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Amgen Q2: Don't Call It a Comeback, Call it a Growth Story (In More Ways Than D-Mab)

Amgen's Q408 earnings were marred by a perfect storm of safety, regulatory and reimbursement issues converging on its erythropoiesis-stimulating agent franchise, and Q109 earnings took a hit thanks to economic woes pressuring patients to forgo pricey meds like the anti-inflammatry drug Enbrel (etanercept). But with Q209, everyone's favorite big biotech is back on top again.

Second quarter earnings of $1.3 billion, or $1.29 per share, beat analyst estimates of $1.16 per share. At $3.7 billion, revenues also beat estimates: the ESA franchise fared better than anticipated, and rising Enbrel sales provided hope for a stable future.

But, as always, denosumab managed to steal the show. The wonder drug is under FDA review for osteoporosis, either related to menopause or caused by hormone ablation therapy in prostate or breast cancer. Recent Phase III data showed denosumab also can delay bone complications in cancer patients with bone metastases, and a number of other Phase III cancer trials are underway.

Concurrent with its second-quarter earnings, Amgen announced it had inked a deal with GlaxoSmithKline to commercialize denosumab for postmenopausal osteoporosis in Europe and certain other ex-U.S. markets â€" laying to rest concerns that Amgen might overspend trying to tackle such a project internally.

Everyone says denosumab is Amgen's future. The Street called it "the most important new drug to come out of Amgen's research labs in years" and "a key to the company's future growth." Credit Suisse analyst Michael Aberman called it "critical to our thesis of Amgen returning to growth."

But can denosumab carry Amgen? The ESA/hematology franchise pulled in $2.5 billion in the second quarter, while Enbrel garnered $899 million. Analysts estimate Enbrel may not slip too much over the next few years, but Amgen's hematology drugs face FDA and CMS issues, not to mention biosimilars threats overseas. That's a lot of ground for denosumab to make up.

Analysts are optimistic. In a BioWorld article, Aberman predicted denosumab will eventually achieve sales greater than $4.5 billion.

And Amgen has a few other tricks up its sleeves.

Robert W. Baird analyst Chris Raymond said Amgen has "fundamentally shifted from primarily playing defense to a genuine growth story." Denosumab is the protagonist in that story, but he noted that Phase III data with colorectal cancer drug Vectibix (panitumumab) in a front-line setting could also be a value-driver.

Additional Phase III data are expected this year from Vectibix in head/neck cancer and Aranesp (darbepoetin alfa) in reduction of cardiovascular events associated with kidney disease and diabetes. And, although it hasn't gotten much attention, Amgen increased its cardiovascular footprint earlier this year by opting in on a Phase II cardiac drug from Cytokinetics.

Growth chart photo by Flickr user NJ Tech Teacher, CC2.0