Want the definition of indecisiveness? Look no further than the year-to-date chart for biotech blue-chip Amgen (NASDAQ:AMGN) which in 2015 has flip-flopped between being up and down for the year more times than I care to count. As of Dec. 10, Amgen shares are lower by about 3% for the year.
The drop in Amgen's stock probably isn't what investors or Wall Street scripted for 2015, but the company nonetheless turned in a very solid performance in other respects. Six of its late-stage products have been approved since December 2014, including five approvals thus far in 2015. Shareholders have also borne witness to multiple guidance increases during the course of the year as relatively new drugs in Amgen's product portfolio (essentially those approved within the past three to four years) delivered rapid growth.
While the good news abounded for Amgen in 2015, three headlines stood out as the company's best. In no particular order, here they are:
Kyprolis ASPIRE's to be great
One of the biggest wins for Amgen in 2015 was the supplemental new drug approval for multiple myeloma drug Kyprolis in the second-line setting in combination with Celgene's Revlimid and dexamethasone. Prior to the July approval, Kyprolis had only been approved in the third-line and higher setting. The approval should more than double Amgen's potential patient pool and will be critical in helping Kyprolis make a run at blockbuster status ($1 billion in annual sales).
However, an approval wasn't a guarantee at this time last year. Two studies, ASPIRE and FOCUS, were primarily what the Food and Drug Administration weighed when deciding whether or not to approve Kyprolis' label expansion. ASPIRE demonstrated a statistically significant improvement in progression-free survival relative to the control group not given Kyprolis. Yet, the FOCUS trial did not demonstrate a statistically significant improvement in median overall survival. Without this improvement in survival, shareholders were forced to sweat a bit until the label expansion was ultimately approved.
Looking ahead, Amgen has its sights potentially on a first-line indication for Kyprolis. At worst, Kyprolis looks to be in line for $1 billion-plus in peak annual sales even if it gains no other approvals.
Ushering in the next-generation of cholesterol-fighting drugs
Secondly, we saw the approval of next-generation LDL-cholesterol-lowering injection Repatha in August. Its approval came just weeks after Praluent, a competing injectable from Sanofi (NYSE:SNY) and Regeneron Pharmaceuticals (NASDAQ:REGN), also got the nod from the FDA.
Repatha and Prauluent fight LDL cholesterol in a new way: They are inhibitors of the enzyme PCSK9. This enzyme binds with receptors on the liver, rendering them unable to filter out LDL, the bad type of cholesterol. Repatha and Praluent's job is to reduce the amount of PCSK9 finding these receptors, thus leaving them open to filter out LDL cholesterol from the bloodstream.
In the phase 3 study that led to Repatha's approval for patients with heterozygous familial hypercholesterolemia, homozygous familial hypercholesterolemia, and people with atherosclerotic cardiovascular disease where statin therapy isn't enough, Repatha delivered an LDL-C reduction of roughly 60%. Sanofi and Regeneron's Praluent was approved to treat HeFH and atherosclerotic cardiovascular disease patients, but not HoFH patients; otherwise, it showed similar efficacy.
The real allure for Repatha is its potential for label expansion. Amgen took the smart road for the time being, which was to get its foot in the door for genetic high cholesterol diseases and establish safety, efficacy, and a rapport with physicians and patients. Ultimately, though, Amgen would like to expand the use of Repatha to patients who haven't had a prior cardiovascular event, but who exhibit high LDL-C levels. If Repatha can expand its label, it could easily be a multi-billion dollar drug.
One aspect worth monitoring in 2016 is the pricing of Repatha and Praluent. With annual wholesale costs of $14,100 for Repatha and $14,600 for Praluent, both could find the task of getting onto insurers' "covered drug" lists challenging, despite their efficacy. So they may not yield an immediate sales boost for Amgen or Sanofi/Regeneron, but their long-term potential is readily apparent.
Up, up, and away!
The last headline that really stood out was Amgen keeping its small, but substantive, dividend increase streak alive.
Biotech stocks aren't typically known for their dividends. In fact, less than a dozen of the well over 300 publicly listed biotech stocks have paid a dividend over the trailing 12-month period. It's simply not an industry that income investors look to. Amgen is a true exception to the rule.
Amgen first began paying a dividend in 2011 ($0.28 per quarter), but has since raised its dividend five times. What's notable is that Amgen doesn't just edge its dividend up a penny or two here and there – Amgen substantially ups its dividend payouts. On a percentage basis, Amgen has raised its dividend by 29%, 31%, 30%, 30% and 27%. That's insanely fast dividend growth, and in the upcoming year shareholders can look forward to receiving $1 per quarter for each share of Amgen stock they own. With nearly $13 projected in annual EPS by 2018, I'm willing to bet that Amgen's dividend increases are far from over.
What's next for Amgen in 2016?
Now that you have a good idea of what Amgen's best headlines in 2015 looked like, you're probably wondering what the upcoming year might have in store for the biotech giant. My guess: more data and drug launches.
Amgen's management team has been very clear about its goals between 2014 and 2016, which included reporting results on 10 late-stage compounds. In addition, Amgen laid off about 20% of its workforce. The move was designed to help offset the rising costs of manufacturing and marketing new drugs, but it could eventually lead to operating margins in excess of 50% toward the end of the decade.
In the upcoming year, we can expect: phase 3 data on ABP 780, Amgen's biosimilar of breast cancer drug Herceptin; a phase 3 cardiovascular outcomes study on Repatha which will be huge for its future sales prospects; phase 2b chronic migraine data for AMG 334; and a likely FDA decision on whether ABP 501, the biosimilar for Humira, is approved or not. It promises to be an exciting year for Amgen, which continues to look like an attractive investment opportunity for both income and growth seekers.
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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