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|Includes: Amgen Inc. (AMGN), GILD

I will be taking a month vacation from blog writing after the publication of this post. I may shorten the vacation to two weeks when and if I become too brain sedentary.

If I buy a few shares of Gilead, which I do not own, I will write a post similar to this one.

I will be writing some comments to previously published posts, as warranted and will respond to reader questions as usual.

I am going to do something different in this post. I am going to discuss in detail the research that I did prior to buying one Amgen share. I am also going to focus on Amgen's second quarter report and on a recent negative article published here about the company.

The article was written by someone calling themselves DoctoRx with over 8600 followers here at SA: Amgen Beats, Raises Again: A Reassessment This author is a "physician and pharmaceutical inventor and entrepreneur" accoring to this profile statement. I will not be responding to the article as Dr. South Gent for a variety of reasons. I will simply refer to DoctoRx as the Doctor here.

I am not really a Doctor, though my currently active license is a result of first receiving a Doctor of Sorts Decree. The "of sorts" aspect has no relation to the medical field however. I am just what I am, a Left Brain dominate person who is by nature a fact based and analytical investor with 4+ decades of experience. Maybe I could use the nom de guerre DoctoSouthGent.

I also can not help myself in cross examining those uttering both the spoken and written word as I hear or read them. It is just an automatic response. I could not stop even with Herculean efforts. Maybe I just gave away the nature of my Doctor's decree as in Juris Doctor.

I am going to approach the Doctor's AMGN article from those angles rather than as Doctor South Gent.

It will be awhile before I refer to the Doctor's Amgen article again. I first need to lay the groundwork about what is now known about AMGEN rather than future guesses about AMGN or GILD.

When I bought some AMGN shares a few weeks ago, I barely discussed it since it was such a low priority investment for me. I first bought 5 shares and then averaged down with a 10 share and another 5 share buy. I did conduct what I would call normal original source research which is not something the Twitter Generation is likely to do.

Item # 1. Bought 5 AMGN at $160.33 and 10 at $156.75: Update For Healthcare Basket Strategy As Of 6/14/16 - South Gent | Seeking Alpha

Item # 1. Added 5 to AMGN at $146.5: Update For Healthcare Basket Strategy As Of 7/6/16 - South Gent | Seeking Alpha

Snapshot of Position as of the Close 7/29/16:

Left to Right: Shares, Closing Price, Value/cost per share/Value

So far, so good.

AMGN is one of 93 holdings in my IB account. I can talk and chew gum at the same time.

The IB account is not a major account for me yet. I just opened it late last year and have been gradually funding it. I have also already eliminated or pared some positions netting over a $3K profit in that account and had over 100 positions until recently.

I would prefer that my 20 AMGN shares go up rather than down, but it really does not make any difference to me as a financial matter. In isolation, the position is meaningless but I spend time researching meaningless positions since the aggregation of a bunch of meaningless positions is meaningful. It is always best to keep error creep under as much control as humanely possible.

Since I really only need to preserve capital, I may elect to sell all or most of those 20 AMGN shares when and if the spirit moves me. It has not moved me into a profit harvest mode so far. I will not be buying more shares at the current price however since I do have concerns about this company. In that respect, I have similar reservations as the Doctor. I am not hot to trot for either AMGN or GILD for similar reasons but favor AMGN over GILD at the current time. Facts may change that alter or reinforce that opinion.

General Parameter's of an Analytical Investor:

I will first discuss the general parameters of analytical thinking and the kind of process required when reading or listening to anyone discussing matters relating to investing.

1. The analytical thought process is devoid of emotion.

2. The analytical thinking is done with no pre-existing opinions guiding the process and certainly with no involvement from one's ego.

3. The process is focused on facts rather than reality creations.

4. Opinions voiced as facts and opinions with no factual support are automatically downgraded to the garbage bin and are given no weight, except in rare instances where the speaker is widely accepted as a leading expert. I describe myself as an expert on nothing. Someone who has knowledge that may be a mile wide but in reality only an inch or two deep.

5. Since the process is fact based and purely analytical, research is required to assess whether (1) material facts have been omitted; (2) negative items are accentuated out of proportion and positive items are denigrated, dismissed or ignored, and vice versa; and (3) statements that are nothing more than opinions need to be separated from facts. Reading articles published at SA or anywhere else is not research.

