Amgen’s Sales Rise! But Shares Play Hard to Get as Investors Sweat for Obesity Data

Amgen Reports Increase in Sales, Investors Concerned Over Awaited Obesity Data

Amgen’s Battle in the Obesity Market: A Slow and Steady Race

Amgen, the biotech giant, experienced a mix of successes and setbacks in the third quarter, ultimately leading to a 4% drop in its shares. While overall sales increased by 5%, it is clear that the company’s venture into the obesity market is not off to a flying start. However, as Bill Smead, the chief investment officer at Smead Capital Management, aptly puts it, “Slow and steady wins the race.”

Demand for weight-loss drugs is soaring, with predictions suggesting the market could reach a staggering $100 billion annually within the next decade. Sensing an opportunity, Amgen is making moves into this competitive space. The company expects to release findings from an early-stage trial for its experimental obesity pill, AMG786, in the first half of next year. Additionally, results from a mid-stage trial for another obesity candidate, AMG133, are due by late next year. Jefferies analyst Michael Yee describes AMG133 as a more promising candidate, while labeling AMG786 as a “wild card” due to its unknown mechanism and lack of data.

Amgen’s recent $27.8 billion acquisition of Horizon Therapeutics is a strategic move to enter the rare disease market, which typically experiences less pricing pressure compared to therapies for more commonly afflicted conditions. The acquisition has boosted Amgen’s full-year sales forecast to between $28 billion and $28.4 billion, a significant improvement from the previous estimate of $26.6 billion to $27.4 billion.

Nevertheless, not all is smooth sailing for Amgen. The sales of Horizon’s flagship thyroid eye disease drug, Tepezza, dropped to $453 million from $491 million in the same period last year. On the flip side, sales of Horizon’s gout drug, Krystexxa, rose to $253 million from $192 million. These mixed results highlight the challenges Amgen faces in navigating the complex pharmaceutical landscape.

In the third quarter, Amgen experienced both triumphs and disappointments with its key drugs. Sales of the cholesterol drug Repatha went up by an impressive 31% compared to the previous year, reaching $406 million. However, this figure fell short of analyst expectations. Similarly, sales of the cancer drug Lumakras plummeted by 31% to $52 million, and sales of the psoriasis drug Otezla decreased by 10% to $567 million. On the bright side, the new biosimilar version of AbbVie’s blockbuster arthritis drug, Humira, known as Amjevita, saw a 30% rise in sales to $152 million.

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Amgen’s Chief Financial Officer, Peter Griffith, expressed confidence in the Horizon deal, stating, “We’re confident now that we’ve officially closed and joined forces.” It is worth noting that the deal faced opposition from the U.S. Federal Trade Commission, which initially raised concerns about Amgen using its market dominance to unduly influence insurance companies and pharmacy benefit managers in favor of Horizon’s products. Fortunately, the dispute was resolved, allowing the acquisition to proceed.

Despite the ups and downs faced by Amgen, the company announced impressive financial results for the quarter. Excluding a $650 million charge for discontinuing its experimental prostate cancer drug, AMG340, Amgen’s earnings per share rose by 6% to $4.96, surpassing Wall Street estimates by 29 cents. Total revenue for the quarter reached $6.9 billion, a 4% increase that aligned with analyst expectations.

As Amgen continues its quest in the obesity market, only time will tell if the company can carve out a space for itself among fierce competitors. In the battle for success, Amgen acknowledges that a slow and steady approach may ultimately lead them to triumph.

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