During the call, however, the analysts were paying attention to misses in clinical trials. Preliminary 12-week data from a phase III study in colon cancer showed that patients who took Vectibix in conjunction with chemotherapy and Genentech's ( DNA) Avastin fared no better than those treated with just chemo and Avastin. Additionally, there were more adverse events among patients taking the Vectibix combination. Amgen also decided to postpone a phase III trial for Vectibix in cancer of the head and neck. An Aranesp trial in patients with cancer-caused anemia didn't go well either. There was a statistically significant increase in deaths among patients taking Aranesp, and the drug did not show any greater efficacy. It's important to note that the trial studied a small set of gravely ill patients. Nevertheless, that's not good news. While stocks eventually trade to their fundamentals (usually), it sometimes takes a while. Sentiment is what often moves shares. Right now, the Street appears disappointed with Amgen due to the pipeline data. I believe it's likely Amgen shares will head lower and remain in a funk until the Cera issue is settled. But there are a few on the Street, such as Bear Stearns analyst Mark Schoenebaum, who believe that
Amgen has a better than 50/50 chance of keeping Cera off the market and protecting a $6.5 billion franchise. If that's the case, I believe investors will quickly forget about last night's disappointment and euphoria will reign. They'll realize that 16 times 2007 earnings and 1.2 times growth (at current prices) is cheap -- especially for a company with a proven track record and a new drug that, despite the latest setbacks, still has enormous potential.