Two Reasons Why Biotech Watchers Are Glued to Amgen
The outcome of a patent lawsuit and the launch of a new anemia drug could determine where this industry leader's stock goes next.....
HEDGE PLAYS. Given the likelihood of those victories, investors have several ways to play the stock. First, they can go for instant gratification. At this point, TKT's testimony in Boston is finished. All sides await U.S. District Judge William Young's verdict, which could come any day now. With a victory, Amgen's stock may get a nice boost. Of course, if Young rules against the company, expect the stock to take a big hit.
Investors could always hedge their Amgen bet by shorting the stock. Another hedge would be to invest in TKT, whose stock would most likely soar if the company wins the lawsuit. TKT currently trades at $38.50 a share, roughly where it was on Jan. 1.
Another way to play Amgen ignores TKT and the patent lawsuit. This strategy focuses on Aranesp. Assume the clinical data are firm and assume the drug receives regulatory approval for treating anemia, dialysis, and perhaps cancer and several other conditions. Aranesp would cannibalize Epogen's market, but this benefits Amgen in the long run as the new drug becomes an even bigger blockbuster. snip<>
businessweek.com
FWIW,Jim |
