It's been a good week for biotech titan Amgen (NASDAQ:AMGN). The company reported impressive results from a phase 2 trial with its drug AMG 162 in the treatment of osteoporosis. AMG 162 appears to compare favorably with Merck's (NYSE:MRK) Fosamax, at least in the drugs' effects on bone mineral density. While data on bone density is nice, in future studies it will be important for Amgen to demonstrate a reduction in bone fractures, as that is the gold standard in osteoporosis.

The osteoporosis market is huge and represents a large opportunity for Amgen. Fosamax had $1.6 billion in sales in the first half of this year, and both Evista from Eli Lilly (NYSE:LLY) and Actonel from Procter & Gamble (NYSE:PG) and Aventis (NYSE:AVE) had first-half sales of more than $500 million. With AMG 162 recently entering phase 3 clinical trials, the drug is now on the horizon for capturing a chunk of this market and making a contribution to future profit growth.

Amgen investors sure hope a drug like AMG 162 gets approved to give the company's stock a shot in the arm. From the early 1980s through 1999, Amgen's stock was a once-in-a-lifetime phenomenon. However, over the last five years, there has been a disconnect between the performance of the company and the stock. Despite tremendous increases in revenues and profits, the stock is up only 29% over the past five years. An annual increase in value of less than 6% is probably not what shareholders in the world's largest biotech company are expecting.

The problem was that coming out of the biotech mania of 1999, profits have had to catch up to the company's market cap. Compared to revenues of $3 billion and profits of $1.1 billion back in 1999, revenues and profits in 2004 should triple to over $10 billion and $3 billion, respectively. Against that stellar performance, a measly 29% gain in stock price is disappointing.

Now with a P/E back in the mid 20s, the company is valued such that Amgen shareholders should be rewarded in the future if products like AMG 162 are successful.

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Fool contributor Charly Travers does not own shares of any company mentioned in this article.