Amgen Earnings: Strong Results and Positive Pipeline Data Support Our Valuation

We’re maintaining our $268 Amgen AMGN fair value estimate following solid 6% product sales growth in the second quarter, driven by 11% volume growth. Amgen’s biggest growth drivers in the quarter were asthma drug Tezpire, osteoporosis drugs Evenity and Prolia, and cholesterol-lowering drug Repatha. These drugs were able to counter relatively flat sales of immunology drugs Enbrel and Otezla, as well as declines in older branded supportive care drugs like Epogen and Neulasta and Amgen’s biosimilar versions of Roche’s Herceptin and Avastin. Overall, we see Amgen as slightly undervalued, as market uncertainty surrounding the pending Horizon Therapeutics acquisition is likely weighing on shares. We continue to believe the deal will close at the end of the year, although we see Federal Trade Commission pushback as a signal that any future large acquisitions in the industry will be scrutinized. We continue to see Amgen’s broad portfolio as supporting a wide moat.

Amgen also disclosed two clinical trial wins in conjunction with earnings, tied to oncology drug Lumakras and oncology drug candidate tarlatamab. We expect the Lumakras data (in combination with Vectibix in colorectal cancer) could help Amgen differentiate its drug from Mirati’s Krazati starting next year, perhaps alleviating pricing pressure. Tarlatamab’s success in small cell lung cancer could allow for approval in 2024, and we expect Amgen to gradually move the drug into earlier-stage patients.