Deutsche Bank Comments on Recent Strength in Amgen (AMGN), Cites Positive Buy-Side Meetings
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Deutsche Bank comments the recent upward move in Amgen (Nasdaq: AMGN). The firm said, "We understand that Amgen has met with several buy-side funds over the past 2 weeks. Feedback from those meetings has been highly positive. This is the first time in ~18 months that we have picked up consistently positive feedback after such meetings. Amgen seems to be communicating 3 key messages, all of which we agree with."
The 3 key messages DB said Amgen is communicating are:
1) Amgen's cost structure could be dramatically reduced if a "worst case" reality unfolds over the next 18 months (i.e. D-mab completely fails and the new Aranesp FDA label is highly restrictive). Thus, it appears that the company should be able to defend its operating margins under virtually any scenario.
2) Amgen is considering partning d-mab for PMO. Many investors fear that Amgen will build, on its own, a ~1,500-person GP sales force to sell d-mab into PMO. Unless the data are HIGHLY compelling, this could be an NPV-negative endeavor since Amgen has no other GP drugs. However, Amgen seems to be messaging that it will likely partner d-mab if the math supports it.
3) Amgen is emphasizing d-mab for CANCER, and investors are becoming more comfortable that this is a potential $1-2B opportunity with VERY HIGH operating margins. In addition, the FDA approval bar is far lower in cancer. Data from the main cancer trials is to be presented in 2009. In essence, it seems that investors are seeing "light after PMO."
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