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Amgen Inc (AMGN) Trade Card™

Amgen Inc (AMGN)
251.49 -0.1 (-0.04%)
Sector: Pharmaceuticals, Biotechnology and Life Sciences
Published by Capital Market Laboratories on 2020-07-10

What does this rating mean?
STOCK RETURNS
3Mo: +15.3%   |   6Mo: +5.3%  |   12Mo: +38.5%

TECHNICAL RATING
10DMA: $228.1  |  50DMA: $232.8  |  200DMA: $222.4
What does this rating mean?

Fundamentals     

➜ AMGN generates $1.5832 in revenue for every $1 in expense, which is extremely high and extraordinarily above the sector average of $0.36.

Amgen said on Tuesday, October 27th, that the U.S. Food and Drug Administration approved its cancer immunotherapy, Imlygic, for use in patients with the most deadly type of skin cancer (Source: Reuters).

The drug itself only showed to extend lives by ~4.5 months, but that's not the huge win here, it's how it works.

"Imlygic is a virus—alive and infectious, the first to get a stamp of approval in the US for its ability to attack cancer cells. It opens a whole new front in the fight against cancer, which has the sneaky habit of coming back after chemotherapy, radiation, or surgery."
Source: Wired


Antonio Chiocca, a neurosurgeon at Brigham and Women’s Hospital, called it "a totally new class of weapons that we can now use."

Amgen has the largest pipeline in late stage trials of all biotechs and while the stock price was actually down from 2005 through 2011, since then it has nearly tripled and if we look at the company as of today, there's no reason it can't keep rising. Let's learn about this remarkable company which has earnings due out 10-28-2015 after the close and an FDA decision on a cancer treatment due out 10-27-2015 with Europe right behind it.

Overview
First, let's start with revenue over the last 15-years and then we'll get to the transformational treatments it has for cancer.



Amgen is now generating over $20.7 billion in annual sales. But there's more coming...

If we plot all of the large cap biotechs with the number of Phase II trials on the x-axis and the number of Phase III trials on the y-axis, we can see that AMGN does in fact have themost Phase III trials. Here's that chart.



Let's Cure Cancer, Why Don't We?
Before we get into exiting products, let's cure cancer, why don't we?

Amgen is at the forefront of oncology with its first-of-a-kind cancer therapy, talimogene laherparepvec (T-Vec). Here's how T-Vec is described:

"The company's T-Vec is a so-called oncolytic immunotherapy, using a genetically modified strain of the herpes virus to invade tumors and replicate itself, killing cancer cells along the way and spurring an immune response to double its effect."
Source: 24/7 Wall St.


There was some troubling data from T-Vec in a Phase 3 trial where it fell short of its secondary (not primary) endpoint of overall survival. Take from that what you will. The primary endpoint was durable response rate, and that showed statistically significant improvement.

Update: 10-28-2015: This drug was approved by the FDA:

"Imlygic, which is the first-of-its-kind to win approval in the United States, is an engineered version of a herpes virus that kills cancer cells when injected directly into tumors, destroying them from the inside, while also priming the immune system to attack the disease."
Source: Reuters


The REALLY Big Cancer Pipeline
Amgen has a ten year collaboration with Kite Pharma, and friends, this is where we all get really excited. Here we go:

Kite Pharma (KITE) is approaching cancer not to treat it, but to cure it in a radical, revolutionary, promising and in the very sense of the word, transformational way. In an incredibly bold step, Kite management, though a year away from completing clinical trials, has just signalled its unambiguous belief that it has in fact found a cure for non-Hodgkin's lymphoma (NHL), a cancer which affects half a million people right now and more than 70,000 new cases every year.

Keep in mind, the clinical trials will conclude at the end of 2016, meaning even the most optimistic projections are for a yet to be FDA approved treatment to generate revenue in early 2017. But, if you're wondering how bullish management is regarding the current clinical trials check this out:

"Although it could be a year or longer before the FDA approves its treatment for non-Hodgkin's lymphoma, the clinical results are so promising that Kite has forged ahead with constructing a 44,000-square-foot facility that would become its cancer-fighting nerve center."
Source: Los Angeles Times


Yes, there is no other way to say this: The company is basically saying out loud that it believes it has cured non-Hodgkin's lymphoma (NHL). Period.