6. Enough information has to be acquired to know what is material and what is not important.

7. There needs to be a thoughtful recognition that the future contains unknowns and unknowables. That makes successful investing hard. Predictions about the future are far less reliable than current or past facts.

8. Language is important. What does it mean to say that something "could" happen or that earnings may increase "up to" 20%. Couda, Woulda and Shoulda are not the same as "will happen" or "has happened". A statement that earnings will increase 20% is fundamentally different than one that earnings "may increase up to 20%."

Rather than writing about some facts, I took some snapshots of material items from the recently released second quarter report. I will assume that anyone reading this blog is familiar with these details and the DoctorRx article.

Let's talk about Amgen first.

Summary of Results:

Product Sales:

I do have a question now.

Why would anyone be dismissive about a cash cow like Enbrel with $1.484B in quarterly revenues, up 10% from the 2015 second quarter or spend more time talking about Corlanor than Enbrel? An attempt to denigrate the Enbrel juggernaut and to focus instead on Corlanor's failure so far needs to set off more than a few alarm bells IMO.

References to Some Pipeline Drugs That Have Not Been Approved Yet:

{I did review pipeline information provided by Amgen and refreshed my recollection about these products. ABP 980 is a biosimilar for Herceptin (Trastuzumab) which has to be accepted by the FDA and to overcome any remaining Roche/Genentech patent claims. The European patent expired last year, and the U.S. patent expires in 2019 as I recall. Generally, there will be other claims that will be asserted to prevent competition other than the one on the main molecule. In short, I would discount the ABP 980 product's successful launch a great deal. I am not going to discuss Amgen's biosimilar program here which could be a profit center down the road.)

Operating Margins:

The preceding information was sourced just from the Press Release: Amgen Reports Second Quarter 2016 Financial Results

When looking at the operating margin, either on a GAAP or non-GAAP basis, the profitability of this company is readily apparent.

A review of the most recently filed Annual Report, SEC Form 10-K, is necessary during the fact gathering mode. That document will generally have material information that is not found in an earnings press release, a conference call transcript or a quarterly 10-Q filing.

While reviewing the 10-K, I saw the following relevant data and related discussions:

Patent Expirations Page 6 10-K

Ongoing Trials as of 12/31/16: Here I would be careful of an opinion comments about the pipeline with no analysis of the facts. The fact that compounds are in the early trial stages and are gambles is not a reason to denigrate the pipeline. Gambling on compounds is what drug companies do. There are a large number of early stage trials:

Several of the stage 3 trials involve efforts to extend the label for products approved for other indications. Enbrel's shining success is due in part to being approved for indications other than the initial indication in 1998 for rheumatoid arthritis.

The 10-K also had this important statement about Enbrel:

"The co-promotion term of our ENBREL collaboration agreement with Pfizer in the United States and Canada expired on October 31, 2013, giving us full ownership of ENBREL promotional rights in the United States and Canada while the rights to market ENBREL outside the United States and Canada are reserved to Pfizer. Under the collaboration agreement, Amgen and Pfizer shared in the agreed-upon selling and marketing expenses approved by a joint committee. We paid Pfizer a percentage of annual gross profits on our ENBREL sales in the United States and Canada on a scale that increased with gross profits; however, we maintained a majority share of ENBREL profits. In 2016, we are required to pay Pfizer residual royalties of 10% of annual net ENBREL sales in the United States and Canada. The amounts of such payments are significantly less than what was owed based on the terms of the previous ENBREL profit share. Effective November 1, 2016, there will be no further royalty payments." (emphasis added, quote from page 20).

Now rather than focusing on quarterly trends, which is captured for the last quarter in a preceding snapshot, I am going to look at annual sales trends to get a bigger picture view of how things are going.

Page F-48 10-K

The following tables break out the U.S. from the rest of the world.

Annual ENBREL and Neulasta SALES TRENDS

Between 2013 through 2015, Enbrel's sales increased from $4.551B to $5.364B.

Neulasta sales increased to $4.715B from $4.392.

I am not going to spend any of my time criticizing those numbers.

While it is generally better to have revenue gains based on volume rather than price, a dollar from a price increase spends just like that dollar from a volume increase. And, the ability to raise price is an indicator of both product strength and demand.

Some analysts have not updated their forward projections yet based on the FDA's rejection of the Novartis biosimilar for Neulasta.

