Mylan NV (MYL, Financial) – the U.K.-headquartered health care company that is engaged in the development, production and global distribution of generic, brand name and over-the-counter products – has received from the Food and Drug Administration (FDA) a Complete Response Letter (or CRL) with reference to its U.S. marketing application for its MYL-1401H, as reported by its co-developer partner Biocon Ltd. (NSE:BIOCON, Financial).
With its application, Mylan is seeking approval for its MYL-1401H, a biosimilar of Amgen's (AMGN, Financial) Neulasta (pegfilgrastim) that Mylan has jointly developed with Biocon.
According to the CRL, the FDA needs extra data on chemistry, manufacturing and controls (or CMC) from Biocon. But concerning the biosimilarity of Mylan-Biocon’s product, the FDA says there wasn’t any kind of problem.
Pegfilgrastim is a neutrophils stimulator used as a treatment for chemotherapy patients. Neutrophils is a class of white blood cells. By stimulating the bone marrow to increase the production of neutrophils, cancer patients are helped in their fight against infections. Chemotherapy patients are more susceptible to infections since chemotherapy lowers immune defenses.
Mylan is trading at $38.45 per share on the Nasdaq with a market capitalization of $20.62 billion. The company has a recommendation rating of 2.2 and a target price of $42 per share. The forward price-earnings (P/E) ratio is 7.23. For full fiscal years 2017 and 2018, analysts forecast EPS of $4.58 and $5.32.
Mylan is selling its book value per share at 1.61 times, its trailing 12 months (ttm) sales per share at 1.72 times and its ttm earnings per share at 31.08 times.
Following this news, shares of Amgen closed 33 cents up or plus 0.18% at $185.79 per unit Oct. 10 on the Nasdaq stock exchange compared to the previous trading day.
Amgen currently has a P/E ratio of 16.91, a price-book (P/B) ratio of 4.28 and a price-sales (P/S) ratio of 5.99.
The forward P/E ratio is 14.39 that combined with an EPS of $12.76, yields a value of $183.62. The figure of $12.76 is a weighted (quarters) average of EPS for full fiscal years 2017 and 2018.
According to Peter Lynch (see chart below), Amgen is overvalued by the stock market at the moment:
For analysts the U.S. global biopharmaceutical company is a buy with a recommendation rating of 2.4 out of a total of 5 and with a target price (average) of $189.70 per share, which represents a 3.3% increase from the current market value.
Amgen has been downtrending in the last five trading days. The health care stock has gained about 27% year to date and is trading about $4 below its 52-week high of $191.10 per share. The 52-week low is $133.64 per share.
Amgen is not selling at its lowest; its dividend yield of 2.48% – as the U.S. global health care company distributes an annual dividend of $4.60 per share – is still far above the Standard & Poor's 500 current dividend yield of 1.89%.
Disclosure: I have no positions in any stock mentioned in this article.
