The past four years have been absolutely phenomenal for Amgen (AMGN -0.50%), with its shares tripling in value since the beginning of 2011, inclusive of dividends. After building its pipeline for more than a decade through organic research and acquisitions, Amgen's nearly one-dozen late-stage studies are all coming to the forefront around the same time. When you add potential drug launches side-by-side with ongoing late-stage catalysts, you usually have a recipe that excites investors.
Heading into 2015, there's plenty of hope that Amgen's run higher will continue, but following such a monstrous four-year run, there's also reason to believe that unless Amgen's late-stage data and drug launches are flawless, it could be in for a challenging year.
The good news for biotech investors is that the "Super Bowl" of all healthcare events is being held right now in San Francisco, known as the JPMorgan Healthcare Conference. In Amgen's Tuesday presentation, investors were made privy to what the company's CEO Bob Bradway believes are the key events that everyone should be focused on in 2015.
After listening to the webcast and perusing the presentation, here are the seven things I believe Amgen's CEO wants you to know about his company.
No. 1: Up to six new drugs are expected to launch this year
Without question, the driving force behind Amgen's success or failure will be derived from whether or not it receives regulatory approval for a half-dozen drugs in 2015.
Source: Amgen.
Although its on-body injector for white blood cell-enhancing drug Neulasta and rare blood cancer drug Blincyto will hopefully move the revenue needle in the right direction, all eyes are focused on LDL-cholesterol drug evolocumab, chronic heart failure drug ivabradine, and metastatic melanoma drug talimogene laherparepvec, known as T-Vec. Individually all three have blockbuster capability, especially evolocumab whose future indications could apply to patients with moderately high triglyceride levels. Clearly these launches are worth keeping a close eye on.
Source: Amgen.
No. 2: Cardiovascular should be an important growth driver over the long term
I found it interesting that Bradway spent quite a bit of time focusing on the idea that Amgen envisions cardiovascular playing a big role in its growth. To that end, Bradway expects ivabradine to be approved prior to evolocumab, although both drugs are expected to play a key role in boosting Amgen's revenue and profits going forward. Remember, the leading cause of death in the U.S. is heart disease, so a chronic heart failure drug and another designed to lower dangerously high triglyceride levels could be a dynamic duo in this space.
No. 3: Good news for Kyprolis
One tidbit of positive information unveiled by Bradway was that the European Medicines Agency had granted multiple myeloma drug Kyprolis an accelerated assessment.
Source: Amgen.
Kyprolis previously delivered a statistically significant improvement of 8.7 months in progression-free survival, or PFS, as a second-line multiple myeloma therapy in the ASPIRE trial. However, it failed to hit the mark of statistical significance for improved overall survival in the FOCUS study. While improved PFS can net a drug an approval in the U.S., it's extremely difficult to garner a thumbs-up from the European Medicines Agency with essentially equivalent survival data. Though I consider the accelerated assessment encouraging, I wouldn't let it go to investors' heads just yet.
No. 4: Partnering up T-Vec could yield big rewards
I found it encouraging that in spite of T-Vec's potential as a metastatic melanoma therapy, Bradway talked up the potential for its immunotherapy to really come to life as a combination therapy, as well as mentioning T-Vec's potential in other solid tumor cancers.
One study in particular that's incredibly intriguing is one which combines Amgen's T-Vec with Merck's anti-PD-1 inhibitor Keytruda. Between T-Vec retraining the immune system to recognize cancer cells and Keytruda further enhancing the immune system's desire to attack foreign cells, the implication is that this duo could be quite the force to be reckoned with. The initial study will enroll about 110 patients.
This study comes after a similar pairing of T-Vec with Bristol-Myers Squibb's Yervoy in June. That study led to shrinkage or elimination of tumors in 56% of the 19 participating melanoma patients.
No. 5: There will be plenty of new data to sift through in 2015
Just because six new products could launch in 2015 doesn't mean there will be a lull in clinical data, either. According to Bradway, chronic heart failure drug omecamtiv mecarbil is due to report phase 2b data this year, along with phase 2b data for asthma drug hopeful brodalumab. Additionally, AMG 416 for secondary hyperparathyroidism is expected to yield phase 3 data in a head-to-head against Sensipar (an Amgen-owned drug).
Source: Amgen.
No. 6: The biosimilar program is ramping up
It might be an afterthought in most investors' minds, but Amgen's biosimilar program is also really starting to come together. Bradway announced that Amgen ended the year with nine biosimilars in its pipeline, up from six when the year began. In addition, Amgen is expected to report phase 3 results for ABP 501, a biosimilar for rheumatoid arthritis drug Humira, currently the best-selling drug in the world, and ABP 215, a biosimilar for non-small cell lung cancer drug Avastin, in 2015.
Although biosimilars have lower prices and weaker margins than branded drugs, they can often make up in volume what they lack in margins. It's also a great hedge for Amgen, which will eventually be plagued by the patent cliff as well.
No. 7: Shareholder incentives are important to Amgen
Lastly, Bradway again made it clear that shareholder value creation remains a top priority. He reiterated the company's 2015 guidance provided a few months ago which calls for roughly $2 billion in share repurchases this year.
Bradway was also pretty clear in his belief that bigger profits at Amgen are going to lead to phenomenal dividend growth. Amgen boosted its dividend by 30% last year and very well could put more money in income investors' pockets if its handful of regulatory submissions work in its favor.
What's an investor to do?
Personally, while I do believe Amgen is set up for a number of regulatory successes in 2015, I believe much of this has already been priced into its shares.
Perhaps the biggest question mark remains Kyprolis and whether or not the EU would ever consider approving a drug which didn't significantly improve overall survival for multiple myeloma patients over existing therapies. It's true that Amgen has other sources of revenue generation beyond Kyprolis, but a failure here could haunt Bradway, as Amgen paid a whopping $10.4 billion to get its hands on Onyx Pharmaceuticals' Kyprolis and remaining cancer pipeline.
To be clear, this doesn't mean I have the gall to bet against Amgen, either. With evolocumab and ivabradine looking like a genuine one-two punch in cardiovascular care, I believe Amgen should witness a number of positive catalysts. However, until we have better clarity on Kyprolis, and perhaps have a quarter or two of prescription data to analyze for key players like evolocumab, ivabradine, and T-Vec, I'd suggest sticking to the sidelines.
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