UPDATED: FDA rejects Novartis' biosimilar


The preceding products had $2.852B in sales during 2013 and $4.132B in 2015, an increase of $1.28B or 44.8%.

It looks like three products are moving toward $2B in annual sales.

The Doctor briefly notes that Prolia and Xgeva have "years of growth ahead", but unfortunately "stand alone as material growth drivers". I missed that line or just forgot about it when I finished the article. Forgetting about the brief discussion may be due to old age issues in the brain matter or I may have just blinked my eyes when coming to that part and missed it.

Annual ARANESP SALES TRENDS: Mostly Flat but Flat at a High Level

Aranesp is cannibalizing some of Epogen's sales. Aransesp has patent protection until 2024.

Phase 3 Study Demonstrates Aranesp® (Darbepoetin Alfa) Reduces Red Blood Cell Transfusions In Patients With Myelodysplastic Syndrome (NYSE:MDS)(ARCADE trial met its primary endpoint of reducing the incidence of red blood cell transfusions in anemic patients with low and intermediate-1 risk MDS at the end of the blinded 25-week study period. Aranesp also significantly improved erythroid response, a key measure of the formation of new red blood cells."


As I mentioned in an earlier post, one of the important products that needs to do better is the cancer drug Kryrolis acquired in the $10B acquisition of ONYX.

FDA Approves New Kyprolis Carfilzomib Combination Therapy For The Treatment Of Patients With Relapsed Or Refractory Multiple Myeloma (January 2016)

European Commission Approves Extended Indication For Amgen's Kyprolis® (Carfilzomib) For The Treatment of Relapsed Multiple Myeloma Patients

New Analyses From Pivotal Phase 3 Studies Show Kyprolis® (Carfilzomib) Allows Patients With Relapsed Myeloma To Live Longer Without Disease Progression ("In a Post-Hoc Analysis, Treatment With KRd for 18 Months Reduced Risk of Progression or Death by 42 Percent During That Period")

Kyprolis (carfilzomib) FDA Approval History -

As I noted when I first discussed buying AMGN shares, this drug needs to pull more weight. This product needs to differentiate itself positively as a first line treatment.

Annual Sales Trends Kryrolis and Other Drugs Excluding Epogen and Neupogen:

Epogen and Neupogen are former blockbuster products in a state of decline as shown in the Q/E 6/30/16 product sales table reproduced above. Everyone knows about these declines. The only question is how fast will be the rate of decline-pretty fast is the obvious answer. Neupogen had worldwide quarterly sales of $196M, down 23% Y-O-Y, and only slightly ahead of Kyprolis that experienced a 45% increase in sales. That kind of dynamic is normal for drug companies that eventually lose patent protection and then sales to generic competition.

Blincyto: This drug is just getting started. A Phase 3 trial was stopped early due efficacy: Phase 3 Study of BLINCYTO® (Blinatumomab) Met Primary Endpoint Of Overall Survival In Patients With B-Cell Precursor Acute Lymphoblastic Leukemia ("The FDA's breakthrough therapy designation and accelerated approval of BLINCYTO underscore the dire prognosis for these patients. This is the first study to demonstrate an overall survival benefit for these patients with an immunotherapy, and this is a tremendously rare achievement in relapsed and refractory ALL," said Sean E. Harper, M.D., executive vice president of Research and Development at Amgen. "We will work with regulatory authorities towards a full approval for BLINCYTO in this population.")

IMLYGIC: This is another new drug. FDA approves first-of-its-kind product for the treatment of melanoma

Imlygic (talimogene laherparepvec) FDA Approval History

Rapatha: The sales have been without question disappointing for this potential blockbuster drug.

This one is going to have to do light years better before I get serious about Amgen. It is supposed to be one of the growth drivers as the legacy drugs decline in sales.

