Amgen Shares Could Gain $2-$4 As Competitor Coherus Receives CRL

Can one man's pain be another man's gain? It seems so. Even within the stock market, this phenomenon is present, seen through sympathy moves, which result in stocks belonging to the same sector/industry or having the same category of products moving either in tandem with each other or in opposite directions.

Such a move is likely to be seen within the biotech sector, according to an analyst who predicts Amgen, Inc. AMGN will move higher following a regulatory setback by competitor Coherus Biosciences Inc CHRS.

The CRL That Knocked Coherus Off

Coherus fell close to 24 percent Monday after it announced that the FDA has issued it a complete response letter for its aBLA for its CHS-1701, a pegfilgrastim biosimilar candidate to Amgen's Neulasta.

This product worth $4 billion per year for Amgen fell off the patent cliff in 2015. With other biosimilar candidates to Neulasta being unsuccessful in clearing the regulatory hurdle, it looks like Amgen is the winner all the way.

Even if the FDA vets the aBLAs of competing drug makers they face the prospect of contending with Amgen on the grounds of patent infringement.

Amgen Shows Very Little Reaction

Despite the negative news for Coherus being positive for Amgen, the shares of the latter reacted with only a modest move to the upside. Amgen shares rose 0.50 percent to $164.88 on Monday.

It is against this backdrop that Street chatter quoting Mizuho Securities said investors were bracing for CHS-1701 entry in the second half of 2017. The firm believes the denial pushed out the erosion curve by 12–18 months, depending on when Coherus refiles its aBLA and whether the FDA classifies the resubmission as Class 1 or 2.

If the FDA classifies the resubmission as Class 1, the review will be completed in two months, but a Class 2 status would mean a lengthier review period of 6 months.

Specifically, Mizuha sees $2 to $4 upside to Amgen shares on the Coherus news.

At last check, shares of Coherus were up 5.25 percent at $16.55.

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