Deutsche Bank Initiates Amgen with a Hold, Dendreon with a Buy
Among the movers, Amgen shares fell about 2% to about $53.93, and Dendreon climbed about 2.5% to $37.40.
Deutsche Bank based its Amgen call on valuation and weakened sales due to the company's declining base business, as well as concerns about price pressures in the U.S. and Europe. The brokerage firm further said it believes the Phase 3 trial of Amgen's much-anticipated bone drug denosumab will not yield positive results, for several reasons, including historical data.
Indeed, sales of Amgen's blockbuster anemia drug Aranesp have been declining due to safety concerns. Meanwhile, the sales growth of similar drug Epogen, and white blood cell boosters Neulasta and Neupogen has been slowing, so the company and investors have placed their hopes on denosumab, marketed as Prolia, as a potential future blockbuster osteoporosis drug.
In June, regulators in the U.S. and Europe approved Prolia for the treatment of postmenopausal women with osteoporosis at high risk for fracture. But the company is hoping for an additional U.S. approval for the drug to reduce the chances of fractures and other skeletal problems in patients whose cancer has spread to the bone. The Food and Drug Administration granted priority review of Prolia for this indication in July.
A Bullish View on a Prostate Cancer Vaccine
Meanwhile, Amgen announced just last week that its colon cancer drug Vectibix had failed a late-stage study in head and neck cancer patients. Vectibix, which is similar to Erbitux, the colon cancer drug from Bristol-Myers Squibb (BMY) and Eli Lilly (LLY), has so far failed to live up to expectations as a potential blockbuster and growth driver.
In the past 52 weeks, shares of Amgen have traded between a low of $50.32 and a high of $62.51. Amgen has been picked by Louis Navalier as one of three health care stocks to sell last month. Deutsche Bank set a target price of $57 on Amgen shares.
As for Dendreon, the analyst believes that Provenge, Dendreon's prostate cancer vaccine, could continue to be a bullish factor for the shares after the FDA finally approved the treatment for men with advanced prostate cancer at the end of April.
Since Provenge certainly has blockbuster potential -- the company estimates annual sales of $1.2 billion to $2.5 billion -- shares soared to close just over $50 following the FDA decision. Still, with looming shortages and possible Medicare coverage issues, shares have declined more than 25% since then.
In the past 52 weeks, Dendreon has traded between a low of $21.25 and a high of $57.67. Deutsche Bank placed a target price of $44 on the shares.