Shares of biotech blue-chip stock Amgen (NASDAQ:AMGN) catapulted higher by 14% in October, based on data from S&P Capital IQ, after the company delivered a slew of positive data, mostly toward the end of the month.
For starters, we had Amgen's earnings report, which topped estimates for yet another quarter. Amgen recorded revenue of $5.72 billion, a 14% increase from the prior-year quarter, while its adjusted profits climbed 18% to $2.72 per share. Comparatively speaking, Wall Street was looking for almost $400 million less in sales and just $2.38 in EPS. Amgen also upped its full-year guidance, appeasing investors.
A day prior to delivering its third-quarter earnings report Amgen also announced that the Food and Drug Administration had approved Imlygic (previously talimogene laherparepvec) for the treatment of advanced melanoma. Imlygic isn't expected to be a huge seller for Amgen, but it nonetheless adds more fuel to the fire of a pipeline that's delivered around a half-dozen new therapies to market over the past year.
Continuing on down the line, Amgen and Cytokinetics (NASDAQ:CYTK) announced that a phase 2 study known as COSMIC-HF involving omecamtiv mecarbil in patients with chronic heart failure demonstrated statistically significant improvements in a number of cardiac function measures. Heart failure affects 23 million people worldwide per the press release, so there's hope that Amgen and Cytokinetics' therapy could have global appeal if it can duplicate this success in later-stage trials.
Finally, Eli Lilly's (NYSE:LLY) announcement that it was scrapping evacetrapib, its CETP inhibitor designed to lower LDL-cholesterol, is a boon for Amgen and a few other drug developers that have next-generation cholesterol drugs in the works or on the market. Amgen's PCSK9 inhibitor Repatha now has one less competitor to worry about.
A lot went right for Amgen in October. But can the good times continue for this biotech juggernaut? I believe the answer is yes thanks to its extensive late-stage pipeline success.
When Amgen announced that it planned to deliver late-stage results on 10 novel therapies by 2016 I was intrigued, but I also didn't expect all of them to succeed. Although there are still quite a few in development, Amgen has had a perfect score over the past year in gaining approvals from the FDA following successful late-stage results. As long as Amgen can continue to gain approval for novel therapies, Wall Street should continue to reward the stock.
Let's not also forget that Amgen cut 20% of its workforce last week in an effort to save more than $1 billion. It's not so much that Amgen is "saving" this money, as much as it's being redirected toward marketing and drug launches. Once these novel therapies generate self-sustaining cash flow we can likely expect Amgen's costs to drop and its operating margins to soar above 50%. With this in mind, I believe there's still ample room for Amgen shares to run higher.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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