Amgen Earnings: Maintaining $268 Fair Value Estimate Following In-Line Quarter and Horizon Deal Completion

Wide moat Amgen AMGN reported third-quarter results that were consistent with our expectations, and we’re maintaining our $268 fair value estimate. We think shares look relatively fairly valued, as investors appear to be weighing the potential growth prospects for key pipeline programs in cardiometabolic disorders and oncology against continuing competition for products like oncology drug Lumakras and psoriasis drug Otezla. The Horizon Therapeutics acquisition officially closed in early October, which significantly expanded Amgen’s rare disease business and should drive near-term growth, although we’re cautious on Tepezza’s ability to significantly expand sales in thyroid eye disease as well as upcoming competing to gout drug Krystexxa from Sobi’s SEL-212. Competition continues to drive a wedge between product sales growth (5% in the third quarter) and volume growth (11%), although this difference was accentuated in the quarter by some changes to Amgen’s estimated sales deductions.

Amgen’s growth is being driven by a combination of steady growth from established osteoporosis drug Prolia and rapid growth from newer products like osteoporosis drug Evenity, asthma drug Tezspire, and leukemia drug Blincyto. While pricing is still a headwind to growth for cholesterol-lowering drug Repatha, sales still rose 31% in the quarter as demand for the drug continues to grow at a rapid pace. In the pipeline, we think Amgen’s phase 3 cardiology drug olpasiran could prove complementary to Repatha and leverage Amgen’s investments in its primary care sales force. In obesity, we’re still awaiting phase 2 data from AMG 133 in late 2024, and we include sales approaching $3 billion annually by the end of our 10-year forecast. We see this program as a wild card, as its unique mechanism of action could lead to safety issues, but phase 1 efficacy and durability data was very promising.