Trump's Expected Policy Changes Have Propelled These 2 Biotechs to New Highs
3/20/2017 6:15:36 AM
March 20, 2017
By Alex Keown, BioSpace.com Breaking News Staff
WASHINGTON – Movement in Washington, D.C. has certainly caused some uncertainty in the healthcare industry when looking at potential changes to the Affordable Healthcare Act, funding concerns through the president’s proposed budget and potential regulatory changes at the U.S. Food and Drug Administration.
But some of the potential changes in Washington are bringing positive benefits to two biotechs, Amgen (AMGN) and Illumina (ILMN) and investors in those companies have seen share prices surge since the November 2016 election of Donald Trump. Writing in the Motley Fool, analyst Corey Renauer said these two companies have seen a combined market cap increase of more than $32 billion since Nov. 18, 2016, with Amgen seeing the lion’s share at $29.41 billion.
So far, 2017 has been a good year for Amgen (AMGN), in part due to successful (so far) litigation against rivals Regeneron (REGN) and Sanofi (SNY) that could prevent those companies from marketing their cholesterol drug Praluent in the United States for 12 years due to patent infringements. In January, a judge issued the ruling, but that is being appealed. If the injunction is upheld, that would leave Amgen’s Repatha as the sole drug of its type in the United States. The company also received a boost after a meeting with Trump when Amgen Chief Executive Officer Robert Bradway told the president the company will be hiring 1,600 people across the United States this year.
The company entered 2017 riding high off of its approved biosimilar, Amjevita to AbbVie (ABBV)’s Humira for the treatment of seven inflammatory diseases, including moderate-to-severe rheumatoid arthritis, moderate-to-severe polyarticular juvenile idiopathic arthritis, psoriatic arthritis, ankylosing spondylitis, moderate-to-severe chronic plaque psoriasis, adult moderate-to-severe Crohn's disease and moderate-to-severe ulcerative colitis. It’s the biosimilar area where Renauer believes Amgen will continue to see growth if Trump’s FDA Commissioner-appointee Scott Gottlieb is approved by the Senate. Renauer said Amgen has multiple biosimilars in late-stage development targeting Avastin, Remicade, Rituxan, and Herceptin. Gottlieb is in favor of “accelerating and simplifying the approval process for biosimilars…,” which “bodes well” for Amgen’s future, Renauer said. Shares of Amgen were up slightly in pre-market trading at $169.40 per share.
Illumina (ILMN) has been in a state of rapid expansion to support its gene-sequencing platforms. Renauer touted the company’s latest technology, which he said “… makes whole human genome sequencing so cheap, it could spark another exponential rise in demand.” In January, Illumina unveiled the NovaSeq Series, a new and scalable sequencing architecture expected one day to enable a $100 genome. The current cost of sequencing is about $1,000. The platform redefines high throughput sequencing with unrivaled throughput, ease of use, low per sample costs, and unmatched flexibility. But while the new technology is promising, Renauer was quick to point out that has nothing to do with President Trump. Where Trump can play a significant role in boosting Illumina’s bottom line is if some of the tax-reforms he has spoken about are passed. If Trump lowers the corporate tax rate and changes the rules that would allow companies to repatriate offshore funds into the United States, “it would do wonders for this company's bottom line and the rest of the healthcare sector,” Renauer said. Shares of Illumina are trading at $161.70 as of 9:33 a.m.
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