Amgen Announces Positive Top-Line Results From Phase 3 GAUSS-3 Trial Of Repatha® (Evolocumab) In Statin-Intolerant Patients with High Cholesterol

Amgen Wins Patent Case On Repatha® (Evolocumab); Regeneron and Sanofi Strongly Disagree with U.S. Jury Verdict in Ongoing Patent Litigation

Some Pipeline Products:

There are several press releases discussing recent events in late stage trials:


Amgen And UCB Submit Biologics License Application For Romosozumab To The FDA (7/22/16 PRESS RELEASE)("romosozumab, an investigational monoclonal antibody for the treatment of osteoporosis in postmenopausal women at increased risk of fracture. Romosozumab works by binding and inhibiting sclerostin, a protein naturally occurring in the bone, thereby increasing bone formation and decreasing bone resorption. . . )

Amgen And UCB Announce Positive Top-Line Results From The Phase 3 Study Of Romosozumab In Postmenopausal Women With Osteoporosis ("These data showed FRAME met the co-primary endpoints by reducing the incidence of new vertebral fracture through months 12 and 24 in postmenopausal women with osteoporosis treated with romosozumab. The study also met the secondary endpoint of reducing the incidence of clinical fractures (composite of vertebral and non-vertebral fractures) in postmenopausal women with osteoporosis through 12 months. However, the secondary endpoint of reducing the incidence of non-vertebral fractures through months 12 and 24 was not met.")

The last sentence is the previous press release is relevant, but capable of being taken out of proportion for those heavily inclined to do so IMO.

I would personally place more attention on the following statement:

"Results from the FRAME study showed that women receiving subcutaneous injection of romosozumab monthly experienced a statistically significant 73 percent reduction in the relative risk of a vertebral (spine) fracture through 12 months compared to those receiving placebo. The effect size persisted after both groups were transitioned to denosumab through the second year of treatment. Specifically, through month 24, romosozumab followed by denosumab reduced the relative risk of new vertebral fracture by a statistically significant 75 percent compared to placebo followed by denosumab. Additionally, patients receiving romosozumab experienced a statistically significant 36 percent reduction in the relative risk of a clinical fracture through 12 months compared to those receiving placebo."

There is also a recently completed Phase 3 trial comparing " the Safety and Efficacy of Romosozumab (AMG 785) versus Placebo in Men with Osteoporosis (BRIDGE)". Amgen - Clinical Trials - Amgen Trials

Amgen And UCB Announce Positive Top-Line Results From Phase 3 Study Evaluating Romosozumab In Men

Erenumab AMG 334: Migraines

Amgen Announces Erenumab (AMG 334) Significantly Reduces Patients' Monthly Migraine Days In Phase 2 ("At baseline, patients enrolled in this study were experiencing approximately 18 migraine days per month. Patients were randomized to receive either placebo, or one of two erenumab doses - 70 mg or 140 mg - subcutaneously, once monthly. Patients experienced a 6.6-day reduction from baseline in monthly migraine days in each of the erenumab treatment arms as compared to a 4.2-day reduction in the placebo arm, a statistically significant reduction in each erenumab treatment arm."); Amgen, Novartis' migraine drug hits endpoint in PhII trial | FierceBiotech

Amgen also has an ongoing Phase III trial for AMG334 and the results will be released soon. Amgen - Clinical Trials - Amgen Trials

There are other migraine drugs in trials including Alder's ALD403 that just completed a Phase 2 study.

I would withhold judgment until I see more data from Amgen and its potential competitors. It is far too early to make rash statements about the success of one over another. One analyst says that the AMGN results are roughly comparable to the others in trials. Competitive positioning would depend on dosing, whether dosing has to occur in a hospital setting, price, and of course FDA approval (including the labeling approval)

Parsabiv (ETELCALCETID AMG 416): Multiple Phase 3 Studies Completed-Amgen - Clinical Trials - Amgen Trials

FDA Accepts Amgen's New Drug Application For Novel Intravenous Calcimimetic Etelcalcetide ("accepted for review Amgen's New Drug Application (NDA) for etelcalcetide (formerly AMG 416) for the treatment of secondary hyperparathyroidism (SHPT) in patients with chronic kidney disease (CKD) on hemodialysis. If approved, etelcalcetide will be the first calcimimetic agent that can be administered intravenously.")

The FDA has set an August 24, 2016 "Prescription Drug Application" Date. So we should know within a month about approval.

Morningstar Report:

The Morningstar analyst makes the following estimates (guesses) about future sales:

Epogen and Aranesp: $3.8B in 2015 to $2.3B in 2020

Neupogen and Neulasta: $5.8B in 2015 to $3B in 2020

Those estimates are based on the analyst opinion's about new competitive branded drugs and biosimilar lauches plus Medicare bundled reimbursement for Neulasta.

