AMGEN - A biotech with news and a reasonable valuation

Last week, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) has announced a positive opinion for the marketing authorization of Prolia((TM)) . Prolia (denosumab) is a key bet for Amgen(AMGN) and is critical in weaning the company off its anaemia portfolio.

The licence application for Prolia is for the treatment of osteoporosis in postmenopausal women at increased risk of fractures, and for the treatment of bone loss associated with hormone ablation in men with prostate cancer at increased risk of fractures. If approved by the European Commission, Amgen would receive marketing authorization for Prolia in all European Union (EU) Member States.Approval if expected some time in Q1 2010.

Prolia’s active ingredient, denosumab, has a unique mechanism of action. It is the first and only therapy in late stage development that specifically targets RANK Ligand, an essential regulator of osteoclasts (the cells that break down bone). Administered every six months as a subcutaneous injection just under the skin, denosumab helps stop the process that causes bone loss, resulting in greater bone density, stronger bones and reduced risk for fractures at the spine, hip and other non-vertebral sites.Given its potential to inhibit all stages of osteoclast development through a unique and targeted mechanism, denosumab is also being studied in a range of other bone loss conditions including rheumatoid arthritis, and for its potential to delay bone metastases and inhibit and treat bone destruction in patients with advanced cancer.

The CHMP positive opinion is based on data from six Phase 3 trials. Two Phase 3 pivotal studies with fracture endpoints in the osteoporosis and prostate cancer settings demonstrated that Prolia administered as a subcutaneous injection twice yearly (60mg) reduces the incidence of fractures. All six studies showed

Prolia is also under regulatory review in the United States (U.S.), Switzerland, Australia and Canada for the treatment and prevention of postmenopausal osteoporosis and for the treatment of bone loss in patients undergoing hormone ablation therapy for breast or prostate cancer. The F.D.A. asked Amgen for additional data in late October, which ultimately may require further clinical.

Amgen’s share price is currently $57 and analysts are estimating 2010 earnings at over $5, giving a forward P/E of 11, which is not aggressive for a biotech stock. Recent news that the company has won a patent dispute with Roche relating to its anaemia product, Mircera, gives further reassurance about earnings and the company approved an additional $5 billion stock buy back in Early December (adding to the $1.2 bn left in the previous buyback programme). The 52 week range is $44 - $64.

Given the forthcoming news on Prolia and the unchallenging P/E, Amgen looks to be a good buy for January.

Update on portfolio 27th December 2009

Coal of Africa (CZA): Has risen to £1.00, following buy at 95p, as South African Coal prices for export continue to rise. News on Vele Mine approval still awaited with anticipation.

NightHawk Energy (HAWK): Bought at 35p. After slipping as low as 30p, has stabilised at 33p. News on Jolly Ranch lateral wells and waterflooding at Revere anticipated in early January. News flow should drive signficiant momentum in this stock. The recent takeover of XTO energy by Exxon shows the potential valuations of shale oil/gas plays. An exciting stock to hold for 2010.

Desire Petroleum (DES) and Falklands Oil and Gas (FOGL): Desire purchased at 85p, now at 86p and FOGL at 131p, now at 128p. The Ocean Guardian Rig has reached Las Parmas.

Next leg:
Las Palmas- Recife, Brazil: 2,860 nm @ av. 4.5 kn = 26 days = ETA Recife 19/20 Jan

Last leg:
Recife-FI 1st location: 2,470 nm @ av. 4.5 kn = 23 days = ETA FI [1st location] 12 Feb 2009
@ av. 5 kn = 21 days = ETA FI [1st location] 6 Feb 2009

Amazon (AMZN): Short set at $146. Now at $138. Short closed

Short Dollar/Euro: Euro shorted at 1.51. Short closed at 1.47. Now at 1.43.

Short emerging markets: Shorts placed on JP Morgan Emerging and Templeton Emerging. Both investment trusts have risen since the short. Given momentum in this sector, watching closely with a view to close.