Market response to Repatha
From August 25–27, 2015, market response to Amgen’s (AMGN) Repatha saw Amgen’s share price rise 7.3%. The FDA (U.S. Food and Drug Administration) approved Amgen’s cholesterol-lowering Repatha on August 27, 2015. Regeneron (REGN) also saw a rise in its share price after the FDA approved Praluent in July 2015. The recent dip in the prices of both stocks is a result of global economic woes and the slowdown in China, which affected all US sectors.
Despite Amgen having a strong drug portfolio and introducing six innovations into the US market, Amgen’s share price continues to move horizontally. This is mainly due to the loss of patent protection for its leading oncology drug combination Neupogen and Neulasta in 2013 and September 2015, respectively. With fears of generic competition eroding Amgen’s oncology market, investors have attributed low valuation to the company.
However, Repatha, with a target audience of about 25 million people, can prove to be a blockbuster therapy for Amgen. Priced at $14,100 per year per patient, this drug can become a major driver of Amgen’s profitability. As high cholesterol is also associated with other cardiovascular diseases such as heart attacks or strokes, physicians and patients will be more willing to use Repatha. Although there are pressures from the payer lobby, the superior clinical profile of the drug compared to existing therapies such as Pfizer’s (PFE) Lipitor and Novatis’s (NVS) Crestor may force health insurers to include the drug in its coverage.
Amgen is focusing on effectively communicating the value proposition of Repatha to both primary care physicians and specialists such as cardiologists, endocrinologists, and lipid and diabetes physicians. In addition, the company is conducting an intravascular ultrasound imaging study in collaboration with Cleveland Clinic. It’s also conducting a 27,500-patient outcomes trial. Results are expected for both in 2016 and 2017, respectively. These studies are expected to establish efficacy and differentiate Repatha from other PCSK9 inhibitor drugs.
Instead of directly investing in Amgen and being exposed to many of its business-specific risks, investors can opt to invest in the iShares NASDAQ Biotechnology ETF (IBB). Amgen accounts for 8.53% of IBB’s total holdings.