Enbrel: Peaks in 2017 at $5.6B

Prolia/Xgeva: Peak at over $4B in annual sales

Repatha: Peak at $5B in sales (which seems a bit on the delusional side now, so wait and see and avoid over excitement are probably the best options at the moment)

Blincyto and Imlygic: Peak at under $1B

Romosozumab AMG 785 Peak at $1B (60% probability of approval; CS has a higher opinion on approvability)

Kyprolis $2B in Peak Sales

Morningstar reports are available currently to Charles Schwab customers and by subscription from the company.

Credit Suisse Report:

In addition to the Moringinstar Report available to subscribers, I read the Credit Suisse analyst report that is available to Charles Schwab customers. CS has an outperform rating and a $206 price target. The analysts believe that execution was strong in the second quarter and "will continue". CS believes AMG 334 will hit peak sales of $1.4B in 2024 and will be approved for episodic and chronic migraines. Lastly, the analysts believe that Repatha may get a boost from trial results, expected in the 2016 second half, measuring the size of plaque size.

Credit Suisse also has reports on AMG334 dated 6/8/16 and Romosozumab dated 2/22/16. CS notes that a competing drug abaloparatide from Radius has to be dosed daily whereas ROMO can be dosed monthly and further views Romo as approvable.

You will see authors pass off as their own analysis regurgitations of this kind of report.

Argus Report: Argus has a buy rating and a $185 price target as reflected in a 5/13/16 report, which is available to Charles Schwab customers.

I would note that Amgen is one of the companies in the hunt for Medivation.

Back to DoctorEx now.

Apparently, this author owned a "small" AMGN position for awhile looking at his disclosure statements. The Doctor clearly prefers Gilead to Amgen and no longer owns AMGN shares having sold them at an undisclosed price after buying them at an undisclosed price. The Doctor does own Gilead.

{no AMGN ownership disclosure on 7/28 and long AMGN on 5/2}

AMGN $174.44 +$2.41 as of 11:07 A.M. on 8/116

First, I would just point out that the market expects Amgen to show earnings and revenue growth over the next couple of years while GILD is likely to experience negative growth.

Any earnings growth for GILD in 2017 is probably coming from share buybacks rather than operating earnings growth.

For the Q/E , GILD reported non-GAAP E.P.S. of $3.08 on net revenues of $7.76B compared to $3.15 and $3.608B in the year ago quarter.

Sales of Harvoni declined to $2.564B from $3.608B in the year ago quarter or a 28.94% decline. That compares with a 10% increase in Amgen's Enbrel revenues.

Stribild revenues declined to $429M down from $447M. Atripla fell to $673M from $782. Complera / Eviplera was flat at $368M. Sovaldi, the second most important drug after Harvoni, rose by 5.9%. Compare that growth to Amgen's Prolia which was up 30% or Xgeva up 15%.

Taking into consideration that Amgen is showing revenue and earnings growth and GILD is going the opposite direction on a company wide basis, I have to at least pause to see GILD's better story.

Now, let's look at some of Doctor's statements.

1. Let's belittle the 10% growth in Enbrel's revenues and put aside the 28.94% Y-O-Y decline in GILD's leading seller.

Gilead Sciences Has No Cure in Sight for Increasing Competition - TheStreet (Japan forced GILD to cut the price of Harvoni and Sovaldi by 32%; revenues are expected to drop 6% this year and 7% next year)

Doctor points out correctly that Enbrel's revenue gains came from a price increase. Doc, money is still money even when it comes from a price increase. A 10% growth in revenues, whatever the cause, is better than a 29% decline unless I am missing something here due to some yet to be recognized old age brain malfunction.

The following are opinion statements:

"With a number of oral competitors coming, I have begun to doubt that any more material price increases can be imposed beyond this year."

"My view is that it is a potentially serious mistake to not allow for a real possibility that as soon as next year, and even more likely by 2018/9, Enbrel sales could be on a rapid decline."

Please note the use of the word "could" as in may happen or may not happen. And please distinquish the world "could" from "already has experienced a rapid decline" which would be an accurate discription for GILD's Harvoni.

Whatever, the Doc's opinon does not jive with analyst estimates that I have seen.

AMGN acquired Enbrel in 2002 when it bought Immunex for about $16B in cash and stock. History of Immunex Corporation

2. Bring Up Corlonor while Downgrading Enbrel:

FDA approves Corlanor to treat heart failure

The Doctor refreshed my recollection focusing so many words on Corloner. Word after word, quote after quote about Corloner. I had forgotten all about it, I have to admit.

