Amgen's cancer-drug pipeline looks promising despite FDA setback, analysts say

By Eleanor Laise

Strong oncology, obesity, and cardiovascular drug candidates behind rating upgrade

Amgen Inc.'s (AMGN) pipeline of cancer, obesity and cardiovascular drugs is poised to deliver good news for the stock, analysts say, despite the company's recent setback with cancer drug Lumakras.

Leerink Partners analysts on Wednesday upgraded Amgen shares to outperform from market perform, saying "accelerating pipeline newsflow" would bolster the stock's valuation. Amgen has several potential blockbuster cancer-drug candidates set to make news in the coming weeks, the analysts wrote, including AMG 193, being studied for treatment of non-small cell lung cancer, and xaluritamig, designed to treat prostate cancer.

The analysts raised their price target for Amgen shares to $318, from $267 previously.

Lumakras, an Amgen cancer drug already granted accelerated approval, hit a roadblock last week when a U.S. Food and Drug Administration advisory panel found fault with a late-stage trial designed to support the drug's full regulatory approval. Amgen said in a statement that it would continue to work closely with the FDA toward full approval of the drug.

The Leerink analysts slashed their 2031 Lumakras sales estimates 76%, to $153 million, saying there's a risk the FDA could rescind its tentative approval of the drug as results of the confirmatory trial are under scrutiny.

Even so, the analysts wrote, Amgen's broader pipeline potential, combined with its acquisition of Horizon Therapeutics, should continue to boost earnings expectations.

Amgen shares climbed 1% premarket on Wednesday and have gained 3.3% in the year to date, while the S&P 500 SPX is up 13.5%.

-Eleanor Laise

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10-11-23 0847ET

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