Biotech superstar Amgen (AMGN -1.53%) finds itself in an incredibly exciting position in 2020, with a lot to look forward to in 2021. The company has a number of late-stage clinical trials due to report results next year and is engaged in the ongoing development of new biosimilar drugs. Amgen also grabbed headlines last month as the first biotech stock to be included in the prestigious Dow Jones Industrial Average, giving mutual funds and exchange-traded funds that track the index increased access to Amgen's shares. Furthermore, Amgen hopes to be be fully recovered from the negative economic effects of the pandemic in 2021, and it may even make headway on a potential therapeutic for COVID-19.
For prospective investors, there may be a few opportunities to purchase the stock by the end of the year, but don't hold your breath for a deep discount anytime soon. As the company's current shareholders know, Amgen has a history of bouncing back from setbacks, and its plans for next year include marketing a plethora of products that can drive future earnings growth.
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Drugs for seniors will continue to be Amgen's powerhouse program
Though Amgen doesn't explicitly focus on creating drugs for senior citizens, many of the popular products in its lineup are indicated for older adults, and the company has also shown remarkable sensitivity to the specific needs of the demographic. In 2018, the company cut the price of its hyperlipidemia drug, Repatha, by as much as 60% to make it more affordable, leading the therapy to earn 20% more in sales revenue in 2019 than the year prior. Don't be surprised if the company uses a similar strategy with other drugs in the future.
Price cuts aside, rising sales of the company's newest drug will drive earnings through next year. Amgen purchased arthritis drug Otezla, the only oral non-biologic treatment for psoriasis and psoriatic arthritis on the market, for $13.4 billion in 2019. The therapy has already been a hot seller for Amgen, earning the company $561 million in the recent second quarter, despite the pandemic. The drug has already exhibited 14% year-over-year revenue growth on a quarterly basis. Expect Otezla revenues to rise over the course of the next year as Amgen continues to penetrate the market. Amgen is also investigating whether Otezla might be useful in treating COVID-19, which could provide its shares with a substantial upside as coronavirus stock investors turn their attention to the biotech.
Amgen expects its battered revenues from other products to recover in 2021 as the coronavirus pandemic (hopefully) ebbs. Amgen reported a 6% decrease in year-over-year quarterly sales of its osteoporosis therapy, Prolia, whose dip it attributed to vulnerable senior citizens avoiding the clinics where they normally receive infusions of the drug. As the company organizes alternative administration sites and the fear surrounding COVID-19 abates, revenues should return to normal levels. Investors should certainly hope that drugs can bounce back -- Prolia brought in a staggering $2.67 billion for Amgen last year.
Expect big pipeline updates amid the company's expanding biosimilars roster
Investors should expect Amgen to continue investing in its biosimilar portfolio as well. Biosimilars are roughly equivalent to generic drugs: Companies can manufacture medicines originally invented by another company once the patent protection has expired, 12 years after issuance, creating a similar product. The main difference between biosimilars and generics is that biosimilars refer to medicines that model those created with living organisms, while generic drugs refer to medicines that model other pharmaceuticals, which are synthetically created from different combinations of chemicals.
Amgen already has a portfolio of lucrative biosimilar products, including a biosimilar of the arthritis drug Humira, which brought the company more than $200 million in 2019 alone. MVASI and KANJINTI, both oncological therapies, launched in the U.S. last year and contributed to $568 million in total company sales from biosimilars. In 2020, the company will launch at least one biosimilar for inflammation, called AVSOLA -- a biosimilar to Johnson & Johnson (JNJ -1.19%) subsidiary Janssen Immunology's Revicade -- in addition to making progress toward commercializing at least two others. By 2021, these biosimilars ideally will have concluded their abridged clinical trial processes, be approved for sale, and on the market.
For other areas of Amgen's pipeline, 2021 will be a critical year. With 21 projects in phase 3 clinical trials without including biosimilars, expect as many as a dozen different programs in areas ranging from neuroscience and cardiology to hematology and nephrology to come to a close. Investors best remain aware that updates from these trials may encourage volatility in the company's stock price and present opportunities to buy the stock at a discount. If any of these late-stage projects unexpectedly miss their benchmarks for efficacy, Amgen's stock will take a small hit and a present an opportunity for investors to initiate a strong position.
