Another Gloomy Day for Amgen

By Charley Grant Features Dow Jones Newswires

Nothing is going right for Amgen these days.

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Amgen and partner company UCB announced late-stage trial results for its experimental osteoporosis treatment, Evenity, on Sunday. While the drug worked, Amgen noted a higher incidence of heart-related side effects than previously expected. Amgen now says the drug is unlikely to win approval from the Food and Drug Administration this year. Investors had been expecting an FDA decision by July.

Analyst consensus had called for roughly $1 billion in peak sales for the drug by 2025, according to Leerink Partners. That is a fairly small number compared with Amgen's total sales of nearly $23 billion annually. And unexpected hiccups in clinical trials are a reality in the drug development business.

But the latest disappointment came after two bigger blows. Amgen said in its first-quarter earnings that sales of its top drug, anti-inflammatory treatment Enbrel, fell 15% in the first quarter from a year ago. The other bad news was disappointing data for its new anti-cholesterol drug, Repatha. Sales for the drug have been well below investor expectations.

Since the Repatha news in March, Amgen shares are down 16% but are still up 5% for the year, including a 2% drop as of midday Monday.

Investors don't expect much good news from Amgen in the near future. The shares trade at about 12 times forward earnings, according to FactSet. That's near a two-year low, and dirt cheap if the company can return to meaningful sales growth, which analysts are predicting won't occur until 2020.

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Given Amgen's history of shareholder returns, buying at current prices and waiting for the turnaround might be a lucrative trade. The problem is, no one really knows where that growth will come from. And with Amgen's string of recent disappointments, the time and pain might be too much for most investors to bear.

Write to Charley Grant at charles.grant@wsj.com

(END) Dow Jones Newswires

May 22, 2017 13:12 ET (17:12 GMT)