Amgen’s ‘White Whale’ Cancer Data May Send Shares to Record High
(Bloomberg) -- Amgen Inc. shares could hit a record if an experimental new cancer medicine is able to show improvements in a handful of patients later this week.
A medicine known as AMG 510 has already shown early promise as data from June indicated the treatment can lead to responses at low doses. AMG 510 targets a cancer mutation known as KRAS G12C, which is thought to be present in roughly 13% of non-small cell lung and as many as 5% of colon tumors.
Getting a drug to work on KRAS mutations has been the “the white whale of drug discovery,” Amgen’s head of global development has said.
Updated results for AMG 510 are expected to be presented at the International Association for the Study of Lung Cancer or IASLC’s World Conference on Lung Cancer in Barcelona on Sunday. Options data for Amgen implies the stock may move 3.6% either way between now and Sept. 13. A more than 3% move to the upside for the biotech company would drive shares to a record high.
According to one of the more bullish analysts covering Amgen - Jefferies’ Michael Yee - Medicines targeting KRAS have the potential to be a $2 billion or more class of drugs. Yee expects the data to show three more months of follow-up for the initial 5 of 10 lung cancer patients who responded to the therapy.
Investors are looking for an overall response rate of 50% or better for the higher dose of the drug, Yee said. That’s after the lung cancer data showed that all three lung cancer patients getting the highest dose had responded in the last update. He expects the next look at the data may be in ten to 15 patients, although the company hasn’t guided as to how many patients will be in those results.
Seventy-five percent or better would be a bull case, but even if the response rate were below 50%, Amgen still has a drug, Yee said. However, that could open the door for a key competitor, smallcap drug developer Mirati Therapeutics Inc.
The next 12 months for Amgen will be “catalyst packed” Yee said. With less hedge funds and mutual funds invested in Amgen than other large-cap biotech peers, Amgen has room for those investors to come into the name, he told clients in an August video.
Amgen bears have eyed the company’s early data and speculated Mirati’s competing medicine could produce better results. The small-cap’s shares rose 8 fold from the start of 2017 through 2018. Yet, there are signs the mania may be fading. A scant month after the stock reached a record in July, the company got its first sell rating and shares are now 25% below their peak.
“While MRTX849’s clinical profile might ultimately emerge as differentiated relative to Amgen’s AMG 510,” if Amgen achieves a response rate of 50% or better in lung cancer at the higher dose, Mirati’s medicine may face “too high of a bar,” JPMorgan analyst Anupam Rama wrote in an August note.
Options data implies Mirati may move 10% between Wednesday and Sept. 20.
Read more: High-Flying Mirati Gets First Sell Rating Over Heady Drug Hopes
Meanwhile another heavyweight drugmaker, Johnson & Johnson, has kicked off its’ own study of a KRAS-inhibitor in colon and lung cancers, according to clinicaltrials.gov.
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