Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Amgen Secures Its Future

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

What's the deal with drug companies stacking stock-moving announcements on top of earnings this quarter?

Celgene (Nasdaq: CELG  ) boosted its earnings with a little clinical trial data, Bristol-Myers Squibb (NYSE: BMY  ) announced the acquisition of Medarex last week, and Amgen (Nasdaq: AMGN  ) secured its future with a marketing partnership with GlaxoSmithKline (NYSE: GSK  ) yesterday afternoon.

Oh yeah, and Amgen released earnings.

Revenue came in 1% lower than the year-ago quarter, but Amgen's current offerings aren't the future of the company. With drugs starting to see generic competition in Europe and year-over-year comparisons for anemia drug Aranesp still hurt by a label change in the third quarter of last year, investors couldn't expect much growth. The one bright spot was Enbrel, which Amgen sells with Wyeth (NYSE: WYE  ) , which increased 7% year over year after having a rough start to the year.

Adjusted earnings per share were up 13%, but much of that came from a decrease in research & development spending due to timing of milestone payments to collaborators. That's not exactly a sustainable way to grow earnings, and revenue has to start moving again to sustain long-term growth.

Fortunately, Amgen has a potential solution in its bone-strengthening drug, denosumab. The deal struck with Glaxo to market denosumab seems like a good fit. Amgen is letting Glaxo, a drugmaker with more international exposure, take care of developing countries such as China, Brazil, India, and South Korea. In places where Amgen already has a sales force, it'll cover the cancer indications and co-promote denosumab for postmenopausal osteoporosis.

Glaxo already has an agreement to market Roche's osteoporosis drug, Boniva, which, on one hand, means it has experience in the space, but, on the other hand, means Glaxo will be marketing two competing products. On the conference call, management assured investors that this isn't a problem, but we'll just have to wait and see if Amgen has gotten itself in the same predicament that Elan (NYSE: ELN  ) has, where Biogen Idec (Nasdaq: BIIB  ) markets both their joint multiple sclerosis drug, Tysabri, and Avonex, which it owns wholly.

At this point, Amgen's investors are in a waiting game for an approval of denosumab, but they won't have to wait too much longer to see its chances for success: the drug goes before an advisory panel meeting the middle of next month -- after earnings season, thankfully.

Double up on this Foolishness:

Elan is a Motley Fool Rule Breakers recommendation. The newsletter is always on the hunt for hot drug stocks and other cutting-edge picks. Click here to see all of our latest discoveries with a free 30-day trial subscription.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.

Read/Post Comments (1) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 30, 2009, at 8:53 AM, twocoins wrote:

    Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. AS USUAL.

    I presume that a Ph.D would be an interesting and educational read and offer some kind of insight into the drug industry.

    It's difficult enough to read and try to pick up an edge if possible. I'm thinking this is a sort of entertainment adventure for this author.

    Rarely, if ever, can I gain any useful information. Perhaps if Mr. Orelli could write about some of his investments, I would find it an interesting article. Thanx for the efforts.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 951899, ~/Articles/ArticleHandler.aspx, 10/26/2016 7:43:03 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 10 hours ago Sponsored by:
DOW 18,169.27 -53.76 -0.30%
S&P 500 2,143.16 -8.17 -0.38%
NASD 5,283.40 -26.43 -0.50%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/25/2016 4:00 PM
AMGN $157.90 Down -0.87 -0.54%
Amgen CAPS Rating: ****
BIIB $286.00 Down -4.78 -1.64%
Biogen CAPS Rating: *****
BMY $49.55 Up +0.32 +0.65%
Bristol-Myers Squi… CAPS Rating: ****
CELG $97.63 Down -0.44 -0.45%
Celgene CAPS Rating: *****
ELN.DL2 $0.00 Down +0.00 +0.00%
Elan CAPS Rating: ***
GSK $40.32 Down -0.36 -0.88%
GlaxoSmithKline CAPS Rating: ***
WYE.DL $0.00 Down +0.00 +0.00%
Wyeth CAPS Rating: ***