Apparently, the CEO is stupid judging from the Corloner rollout: "More than a mistake, the failure to decide makes me wonder if the CEO fully understood the dynamics in play here."

I am going to admit right here and now that I know a lot less about Amgen's business than the CEO. I am not being humble when I say that.

Granted, this rollout has been a bust (factually supported opinion statement).

3. Another opinion denigrates the importance of existing products:

"As far as the rest of the young launches, Blincyto and Imlygic in oncology are going to be nice products. I doubt that either one will move the EPS needle enough to really matter, though."

Okay, if we take away the sub $1B per year products from Amgen, let's do the same for Gilead. A lot of money can be made with those products that fill niches. Novartis likes to concentrate on them. But let's forget about all of them irrespective of who owns them.

While we are it, let's forget about Amgen' Vectibix compound that went over $500M in sales in 2014 and NPlate that went over $500M in 2015 as well.

FDA Grants Priority Review For Amgen's Supplemental Biologics License Application For BLINCYTO®

Nplate® (Romiplostim) Study In The Lancet Shows Significant Increase In Durable Platelet Response

"Nplate® is a man-made protein medicine used to treat low blood platelet counts in adults with chronic immune thrombocytopenia (NYSEMKT:ITP), when certain other medicines, or surgery to remove your spleen, have not worked well enough."

Website: ITP (immune thrombocytopenia) and Nplate® (romiplostim)

Amgen Submits Supplemental Biologics License Application For BLINCYTO® (Blinatumomab)("Filing Based on Phase 2 Study Showing BLINCYTO Provides Meaningful Therapeutic Benefits in Difficult-to-Treat Type of Pediatric Acute Lymphoblastic Leukemia"); FDA Grants Priority Review For Amgen's Supplemental Biologics License Application For BLINCYTO®

Phase 3 Study of BLINCYTO® (Blinatumomab) Met Primary Endpoint Of Overall Survival In Patients With B-Cell Precursor Acute Lymphoblastic Leukemia: Study Stopped Early for Efficacy

FDA Approves BLINCYTO™ (Blinatumomab) Immunotherapy for the Treatment of Relapsed or Refractor B-Cell Precursor Acute Lymphoblastic Leukemia

Vectibix panitumumab And Best Supportive Care Improves Overall Survival Compared To Best Supportive Care In Chemorefractory KRAS And RAS WildType Metastatic Colorectal Cancer

AFDA Approves First-Line Use of Vectibix (Panitumumab) Plus FOLFOX for Patients with Wild Type Kras Metastatic Colorectal Cancer ("Vectibix is the First and Only Biologic to Offer Significant Survival Benefit as a First-Line Treatment with FOLFOX Chemotherapy for Patients with Wild-Type KRAS Metastatic Colorectal Cancer")

4. Spend a Lot of Words Discussing the Dezima Pharma Acquistion: Amgen acquires Forbion portfolio company Dezima Pharma: Upfront payment of USD 300m plus up to USD 1.25bn in development and commercial milestones as well as royalties for Dezima's, once-daily CETP Inhibitor, TA-8995, for dyslipidemia

A lot of words are expended criticizing Amgen's $300M upfront payment that may or may not have to be written off.

It seems to me that Amgen thought that the upfront expenditure was worth the gamble in case Merck's large and ongoing outcomes study for Anacetrapib comes up short. Forbes The references in the Doc's article to waiting for Merck to publish its results supports my opinion.

Actually, since I own a lot more Merck than AMGN, I am hoping for a favorable result for Merck's outcome study. Amgen's management thought that the Dezima compound was worth a $300M up-front payment gamble. I may have not reached the same conclusion. Before making a decision, I would need access to the same data and informed opinions that guided AMGN's decision to buy Dezima before venturing anything resembling a firm opinion.

5. Lastly there are criticisms of Amgen's involvment with a compound called Omecamtiv. I own 50 shares of Cytokinetics (NASDAQ:CYTK) that is participating with AMGN on this product.

DoctorRx: "I have raised questions about whether the elevated blood troponin levels associated with omecamtiv use imply that it's unsafe. Omecamtive reminds me conceptually of the positive inotropes that the industry was excited about perhaps 20 years ago. . . I suspect I'm on the right track, given AMGN's concern about "safety" and "narrow therapeutic index."

