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Amgen Provides Long-Term Update

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Amgen (AMGN) recently provided an update on its long-term strategy. The company said that it intends to focus on the discovery and development of molecules that address significant unmet medical needs and the manufacture of biologics.

The company said that its late-stage pipeline is advancing with results from eight pivotal programs expected by 2016. Important candidates include AMG 145 (cholesterol management - results from four phase III studies due in 2014), romosozumab (postmenopausal osteoporosis), brodalumab (psoriasis - results due in 2014), AMG 416 (secondary hyperparathyroidism - results due in 2014), talimogene laherparepvec (melanoma - results due in 2013), trebananib (ovarian cancer - results due in 2013), blinatumomab (acute lymphocytic leukemia - results due in 2014), and rilotumumab (gastric cancer - results due in 2016).

The company expects the Prolia -Xgeva (denosumab) franchise, which delivered combined sales of $1.2 billion in 2012, to post combined sales of more than $3 billion over time.

Amgen is also focusing on the lucrative biosimilars market and expects to launch six new biosimilars from 2017. Amgen is looking to expand its presence in new and emerging markets as well and expects sales from these markets to cross $1 billion by 2015.

The company intends to expand its operating footprint in key markets, including Japan and China.

Amgen, which had previously guided to 2013 earnings of $6.85 - $7.15 per share, now expects earnings in the range of $7.05 to $7.35 per share on revenues of $17.8 - $18.2 billion.

Our Take

Amgen should be able to deliver on its long-term strategy based on expansion in key markets, launch of new manufacturing technologies, and pipeline development. However, nearer-term, we remain concerned about the performance of existing products. We expect 2014 to be an important year for Amgen with the company expected to report results on several key pipeline candidates. Amgen currently carries a Zacks Rank #3 (Hold).

Companies like Targacept Inc. (TRGT), Cytokinetics (CYTK) and Alkermes (ALKS) currently look more attractive. While Targacept and Cytokinetics are Zacks Rank #1 (Strong Buy) stocks, Alkermes is a Zacks Rank #2 (Buy) stock.

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