- By Alberto Abaterusso
Amgen Inc. (AMGN) announced to the markets last Tuesday, April 4, that it has filed with the U.S. FDA a supplemental Biologics License Application and with the European Medicines Agency an application for a variation to its MAA, seeking the inclusion of multiple myeloma patients in the Xgeva's (denosumab) label, in order to prevent these patients from developing skeletal-related problems as a complication of plasma cells cancer.
The intrinsic value of AMGN
Xgeva is currently approved for the prevention of skeletal-related events in patients affected with solid tumours. These solid tumours' complications include fractures, spinal cord compression and others that make it necessary to resort to radiotherapy or surgery.
The company said that "the applications include new data from the pivotal Phase 3 head-to-head 482 study, the largest international multiple myeloma trial ever conducted."
Xgeva is the brand name under which denosumab is commercialized. Denosumab is a monoclonal antibody (a type of protein) designed to bind to an antigen called RANKL which is implicated in the activation of osteoclasts, the cells of the organism that plays a role in the degradation of bone tissue. Denosumab reduces the formation and activity of osteoclasts, by binding to the antigen and inhibiting its action. This in turn limits the loss of bone, making fractures and other serious complications of the skeletal system less likely.
In 2016, revenue from the sale of Xgeva was $1.59 billion, a 9% increase year over year. Approximately 73% of Amgen's Xgeva sales came from the U.S. and 27% from the rest of the world.
April 7, Amgen closed at $163.38, up $1.13 or 0.70% from the previous trading day, with a volume of 1,973,170 shares traded on the NasdaqGS versus an average volume of 2.9 million shares traded over the last 10 trading days and an average volume of 3.92 million shares traded over the last three months.
The health care stock has been trading down since mid-March; however, it gained 8% year to date and it is more volatile than the stock market with a beta of 1.78.
Amgen closed the last trading days of week 14 with a price-sales ratio of 5.23 and a price-book ratio of 4.04. The trailing price-earnings ratio is 15.96. Considering that the forward price-earnings ratio is 12.85 and for 2017 analysts forecast EPS of $12.31 on average (5.7% growth from 2016), the stock seems to be overvalued by the stock market at the moment. However, for the majority of analysts, Amgen is a buy with a recommendation rating of 2.4 and an average target price of $185.50 per share.
Disclosure: I have no position in Amgen Inc.
This article first appeared on GuruFocus.
The intrinsic value of AMGN