Shares of Amgen (AMGN) are leading the Standard & Poor’s 500 index today, likely related to the voluntary recall by Affymax (AFFY) of its antianemia drug Omontys ; Affymax’s stock has been walloped, down 85% at the latest.
The move eliminates a potential rival to Amgen’s Epogen drug. As Joshua Schimmer at Lazard writes today:
New entrant setback should improve confidence in Epogen: While Epo’s track record has been far from stellar, with concerns regarding CV risk and tumor progression, these fatalities with Omontys are likely to reinforce the “devil you know” perspective of the nephrology community. This is likely to be relevant as biosimilars enter the market, and AMGN’s “manufactured by Amgen” campaign that seemed to be a “wild card” play to defend its turf all of the sudden is starting to resonate.
He reiterated his Buy rating and $101 price target.
But while Amgen is up 4% today, to $90 a share, Oppenheimer analyst Boris Peaker cautioned against being too bullish on the stock just because of the news:
We believe that the Omontys recall will be a near-term tailwind for Amgen’s ESA business, but long term we continue to see significant headwinds to Amgen’s anemia franchise from bundling repricing and biosimilars. We reiterate our Perform rating with an $89/share price target.
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