Over the past 17 years, Amgen has earned more than $60 billion from sales of its anti-inflammatory drug Enbrel, which it acquired via a 2002 buyout of the medicine's original developer, Immunex.
A court decision issued last week could protect that business for another decade, potentially forestalling copycat competition through 2029.
Ruling Friday, U.S. District Judge Claire Cecchi upheld the validity of two patents Amgen holds on Enbrel and rejected a challenge from Sandoz, Novartis' generic drugs unit. Sandoz won U.S. approval three years ago for a biosimilar version of the multipurpose treatment, but has been unable to launch it due to the ongoing litigation.
The verdict, which Sandoz plans to appeal, removes for now one of the largest threats facing Amgen. Shares in the biotech jumped by 6% Friday in response to the news, and increased again by 5% Monday to near a 52-week high.
Amgen's share price upswing comes as its biotech peers are in the midst of recharting their paths forward.
Celgene is in the process of being acquired by Bristol-Myers Squibb, a $74 billion deal made possible by the biotech's sliding share price. Biogen's value is much reduced following the failure of its top Alzheimer's drug prospect, aducanumab, and investors appear uncertain of where the company heads next. And Gilead is still working to redefine itself after sales for its hepatitis C drugs evaporated.
"Is Amgen now the cleanest large-cap biotech stock?," asked Cantor Fitzgerald analyst Alethia Young in a Aug. 12 note to clients.
The favorable ruling for Amgen follows release this summer of early, but promising, data for an experimental lung drug that analysts think could eventually earn the company billions of dollars, if proven with further testing.
Results from a Phase 1 study of that drug, which targets an oncogene called KRAS that's known to drive many cancers, are from only a handful of patients. No other company, however, has successfully developed a medicine capable of treating KRAS-driven tumors, meaning Amgen's early success could put it out in front in a potentially large market.
While that promise excited investors, the possibility of a biosimilar version of Enbrel to soon arrive shadowed Amgen, which earns nearly a fifth of its revenue and about a quarter of its operating profits from sales of the drug.
If Sandoz had won and launched its biosimilar, Enbrel sales were likely to decrease by 8% a year, estimated Leerink analyst Geoffrey Porges. Now, while Enbrel sales are still expected to drop due to branded competition, the decline will be less steep.
"This, coupled with the fact that they have a KRAS plus an early emerging pipeline — they're starting to lay out a track for evolving the base business beyond what they had," said Umer Raffat, an analyst at Evercore ISI, in an interview.
That could carry implications for Amgen's approach to dealmaking, too. The company has nearly $22 billion in cash and marketable securities, one of the largest hoards in the industry.
"I don't think Amgen has to do a deal," said Cantor's Young in an interview. "I think the pressure would have been higher if the Enbrel case hadn't ruled their way. They don't have to be desperate."
Amgen still faces challenges, of course. Biosimilars might not threaten Enbrel for some time, but the copycat biologics are already eating into sales of Neulasta, Amgen's second best-selling drug. Revenue from Neulasta declined by 25% year over year during the second quarter.
The company's pipeline prospects remain mixed beyond KRAS and even there, optimism is balanced by caution over the early nature of the data that's been released to date.
"You don't want to put the wagon before the horse," said Salim Syed, an analyst at Mizuho Securities USA, in an interview. "KRAS is still early."
The drugmaker is also among the most at risk from a pricing plan proposed by the Trump administration, which remains focused on delivering on promises to lower drug costs.
Even so, Amgen could offer investors stability in a sector that's seen substantial upheaval in recent quarters.