Maintaining Our $255 Amgen FVE Following Steady 3Q; Price and Competition Constrain Growth

Amgen’s third-quarter revenue fell 1% from the prior-year period, as pricing pressure and foreign-exchange headwinds countered the 8% volume growth in the quarter. Non-GAAP net income grew 15% largely because of a $400 million up-front payment to Kyowa Kirin for atopic dermatitis drug AMG 451 in the third quarter of 2021 (excluding this payment from non-GAAP results implies 1% non-GAAP net income growth for the quarter). While Amgen’s osteoporosis business (Prolia and Evenity) continues to stabilize Amgen’s results, we’re less enthusiastic about growth prospects for Amgen’s other established drugs. We look to the launch of Amjevita (Humira biosimilar) in 2023 as well as the continuing launches of lung cancer drug Lumakras and asthma drug Tezspire to help drive growth heading into next year, and we’re particularly bullish on Tezspire’s differentiated profile from Regeneron/Sanofi’s Dupixent and strong efficacy. The drug was also just approved in Europe and Japan in September, and several studies in other immunology indications are in progress that could further expand its potential. In addition, the recent acquisition of ChemoCentryx and immunology drug Tavneos should prove complementary to Amgen’s existing immunology business. We think these newer products will help keep Amgen’s wide moat secure, and we’re maintaining our $255 fair value estimate.