE  ) , also posted a nice gain of 11%. It's now tied with Neulasta as Amgen's top-selling drug. It's amazing that a drug can continue to post double-digit gains nearly 15 years after it was first approved, especially with so many anti-inflammatory drugs approved for treating rheumatoid arthritis and other related indications Enbrel is approved for. AbbVie's (NYSE: ABBV  ) Humira was approved four years later and has surpassed it in sales, but both franchises, as well as Johnson & Johnson's Remicade, have developed into multibillion-dollar blockbusters. Humira topped $9 billion last year.

Still a biotech
While the price of Amgen stock will mostly be dictated by its current offerings, its pipeline still has some influence. With revenue around $18 billion annually, the addition of another blockbuster would drive sales up about 5%. That's true organic growth.

According to an abstract posted at Forbes, Amgen's PCSK9 inhibitor was able to help some patients with a rare genetic disease that causes extremely high levels of cholesterol. For some patients, the drug, dubbed AMG 145, seems to work as well as Aegerion's (NASDAQ: AEGR  ) Juxtapid or Kynamro from Isis Pharmaceuticals (NASDAQ: IONS  ) and Sanofi, without the side effects. In addition to taking some sales from Juxtapid and Kynamro, AMG145 looks poised to treat patients with less severe cholesterol problems given the clean side effect profile.

Which way next?
The growth of Xgeva and Prolia is quite promising. The drugs are still minor players, but as they get larger, they'll have a greater influence on the overall revenue number.

The next major move for Amgen stock might come from the pipeline, which is a little less predictable. Amgen has six new drugs in phase 3 development and is trying to expand quite a few current drugs into additional indications.

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