December 24, 2011 - Amgen Inc., (AMGN-NASDAQ) a biotechnology medicines company, discovers, develops, manufactures, and markets human therapeutics based on advances in cellular and molecular biology for grievous illnesses primarily in the United States, Europe, and Canada.

The company also markets Sensipar/Mimpara, a small molecule calcimimetic that lowers serum calcium levels; Vectibix, a monoclonal antibody that binds specifically to the epidermal growth factor receptor; and Nplate, a thrombopoietin (TPO) receptor agonist that mimics endogenous TPO, the primary driver of platelet production.

In addition, it provides Denosumab, a human monoclonal antibody that targets RANKL, an essential regulator of osteoclasts. Further, the company offers product candidates in mid-to-late stage development in a variety of therapeutic areas, including oncology, hematology, inflammation, bone, nephrology, cardiovascular, and general medicine consisting of neurology.

It sells to healthcare providers, including physicians or their clinics, dialysis centers, hospitals, and pharmacies; consumers; and wholesale distributors of pharmaceutical products. The company has various collaborative arrangements with Pfizer Inc.; GlaxoSmithKline plc; Takeda Pharmaceutical Company Limited; Daiichi Sankyo Company, Limited; Array BioPharma Inc.; Kyowa Hakko Kirin Co. Ltd.; and Cytokinetics, Inc. Amgen Inc. was founded in 1980 and is headquartered in Thousand Oaks, California.

Amgen is one of the few profitable biotech companies and the largest independent one. The numbers are large: $2.9 billion for Research and Development in 2010 or 19% of total sales. Cash on hand: $17.7 billion. Financial Strength: A++. If you want a biotech in your portfolio, AMGN is worth your time and consideration.

While sales dipped in 2009 to $14.642 billion (from $15.003 billion in '08), profits didn't. Earnings per share went up, going from $3.90 to $4.83. Sales came back last year to $15.053 billion and earnings finished higher again: $5.12. This year, analysts see revenues up 3% to $15.51 billion and earnings increasing to $5.32 (consensus from 25 analysts with a range of $5.22 to $5.41). Next year, expect $16 billion in revenues and $5.82 for earnings (with a range of $5.45 to $6.62).

That R&D spending is about to pay off. There are several late-stage durgs that focus on oncology, inflammation, and metabolic diseases. Management is also focusing R&D on developing antibodies for hypercholesterolemia (a form of high cholestorol) which represents a large market opportunity. Of course, getting any drug to the final FDA approval stage requires time and lots of money. Patience is required to see the pay off, if ever, from new products.

This stock has an interesting trading pattern. It's been basically flat for 2.5 years, going between $45 and $61. Investors even held on to it when the world seemed to be ending in early 2009. Now it's starting to move above those levels, but it needs a catalyst to break out.

One such opportunity could be emerging markets. The company is looking to India and Japan for growth, speculating that the emerging middle class and the governments will become more aware of healthcare and spend money accordingly.

Growth over the last 5 years, in sales, has averaged 12.5% annually. For the next 5 years, analysts predict 7% a year, on average. Earnings were up, on average, 6.83%. For the next 5, expect 7.44% a year, on average. Of course, with a new blockbuster drug approval, these numbers adjust upward quickly.

Essential Numbers:
- Market Cap: $55.71 billion
- Forward P/E: 11
- Price to book: 2.36
- Operating margin: 33.97%
- Profit margin: 24.41%
- Return on assets: 7.35%
- Total cash per share: $20.17
- Total debt: $14.26 billion
- Current ratio: 4.6
- Book value per share: $26.80
- Beta: .6
- 52 week change: 12.23%
- Shares Outstanding: 876.54 million
- Float: 875.21 million
- Held by insiders: .12%
- Held by institutions: 80.6%
- Dividend: $1.44

Amgen should appeal to many investors. There's even a dividend of decent size which is rare for a biotech. With global markets still relatively untapped, AMGN has a bright future for many years to come.

- Company Web site: www.amgen.com

    Ted Allrich