Amgen has provided $60 million to KITE upfront for covering early-stage development costs and could contribute up to $525 million if milestones are met. While Amgen has a huge pipeline of drugs, this is one of the most exciting parts of its future and reminds us that Amgen is committed to curing cancer.

More Cancer Pipeline
As if we needed more, Amgen and Merck have a collaboration in place to combine their drugs to cure carcinoma of the head and neck. And yes, again, both treatments are immunotherapies, which use the body's immune system to destroy tumors. There is a Phase I trial in place to test Amgen's talimogene laherparepvec with Merck’s Keytruda. There is also a Phase III trial set to evaluate the drug combination in melanoma patients (Source: WSJ).

More Pipeline
Believe or not, cancer treatments aren't necessarily the biggest part of the pipeline. Kyprolis is Amgen's multiple myeloma drug. While sales rose 53% to just under $120 million last quarter, we must note that the drug is actually only being sold on its third line indication. In English, the FDA requires strict labelling of the drug for usage. The Motley Fool did a wonderful job summarizing the addressable market of the drug as the FDA expands its label for second-line status.

"There are some 5,900 potential patients in the third-line and 1,200 in the fourth-line for Kyprolis to reach each year. As a second-line therapy Kyprolis has an opportunity to reach [an additional] 16,400 patients. It's a big opportunity for Kyprolis to expand and reach its full potential of perhaps $3 billion in annual sales."
Source: The Motely Fool


Yes, this $199 million drug has the potential to be a mega-billion hit. The one thing to note is that JNJ also has a myeloma drug which seems to be presenting significant competition to Amgen and of course, Celgene's Revlimid. When earnings come out for Amgen, pay attention to details on Kyprolis for its second line indication -- this is a game changer if it goes well. In any case, the market has room for more multiple drugs and the upside is enormous.

What's Going on Right Now
Alright, the pipeline is the fun stuff, but the guts are still the actual sales results, and they are very impressive.

As of right now, the company's revenue is driven by several products: Chemotherapy infection fighter Neulasta®/ NEUPOGEN®, Rheumatoid arthritis drug ENBREL, Anemia drug EPOGEN, Osteoporosis drugs XGEVA®/ Prolia®, another anemia drug Aranesp and a long list of others. Here's a breakdown of sales for existing products from the company's quarterly report.



Exciting Current Product Growth
Amgen's newest products Prolia and Xgeva saw strong growth and then some really (really) good news. Prolia revenue rose 29% year-over-year and Xgeva grew revenue 11% year-over-year. But here's where it gets interesting. Prolia is an Osteoporosis drug and the first approved therapy that specifically targets RANK Ligand, an essential regulator of bone-removing cells (osteoclasts) and is often used for patients who have failed or are intolerant to other available osteoporosis therapy.

More Good News on Prolia
On October 11th AMGN announced the findings from a Phase 4 study. The study found that Prolia caused higher gains in bone material density than the intravenous bisphosphonate zoledronic acid in postmenopausal women with osteoporosis (Source: CNA Finance). What does any of that mean? Try this: Paul Miller, M.D. the medical director of the Colorado Center for Bone Research, Lakewood, Colorado and lead investigator said:

"Despite the availability of newer therapies like denosumab, bisphosphonates are commonly used first-line to treat osteoporosis [] our findings showed that denosumab (Prolia) provides significantly greater bone mineral density increases than zoledronic acid."
Source: PR Newswire


Yeah, he's saying, "hey, doctors, use Amgen's treatment, it's better."

Conclusion
Amgen has a huge product line, well diversified and for the most part growing. It has a huge pipeline of drugs including truly ground breaking cancer treatmentsand so many others. The firm is essentially a biotech mutual fund and has stunning growth possibilities ahead.

Technicals   |   Support: 217.9   |   Resistance: 258.24   

Swing Death Cross Alert: The short-term 10 day MA is now below the 50 day MA.

AMGN has a three bull (stock is range bound) technical rating because , while it's trading above its 10-, 50-and 200- day moving averages, the stock is down on the day and the 10-day moving average is below the 50-day moving average.


