Amgen Tumbles After Scrapping A $900 Million Prostate Cancer Drug

The company didn't offer any insight into the reason it scrapped AMG 340.

Amgen Tumbles After Scrapping A $900 Million Prostate Cancer Drug

Amgen's (AMGN), a biotech company, beat Wall Street earnings expectations by a wide margin on Tuesday. However, Amgen shares fell after Amgen scrapped an experimental treatment for prostate cancer.

The company did not provide any information on its decision-making regarding AMG 340, an experimental drug that was tested for metastatic castration resistant prostate cancer. Amgen acquired AMG 340 with the $900m acquisition of Teneobio, which will take place in 2021.

Amgen is now taking a net impairment charge of $650 million in relation to its decision not to sell the AMG 340.

Amgen's stock fell 4.1% in afternoon trading on the stock market today, near 252.50.

Amgen Stock: 'Puts And Takes'

Christopher Raymond, Piper Sandler analyst, noted that Amgen has "puts" and "takes" on all fronts.

The revenue rose 4% to reach $6.9 billion, which was in line with the FactSet polled analysts' expectations. Earnings adjusted up 6% to $4.96 a share, exceeding forecasts of $4.68 a share.

Raymond reported that worldwide product sales, which exclude other revenue sources, missed estimates by $6.55 billion. Amgen also missed sales targets for several of its biggest products.

Enbrel's revenue, which treats autoimmune diseases, was $1.04 billion less than expected, a 6% decline.

Salim Syed, an analyst at Mizuho Securities, noted that Lumakras lung cancer drug is under pressure due to ongoing reimbursement negotiations in France. Otezla, an inflammation drug, is still feeling the impact of free drug programs.

Amgen stated in a press release that "we expect the demand for Otezla to be affected (by these free drug programs)" until 2023.

Obesity Treatment in Focus

Raymond noted that sales of Tezspire and Aimovig were above expectations. Tezspire treats asthma, Aimovig migraines and the last three are osteoporosis medications.

Analysts at Amgen are now looking forward to the company’s efforts in treating obesity. Amgen has been testing AMG 133, a weight loss pill. Phase 2 results are expected in "late 2024."

Syed, a Mizuho analyst, said that the company has a number of obesity-related assets they intend to develop "over the next couple of years."

Amgen's stock was given a neutral rating with a 223-price target.

Amgen has raised its forecast for the year. It now expects to earn adjusted earnings of $18.20 to 18.00 per share, on sales between $28.4 and $28.4 Billion. Amgen raised its guidance after completing the successful acquisition of Horizon Therapeutics in early October.

Analysts at Amgen predicted earnings per share of $18.36 and sales of $27.57 billion.