Amgen Shares Look Cheap Ahead Of ASCO

Wachovia Securities upgraded shares of Amgen ahead of one of the biggest medical meetings of the year, as the biotech giant is expected to report positive data for one of its most promising drugs in development.

Analyst George Farmer said denosumab, an experimental osteoporosis treatment formerly known as AMG-162, could receive accelerated approval should pending Phase II data prove positive.

"Based on compelling biology, there is good reason, in our view, why a positive outcome could be expected from the denosumab Phase II trials to be presented at ASCO this June," Farmer wrote in a note to clients Monday.

The mid-stage clinical trials are designed to determine the efficacy of the drug for the treatment of metastatic bone disease.

"We believe one or more of these trials could support an accelerated approval plan if positive," he added. "Should Amgen pursue such a strategy, we believe a BLA [biologics license application] for denosumab as treatment for bone metastases could be filed in the first half 2007 and perhaps face market entry in 2008 -- one year ahead of Street expectations."

Farmer forecasts a 13% revenue compound annual growth rate for Amgen through 2008, relative to the median combined growth rate of peers Biogen Idec, Gilead Sciences and Genentech. The Wachovia analyst values Amgen in a range of $75 to $82 per share.

"We believe the potentially early filing of denosumab justifies buying Amgen stock ahead of ASCO, especially now that most of the negativity, in our view, has been played out," the analyst noted.

"With $3 billion of stock already repurchased this year and another $3.2 billion remaining, Amgen management has signaled, from our perspective, that it believes its stock to be cheap."