I Still Like Amgen - Despite the Recent Run-up

Amgen (AMGN) reported 2Q08 results (see conference call transcript) that beat consensus analyst estimates and raised its full-year [FY] guidance for earnings and revenue, thanks to much stronger-than-expected sales of its anemia drugs Aranesp and Epogen:

• 2Q08 Revenue +1% at $3.8 billion [B] vs. $3.58B expected
• Adjusted Earnings Per Share [EPS] of $1.14 vs. $1.02 expected
• Increased EPS Guidance FY08 of $4.25 to $4.45 from $4.00 - $4.30
• Increased Revenue Guidance FY08 of $14.6B - $14.9B from $14.2B - $14.6B
• Aranesp 2Q08 Sales of $825M vs. $738M expected
• Epogen 2Q08 Sales of $622M vs. $585M expected
• Enbrel 2Q08 Sales of $841M, up 2% from 2Q07
• 2Q08 Research & Development [R&D] Expenses of $779M vs $777M in 2Q07
• Repurchased about 33M shares during 2Q08 for $1.5B with additional $4.9B authorized

Amgen's results build on positive momentum from after-hours on Friday when it announced positive Phase 3 results for its bone drug denosumab, which will support a future filing for regulatory approval with the FDA. The Company also expects approval for Nplate (romiplostim) for the treatment of a rare bleeding disorder due to a low platelet count. Nplate was previously recommended by the FDA Oncology Panel (with post-marketing monitoring of patients required) and a final decision by the FDA has been delayed from a PDUFA date of 7/23/08.

As illustrated in the accompanying one-year chart comparison below, Amgen is narrowing the underperformance gap as it rebounds strongly from it lows of earlier this year to the $40 per share level and is currently trading at around $62 per share after hours since reporting its 2Q08 results. Given investor rotation into biotechs as a source of defensive growth, I still like Amgen despite the recent run-up as it only trades at about 14X revised 2008 earnings guidance.

Disclosure: none