Here are some facts on that suspicion.

Troponin test: MedlinePlus Medical Encyclopedia

Positive Data With Omecamtiv Mecarbil ("Regarding adverse events, including serious adverse events, no safety signal was seen among patients treated with omecamtiv mecarbil when compared with patients treated with placebo. As in previous studies, there was a "small increase in troponin" among the omecamtiv mecarbil-treated patients. In the Acute Treatment with Omecamtiv Mecarbil to Increase Contractility in Acute Heart Failure (ATOMIC-AHF) study, reported by heartwire from Medscape, there was a numerical increase in MIs in the active-treatment arm vs the control arm, which investigators believed were mainly small, subclinical elevations in troponin. In this latest trial, an independent adjudication of the troponin elevations determined none of these to be MIs, according to Amgen and Cytokinetics." emphasis added)

Amgen And Cytokinetics Announce Late-Breaking Presentation Of COSMIC-HF Trial At AHA Scientific Session ("The trial met its primary pharmacokinetic objective and demonstrated statistically significant improvements in all pre-specified secondary measures of cardiac function in the treatment group employing pharmacokinetic-based dose titration. Omecamtiv mecarbil, a novel investigational cardiac myosin activator, enhances cardiac function by increasing cardiac contractility and is being developed for the potential treatment of heart failure.")

Cytokinetics | Omecamtiv Mecarbil | Heart Failure

In June 2013, Cytokinetics and Amgen executed an amendment to the Amgen Agreement to include Japan, resulting in a worldwide collaboration (the "Amgen Agreement Amendment"). Under the terms of the Amgen Agreement Amendment, the Company received a non-refundable upfront license fee of $15.0 million in June 2013. In conjunction with the Amgen Agreement Amendment, the Company also entered into a common stock purchase agreement which provided for the sale of 1,404,100 shares of its common stock to Amgen at a price per share of $7.12 and an aggregate purchase price of $10.0 million, which was received in June 2013." Page 8 Form 10-Q

AMGN has a profit on the stock at the moment and could now offset the $15M upfront payment with the realized gains.

"Under the Amgen Agreement, as amended, the Company is eligible to receive over $350.0 million in development milestone payments which are based on various clinical milestones, including the initiation of certain clinical studies, the submission of a drug candidate to certain regulatory authorities for marketing approval and the receipt of such approvals. Additionally, the Company is eligible to receive up to $300.0 million in commercial milestone payments provided certain sales targets are met. Due to the nature of drug development, including the inherent risk of development and approval of drug candidates by regulatory authorities, it is not possible to estimate if and when these milestone payments would become due. The achievement of each of these milestones is dependent solely upon the results of Amgen's development and commercialization activities and therefore none of these milestones was deemed to be substantive. During the three months ended March 31, 2016 and 2015, the Company recognized no revenues for milestones achieved under the Amgen Agreement."

This compound is far more important to CYTK than to AMGN. CYTK had a $440+M market cap based on last Friday's closing price of $11.12 vs. AMGN's $128.85B at $172.03.

Amgen says it is being aggressive on this compound and I would not read too much between the lines when an AMGN representative talks about protocol discussions with the FDA for a Phase 3 study.

Personally, I view it as important to be cautious with suspicions, hunches, and speculations when making investment decisions. The future is hard enough to predict without giving the Right Brain free reign to run wild.


9/9/16 Update:

I did sell my barely existent Amgen position with the intention of repurchasing the shares back at a lower price:

Disclaimer: I am not a financial advisor but simply an individual investor who has been managing my own money since I was a teenager. In this post, I am acting solely as a financial journalist focusing on my own investments. The information contained in this post is not intended to be a complete description or summary of all available data relevant to making an investment decision. Instead, I am merely expressing some of the reasons underlying the purchase or sell of securities. Nothing in this post is intended to constitute investment or legal advice or a recommendation to buy or to sell. All investors need to perform their own due diligence before making any financial decision which requires at a minimum reading original source material available at the SEC and elsewhere. A failure to perform due diligence only increases what I call "error creep".ERROR CREEP and the INVESTING PROCESS Each investor needs to assess a potential investment taking into account their personal risk tolerances, goals and situational risks. I can only make that kind of assessment for myself and family members

Disclosure: I am/we are long AMGN.