Amgen Inc. (NASDAQ:AMGN) is one of the world's largest biotechnology companies, and management plans to update investors on the company's second quarter financial results on July 27. Will Amgen's results make this Goliath a stock worth buying?
In this clip from The Motley Fool's Industry Focus: Healthcare podcast, analyst Kristine Harjes and contributor Todd Campbell discuss what investors should be looking for when management announces their results.
A transcript follows the video.
This podcast was recorded on July 19, 2016.
Kristine Harjes: Todd, what are you looking at going forward? We have a bunch more biotechs and big pharmas that are reporting over the next month or so.
Todd Campbell: Yeah, it's going to be fast and furious. Listeners are going to want to pay a lot of attention to the Fool in the coming week, because we're going to have a lot of coverage on earnings for all of these big companies. I'm watching with some intrigue Amgen. One of the reasons I'm watching Amgen is, we were just talking about biosimilars and the potential risk to J & J and Remicade -- well, Amgen has some pretty big sellers that also could face the sting of biosimilars soon. I want to see whether or not their new drugs are making enough headway to offset any headwinds that could pop up from biosimilars there too.
Harjes: The name to watch there would be Enbrel, that's their big anti-inflammatory drug that could face biosimilar competition soon.
Campbell: Right. $1.4 billion per quarter in sales could be in jeopardy if we get a biosimilar approved by the FDA. There's also a biosimilar under way by Coherus that targets Neulasta, which is their white blood cell boosting drug that's used in patients undergoing chemotherapy. That could come to market some time in the next year or two, who knows. There are risks here to billions of dollars of Amgen's sales. Now, Amgen isn't just sitting back. They have new drugs under development. They spend a lot of money in R & D. And, they have their own pipeline of biosimilars targeting other companies' drugs that are losing patent protection, most notably a biosimilar that targets Humira.
Harjes: Yeah, they're kind of playing both sides, offense and defense. By the way, for our listeners who may not know what a biosimilar is, it's essentially a generic version of a biologic drug. They're a little bit more complex, so they're not quite as easy to duplicate as generics that we're all very used to. If you're interested in more information about them, I can totally send that your way. Email us at firstname.lastname@example.org, or you can tweet us @MFIndustryFocus. Just wanted to get that out there in case anyone was scratching their head on what a biosimilar is.
Campbell: I know, there's so many different terms we have to be familiar with as healthcare investors, especially when we're talking about biotechnology in pharmaceuticals. But hey, that's what we're here for, right?
Harjes: Yeah, we're here to help. Anything else to watch with Amgen?
Campbell: Again, I would say the most important thing that I'm trying to figure out is whether or not payers are actually starting to reimburse for Repatha, which is their next-generation cholesterol busting drug that won approval last summer, and it's pretty much been -- we'll call it a dud for now. I think the sales are less than $20 million a quarter. We'll see whether or not they've gotten any new agreements in place with insurers, whether or not those sales are starting to watch higher or not. I'll be watching that.
Kristine Harjes has no position in any stocks mentioned. Todd Campbell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.