Amgen, Inc. (AMGN)’s Future Is Brighter Than You Might Think

When you think about a cutting-edge, one-foot-in-the-future biotech company, no one would blame you for skipping over Amgen, Inc. (NASDAQ:AMGN). You don’t have to look very hard to find a headline labeling it as an aging pharmaceutical company grappling with a fading market presence and lack of ingenuity in the pipeline. Some may even argue that Amgen’s future isn’t as bright as its biotech competitors.

I couldn’t disagree more. In fact, earlier this month CEO Robert A. Bradway outlined his long-term strategy for growth that focuses on three key areas:

1. Selective research and development with “biology first” policy.
2. Transformation of the commercial model.
3. New manufacturing technologies.

What does it all mean? Let’s take a closer look.

Pipeline outlook
Amgen’s pipeline stacks up pretty favorably with its peers, especially in late-stage development:

Source: Company websites.

As of today, the company expects results from two pivotal phase 3 trials this year, five more in 2014, and one in 2016. That doesn’t beat Celgene, which is expecting data from more than 10 phase 3 trials this year, but it does dismiss any claims that Amgen has lost its ability to innovate.

I recently pointed out why Celgene was my favorite big biotech for 2013. I’m not backing down from that opinion — I just think several companies finished a close second. Other than Amgen, Gilead and Biogen have promising drugs on the market and in their pipelines as well. Gilead, which has several of the market’s brightest drugs, has five biologics in phase 2 trials not included in the table. And although Biogen began 2013 with a failed phase 3 trial, its focus on pure biologics is unrivaled.

Amgen’s size and market presence deserve an analysis of its own. Consider that Neulasta/Neupogen, the company’s top drug, nearly brought in more revenue last year than the totals enjoyed by Celgene and Gilead.

Decoding “biology first”
The pipeline is being driven by a “biology first” policy, which aligns development selectivity with human genetics. A recently acquired treasure trove of human genetic data from deCODE Genetics could pay tremendous long-term dividends. What’s the importance?

Over the past 17 years, deCODE Genetics created dozens of innovative analysis techniques to mine genetic data from large populations. The company used Iceland’s mostly homogenous population to sweep through the human genome with unparalleled precision. Discrepancies in gene expression were easier to notice in the population and less likely to be caused from racial genetic differences, thus making genes linked to various diseases stand out with scientific significance.