Morgan Stanley Found This 'Unexpected Negative' At Amgen

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In a report published Tuesday, Morgan Stanley analysts maintained an Equal-Weight rating on
Amgen Inc
AMGN
, while reducing the price target from $179 to $171. Amgen announced the termination of the development and commercialization of brodalumab, an IL-17 antibody for psoriasis. The company which was working in partnership with AstraZeneca for the same has returned the compound to the latter. "The decision was based on events of suicidal ideation and behavior in the brodalumab program, which Amgen believes likely would necessitate restrictive labeling," the analysts mentioned. "We had previously modeled a 2016 launch with ~$1.4B in peak-sales by 2020E: We had believed that theIL-17 class would be large and that brodalumab, given that it was the only IL-17 to demonstrate superiority to Stelara in a head-to-head study, would have taken sig. market share within the class," the analysts added. The decision is expected to have a negative impact on Amgen's future performance. In the report Morgan Stanley noted, "Brodalumab represented the 3rd largest pipeline compound in our model after PCSK9 and romosozumab. Thus, we see this as a sig. negative." Major factors impacting the future revenues at Amgen include the erosion of the base business due to biosimilars, the launch of its PCSK9 inhibitor and the maturation of the Phase III pipeline, especially evolomucab.
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Posted In: Analyst ColorPrice TargetReiterationAnalyst RatingsMorgan Stanley
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