Amgen (AMGN - Get Report) shares have been stuck in a rut for most of 2019. After setting 52-week highs of $210.19 late last year, Amgen has spent most of the last eight months or so trading well below the $200 threshold. The stock fell to a low of $166.30 in late May.

This weakness is due to a slowdown in growth. This year is projected to the Amgen's first negative bottom-line growth year since 2000. Amgen has been a model of success in the large cap bio-tech/pharma space, yet the recent slowdown in growth points to a new stage in the maturation of this company and investors are beginning to worry about its future prospects.

Amgen's headline results during the quarter weren't very impressive. The company posted year over year revenue growth of -3.1%, net income was down 5.1% y/y and cash flows from operations shrunk by 33.3%. But, the focus wasn't on the near-term fundamentals, but instead, on the potential of the company's KRAS inhibitor drug, AMG 510.

A Scientific Breakthrough 40 Years in the Making 

Amgen originally made headlines with its KRAS inhibitor at the American Society of Clinical Oncology conference earlier in the year with its AMG 510 drug. The news surrounding this drug was seen as a major breakthrough in the oncology space because companies have been trying to target KRAS mutated cancer for decades now, with few results to show for it.

The KRAS G12C mutation is seen in roughly 13% of lung cancer patients, approximately 3% of colon cancer patients and approximately 2% of all other solid tumors. Currently, there are no drugs that target this specific mutation and therefore, Amgen management sees this drug as meeting an unmet need in the oncology space, leading certain analysts to assume that the drug could receive accelerated status should the trials continue to progress well.

In the study released during ASCO, the primary endpoint was patient safety. This makes sense, being that it was AMG 510's first-in-human study. Amgen management deemed the drug safe when presenting their findings at ASCO. Furthermore, not only was the primary end point met, but AMG 510 showed impressive results with regard to the 50% response rate and the disease control rate of 90% (9 out of 10 patients, with five receiving partial response ratings and four receiving stable disease) in the non-small cell lung cancer (NSCLC) segment of the study.

This was big news because the NSCLC market is a major one. Many of the big bio-pharma names operating in the oncology space are competing for market share here. But, in the second quarter, Amgen built on that momentum with data regarding solid tumors elsewhere in the body as well. 

The ASCO presentation included no-responses from patients in the colorectal patient subset, which appeared to have left the door open for other companies working on KRAS inhibitors. However, in the Q2 conference call, Amgen management announced that they had formal tumor responses in colorectal and appendiceal cancer patients as well and they're moving forward with the AMG 510 program rapidly and expect to begin the phase II portion "in the coming days."

Elsewhere in its oncology segment, Amgen also had positive results from its BiTE platform with initial data from studies related to prostate cancer. These results were so encouraging to management that Amgen has decided to pause its CAR-T programs in association with Kite and focus on its own BiTE platform.

Renewed Hope Changes Downtrodden Sentiment 

Needless to say, the ASCO presentation and the Q2 conference call changed the narrative surrounding this company from that of a legacy driven, no-growth, cash cow one back to the exciting, cutting-edge, bio-tech innovations that Amgen investors have come to expect over the years. Amgen went from being a dog to potentially becoming a market darling again with renewed hopes of a new oncology platform.

Shares popped more than 5% in response to this data and they continue to trade well (late in the week when the broader markets sold off on Federal Reserve-related news and President Trump's tweets about further Chinese tariffs, Amgen held in these, ending the week near recent highs).

Management is still experimenting with dosing regimens in patient populations in existing study areas and appears to be hopeful that AMG 510 will prove successful in treating KRAS across a wide variety of solid tumors. These studies were nearly 40 years in the making and finally, all of the hard work that doctors and scientists have done in this space is starting to pay off. It's still early in the KRAS time table with regard to in-human studies, but Amgen could be sitting on a new oncology platform here with the potential to generate billions in sales on an annual basis.

Even after the Q2 bump, Amgen shares are trading for just 13.1x trailing twelve month earnings. This figure is well below the company's long-term P/E average of more than 21x. Amgen shares yield 3.11% and while 2019 guidance is still disappointing, analysts expect the company to return to growth in 2020 and 2021. The stock looks cheap right now and if positive data continues to roll in with regard to AMG 510's potential, these bargain barrel prices might not last much longer.

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Amgen is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells AMGN? Learn more now.

Nicholas Ward is long AMGN.