Amgen’s crucial court win marks ‘a new dawn’ for the stock, says analyst

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Amgen

One of the largest biotech companies in the world scored a major win recently thanks to a decisive court ruling. The seventh-largest biotech company in the world, Amgen (NASDAQ: AMGN), jumped today as the market found out that it won a crucial patent lawsuit.

In particular, the ruling would extend protection on its blockbuster rheumatoid arthritis drug called Enbrel until 2029. With rival biotech companies gearing up to launch their own drug, the ruling was so significant that one analyst went on to say that it’s “a new dawn” for Amgen.

Should the decision have gone the other way, Amgen’s main opponent in the case, Novartis AG (NYSE: NVS) would have ended up launching a similar drug in the following year. The ruling ends a year-old lawsuit where Amgen argued that competitor drugs were infringing on Amgen’s patents, with the judge siding with Amgen.

It’s an especially crucial win for Amgen as the stock was up only 0.3 percent over the past 12 months before today’s spike, falling behind indexes such as the iShares Nasdaq Biotechnology ETF (IBB), which is up 9.3 percent over the same period.



“This decision…removes a major overhang for Amgen’s stock and should result in significant multiple expansion based on new investors’ interest,” wrote SVB Leerink analyst Geoffrey Porges in a note Friday afternoon. “Another analyst from Cowen, Yaron Weber, went on to ask whether this would be “a new dawn” for the company. “Many investors have been sitting on the sidelines pending this outcome. With this case behind us, we believe the stock will be poised for positive returns as this is a clearing event that pressed the P/E [price-to-earnings] multiple.” In a note written on Sunday, Weber rates Amgen with an “outperform” rank and gives a target price of $231 per share.

Amgen further excited analysts during its earnings call back in July where it said its experimental cancer drug AMG510 was showing promising signs. Overall, the company is now well-positioned to stage a significant turnaround over the coming months.

Shares of Amgen were trading around 4.9 percent higher on Monday in response to the news. Over the past few months, shares have been struggling to break out of the $190 resistance level, frequently tumbling well below that.

Over the past week, however, the stock has jumped as high as $205 and comes close to breaking a new 52-week high. For those curious as to how Amgen’s rival in the case responded, shares of Novartis actually didn’t move much in response to the news, ending the day up 0.4 percent.

Amgen Company Profile

Amgen is a leader in biotechnology-based human therapeutics, with historical expertise in renal disease and cancer supportive-care products. Flagship drugs include red blood cell boosters Epogen and Aranesp, immune system boosters Neupogen and Neulasta, and Enbrel for inflammatory diseases.

Amgen introduced its first cancer therapeutic, Vectibix, in 2006 and received approval for bone-strengthening drug Prolia/Xgeva in 2010. Amgen’s acquisition of Onyx bolstered the firm’s therapeutic oncology portfolio with Nexavar and Kyprolis. Recent launches include Repatha (cholesterol-lowering) and Aimovig (migraine). – Warrior Trading News

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