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Amgen Continues Slide, Hitting 52-Week Low

Big biotech has lost 20% of its value since joining the Dow

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Barry Cohen
Oct 12, 2021

Summary

  • Latest blow is disappointing news about promising cancer drug.
  • Combinations with treatments from Boehringer and Novartis weren’t effective.
  • Hedge funds have become less bullish about Amgen’s prospects.
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Amgen Inc. (

AMGN, Financial) hasn’t traded in the $100s for more than two years, but the big California-based biotech is knocking on the door of that ignominious level.

The company’s stock hit its 52-week low of $201.35 on Tuesday as it continues to be whipsawed by a spate of bad news. Most recently, Amgen said it will stop combinations for its highly-touted cancer drug Lumakras with drugs from Boehringer Ingelheim and Novartis (

NVS, Financial) in KRAS-mutated cancer after disappointing data, Bernstein analyst Ronny Gal told FiercePharma.

Lumakras is the first drug specifically approved for KRAS-mutated cancer. The KRAS mutation is an error in a protein in normal cells. It is called KRAS because it was first identified as causing cancer in Kirsten RAt Sarcoma virus. Normally, KRAS serves as an information hub for signals in the cell that lead to cell growth. Amgen is searching for various combination options to expand its reach, but is struggling to find the right partner.

Jefferies’ analyst Michael Yee was banking on the combination with the Novartis drug to boost Lumakras sales, especially because Amgen’s closest competitor, Mirati Therapeutics Inc. (

MRTX, Financial), isn’t pursuing its own drug.

Lumakras’ latest disappointment doesn’t mean combinations with other mechanisms wouldn’t work. “With a broad effort by Amgen and others to find the right combination, we see it as reasonably likely some combinations will provide added efficacy, especially in targeted segments,” Gal said in a note. However, this leaves Amgen vulnerable to competitors who are hot on the trail.

Based on 11 Wall Street analysts offering 12-month price targets for Amgen in the last three months, the average target is $242.22 with a high forecast of $278 and a low of $185. The stock is rated a moderate buy.

Hedge funds appear to be so-so about Amgen. The stock was in 53 hedge funds' portfolios at the end of the second quarter of 2021, well off the all-time high of 73, but still higher than the 47 with a position at the end of the first quarter, according to Yahoo Finance. Amgen wasn’t among the 30 most popular stocks among hedge funds. Health care companies that did make the list were Johnson & Johnson (

JNJ, Financial), Thermo Fisher Scientific Inc. (TMO, Financial) and UnitedHealth Group Inc. (UNH, Financial). Amazon.com Inc. (AMZN, Financial) topped the chart, with Facebook Inc. (FB, Financial) a close second.

Joining the Dow Jones Industrial Average should benefit a stock, but that hasn’t been the case with Amgen. Since being added to the measurement at the end of August 2020, the company has lost about 20% of its value. If there’s one consolation to investors, the drop in share price has boosted the company’s dividend yield to 3.41%.

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Disclosures

I am/we are Long AMGN and JNJ.
The views of this author are solely their own opinion and are not endorsed or guaranteed by GuruFocus.com
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