Amgen's
A sign that Amgen has achieved big pharma one-drug-doesn't-matter status? A sign that investors know pancreatic cancer is a tough indication? Probably both.
Amgen didn't give many details beyond that it was stopping the trial that was comparing a combination of ganitumab and Eli Lilly's
The only solace investors can take in the news is that the decision was based on a futility analysis while the trial was going on. By ending the trial early, Amgen avoids spending cash on a trial that wasn't going to work. It's also stopping a phase 2 trial in advanced pancreatic cancer.
The drug is also being tested in colorectal and small-cell lung cancer, a couple of other hard-to-treat cancers. It's all relative of course -- most cancers are hard to treat -- but pancreatic, colon, and lung cancers are near the top. Amgen's investors seem to have gotten that and not priced in success into the valuation. Investors in Celgene
The other side of the story is that Amgen has gotten quite large. It's actually larger by market cap than Bristol-Myers Squibb
When a company gets this big, balancing where to put the cash it's bringing in becomes increasingly complex. Investors should look for the company to make strategic bets with its R&D dollars to leave as much cash as possible to return to investors through dividends and share repurchases. A few long-shots in hard-to-treat indications are OK, but Amgen needs to keep in mind what it's become.
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