Amgen: Raising Our FVE to $268 on Obesity Drug Potential, Horizon Remains Neutral to Our Valuation

We're raising our fair value estimate for Amgen to $268 from $255 after raising our sales forecast for Amgen's obesity drug candidate AMG 133, along with our broader, more bullish view on the global obesity market potential. We assume AMG 133 sales of $2.6 billion on a probability-adjusted basis by 2032, using a 30% probability of approval in 2026. We also assume the pending Horizon acquisition could close around the end of 2023, which is neutral to Amgen’s wide moat and our valuation, bringing valuable rare disease and immunology drugs but at a steep $28 billion price tag. We expect negotiations to continue over the next few months, as the FTC could be looking for Amgen to make broader commitments regarding future bundling practices and Horizon’s portfolio and pipeline. We see Horizon’s portfolio of rare disease and immunology drugs generating combined sales north of $6 billion by 2028.