Dear Mr. Berko:

I think I would like to buy 50 shares of Amgen. I’m currently using one of their miracle monoclonal antibody drugs, which has saved my life. My doctor tells me that Amgen has the best research and development department in the world. I looked up the stock at the library, and I’m impressed with the company’s pipeline and its future revenue potential. Please tell me what you know about the company and what you think its potential could be in the next five to six years. I can easily afford to buy 50 shares and could buy as many as 100.

G.F., Norman, Okla.

Dear G.F.:

It pains me to recall way back in January 1998 when my son (he’s a family physician) told me he wanted to invest $5,000 to buy 100 shares of Amgen. The kid was thinking big — he wanted to buy 100 shares, not 25 or 50 shares, but 100 shares at $50 a share. He was in his second year of practice, his wife had recently borne a son, and he had just bought a new house. So he said to me: “Dad, would you lend me $5,000? I’ll pay you back in two years, assume all the risks and give you 10 percent of my profits.”

I figured all I could lose was $5,000 (which is part of his inheritance anyway) and it would be a cheap lesson for my son to learn about the stock market and the reliability of secondhand information from a friend’s friend.

Well, my son still owns Amgen and his 100 shares (after two splits) are now 400 shares at $75.90 worth $30,360. I’ve got my five grand back and I own 40 of his 400 shares.

Amgen Inc. (AMGN-$75.90) is the largest biotechnology company in the universe. Harnessing the power of cellular and molecular biology with medicinal chemistry, Amgen was able to isolate and commercialize naturally occurring proteins, molecules and antibodies that geometrically increase the body’s natural ability to heal itself.

Amgen’s development focuses on the specialized areas of hematology, oncology, neurology, inflammation and metabolic disorders. This amazing, remarkable and preternatural company has given birth to some impressive products. Its first product, Epogen, was brought out in 1989 and was an immediate success. Epogen brought immediate improvements for end-stage renal disease patients. In 1991, Amgen launched Neupogen, a version of a human protein that increases production of infection-fighting white blood cells.

In 2001, Amgen introduced Aranesp, a recombinant protein that stimulates the body’s production of oxygen-carrying red blood cells. And four years ago, it released Enbrel, which regulates the inflammation process and provides relief for many people who have moderate to severe rheumatoid arthritis. These, plus several other astonishing recombinant protein products, are responsible for Amgen’s $12 billion in expected 2005 revenues and anticipated earnings of $2.65 a share.

This company has a rich R&D pipeline that should enable it to maintain its torrid revenue and earnings growth. Amgen has more than 30 drugs in Phase 1, 2 and 3 clinical trials. A number of these may easily become blockbuster products, especially its obesity drug that markedly decreases food intake without side effects and increases energy expenditure, an asthma drug that has worked like a miracle with zero side effects, a Type 2 diabetes drug that is taken orally and greatly improves the body’s ability to respond to insulin, an osteoarthritis drug that blocks the action of interleukin-1, several new rheumatoid arthritis drugs that have wide application in other inflammatory diseases and several cancer drugs that in testing have demonstrated impressive and compelling results.

Frankly, I doubt there’s another biotech company with Amgen’s depth, its resources, its impressive technology, its top-flight R&D staff, its superb management, its world-class reputation and its trust. Earnings for 2006, 2007 and 2008 appear quite bright. Aranesp, an anemia drug for congestive heart failure, and Nuelasta, which reduces the incidence of infection in cancer patients with malignancies, continue to be strong sellers and should continue to grow rapidly.

Many of our accounts (and I) own Amgen. We believe that Amgen’s revenues can double to $22 billion in the coming five to six years and that its earnings will more than double. AMGN’s operating margins are an impressive 49 percent, and its net profit margins are running at an astounding 29 percent. Meanwhile, Amgen’s forward price-earnings ratio of 29 is comfortingly low, and its $19 book value is comfortably high when compared to the competition. Amgen is on track to earn $6 a share in the next five years; the shares could easily trade in the $145 to $160 range. Yep, buy this stock, because the Amgen people can see the future a lot better than we can, and they’ve got a road map to take them there.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net.

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