Earnings Estimates
Earnings Date
2018-02-01
EPS
$3.04
Revenue (Mean)
$
Revenue (Median)
$
Last Quarter (Actual)
$6.16 billion


Fundamentals Rating Summary


Metric Current 1yr Ago 2yr Ago Direction
Revenue (TTM US$ Millions)Rising 23,966 23,750 22,939 Rising

Operating Margin (QTR)Falling 1.58 1.64 1.71 Falling

Net Income (TTM US$ Millions)Falling 7,675 8,075 2,219 Falling

Cash from Operations (TTM US$ Millions)Falling 9,439 10,414 11,519 Falling


Research and Development Expense/RevenueFalling 0.155 0.158 0.137 Falling




Stock Returns and Chart


AMGN is up +15.3% over the last three months and up +5.3% over the last six months. The stock price is up +38.5% over the last year.

Before we dig into the fundamental trends that drive the rating, let's look at a two-year stock chart with regression channel and 10-day momentum (on the bottom).

Note: You can change time horizons by clicking the or buttons near the bottom of the chart. You can examine a one minute day trading chart by clicking the at the top left corner of the chart.

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Now let's examine the visualizations of the critical financial measures.


Enter Symbol


METRIC CURRENT 1YR AGO 2YR AGO DIRECTION
Revenue (TTM US$ Millions) 23,96623,75022,939Rising

Revenue over the trailing twelve months (TTM) for AMGN is rising. For the most recent (annual) period the company reported $23.97 billion from $23.75 billion a year ago, or a 0.9% change. The two-year change in revenue (TTM) is $1.03 billion (a 4.5% change).

What do all these numbers mean?
AMGN's fundamental rating benefited these results:
1. The one-year change was positive (but no extra points were given for a large percentage increase).
2. The two-year change was positive.

Let's look at Revenue (TTM US$ Millions) in the chart below.


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Enter Symbol



METRIC CURRENT 1YR AGO 2YR AGO DIRECTION
Operating Revenues/Operating Expense 1.581.641.71Falling

Operating Revenues/Operating Expense
Operating revenue over operating expense simply shows us how much revenue (in dollars) is generated for every dollar of expense. The ratio must be (at a minimum) above 1.0 in order for a company to turn an operating profit. For the latest quarter AMGN showed a ratio of 1.58.

What do all these numbers mean?
A year ago Operating Revenues/Operating Expense was 1.64. In the last year we can see operating margins are decreasing but are greater than 1.0 for the most recent period.

AMGN's fundamental rating was affected from the operating margin numbers in two ways:
1. The current value is above 1.0 (the firm generates an operating profit).
2. The one-year change was negative (lowers the rating a little bit).

Let's look at Operating Revenues/Operating Expense in the chart below with the total assets in the orange line.


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METRIC CURRENT 1YR AGO 2YR AGO DIRECTION
Net Income (TTM US$ Millions) 7,6758,0752,219Falling

Net Income (after tax profit) over the trailing twelve months (TTM) for AMGN is falling. For the most recent trailing-twelve-months (TTM) the company reported net income of $7,675 (million). That's a decrease in the most recent year from $8,075 (million) or a -4.95% change.

In our next chart we plot Net Income (TTM US$ Millions) in the blue bars and the quarterly results in the gold line. Note the falling bars from a year ago (four quarters ago).


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METRIC CURRENT 1YR AGO 2YR AGO DIRECTION
Cash from Operations (TTM US$ Millions) 9,43910,41411,519Falling

Cash from Operations (TTM US$ Millions) is a critical determinant of stock price since market cap is the present value of all future free cash flows. For AMGN the metric is falling (it was $10,414 million last year). For the most recent trailing-twelve-months the company reported Cash from Operations (TTM US$ Millions) of $9,439 million. That's a decrease in the most recent year from $10,414 million or a -9.36% drop.

This cash metric is down $-2,080 million from $11,519 million two-years ago.

For our next chart we plot Cash from Operations (TTM US$ Millions) in the blue bars through time. Note the falling bars from a year ago (four quarters ago).



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