Jefferies thinks that while permanent injunction against Praluent is a nice surprise for Amgen, Inc. (NASDAQ:AMGN), key to its Repatha success is meaningful CV outcomes data in 1Q17. While Amgen expects Sanofi to appeal with in next 45 days, if granted, appeal process could take ~3-12 months. At present, Amgen does not seem interested in settlement. On potential repatriation of overseas cash (~$34B), it would not fundamentally change BD outlook, but provide greater flexibility to return capital to shareholders.
Key upcoming catalyst will be Repatha CV outcomes data (FOURIER) in ~1Q17 with full data at ACC (3/17-3/19/17 in Washington, D.C.); Amgen notes PCSK9i's at ~$1B run-rate exiting 2016 if all prescriptions had been approved (vs. 75% rejection rate). Pharmacy rejection rate was slightly higher in commercial insurance vs. Medicare Part D, per Amgen, although higher level of abandonment in Part D pts. Amgen does not expect to see an adjustment in utilization management criteria until CV outcomes data is included in label (sometime in 2018). Currently Amgen has not seen a decline in prescribing patterns due to strict utilization management criteria, but has noticed physicians being more selective about prescribing Repatha, knowing how onerous the process is.
Amgen pleased with (seemed nicely surprised by) recent issuance of permanent injunction against Praluent by U.S. District Judge Sue Robinson; Amgen seems unlikely to settle & next event is appeals court's decision on whether to grant Sanofi's appeal (Amgen certainly expects) in next <45 days. If the request for an appeal is not granted, Praluent would need to be taken off the market 45 days from the permanent injunction grant on 1/5/17. If the request is granted, the appeal process could take ~3-12 months per Amgen. At present, Amgen does not see a settlement with Sanofi (SAN FP, Hold)/Regeneron (REGN, Hold) enabling them to keep Praluent on market, noting the importance of IP protection (vs. public interest), particularly Amgen has enough Repatha to supply the market demand.
Amgen advocating for a change in corporate tax reform & confident it would happen, but repatriation of ex-U.S. cash ($34.4B cash as of 9/30/16) would not fundamentally change BD outlook. Amgen notes current effective tax rate has been ~20%, which it expects would continue under the existing tax regime. Tax reform would provide greater flexibility to return capital to shareholders. As of 9/30/16, Amgen had $38B in cash, cash equivalents & marketable securities globally, of which ~$34.4B was ex-U.S based.