Amgen: FDA OK for Osteoporosis Therapy Is Welcome News

Includes: ALIOF, AMGN
by: EP Vantage

Another shoot of growth sprouted for Amgen (NASDAQ:AMGN) Friday as its most important product denosumab won a second US approval – for reducing skeletal-related events (SREs) in certain cancer patients. The news was broadly expected and Amgen shares flitted slightly higher Friday morning; what investors are really waiting for is data that could add substantially to denosumab sales forecasts (Event – Amgen awaiting Prolia game changers by year end, October 22, 2010).

Still, the green light from the FDA is welcome news for the world’s biggest biotech, which needs growth drivers as its portfolio of substantial but aging blockbusters is waning. Denosumab is by far Amgen’s biggest growth driver – consensus has sales of $3.5bn by 2016 – and initial demand for the product will be closely scrutinized. Approval comes amid speculation a bid for Switzerland’s Actelion (OTCPK:ALIOF) is being prepared, a move that would make sense given Amgen’s quest for sales growth but that would not come without its own risks.

Second approval

Denosumab, or d-mab, was approved in June as an osteoporosis therapy marketed under the brand name Prolia; third-quarter sales reached $10m.

The RANK Ligand-targeting antibody has now been granted a license for reducing events, such as fractures or need for surgery, in solid tumor patients whose cancer has metastasized to the bone. RANK Ligand is involved in the proliferation of osteoclasts – cells that break down bone – and is thought to be a key player in oncologic bone destruction. According to Amgen, three out of four advanced prostate, lung and breast cancer patients suffers are affected by bone metastases.

Denosumab will be marketed as Xgeva in this setting.

Pivotal head-to-head trials, pitting subcutaneous Xgeva against an intravenous infusion of Zometa, administered once-monthly, found Xgeva delayed SREs to a “clinically meaningful” degree – three to four months longer to the first SRE in prostate cancer patients. It was superior in reducing SRE risk in breast and prostate cancer patients. Marginal superiority was seen in multiple myeloma patients, and the FDA has excluded approval to treat these patients.

Label looks a plus

The broad label, while largely expected, is a plus for Amgen. Safety signals were low blood calcium levels and incidence of osteonecrosis – bone decay – of the jaw, both higher than with Zometa.

Differing opinions on how the safety profile will impact take up largely explain wide variations in analysts sales forecasts for the product.

For example, Goldman Sachs believes 2013 sales of denosumab as a complete franchise will only reach $1.3bn – EvaluatePharma consensus sees nearly $2bn – citing safety signals and the high $1,650/month price, double that of Zometa, as potential dampeners.

The bank's analysts point out that the osteonecrosis signal increased in a four-month trial follow-up, and was the major factor originally limiting Zometa's uptake. Furthermore, with four fifths of myeloma patients currently taking Zometa, the drug will miss out on a big slice of the market.

On the other hand, analysts at UBS are penciling in sales of $1.75bn in 2015 for the SRE indication only. The bank reckons clinical superiority of Xgeva in multiple tumor types will eventually win out over a less favorable safety profile to Zometa, even when generics enter the market in 2013.

The next event on the horizon for the product is data showing whether the antibody can prevent cancer spreading to the bone in prostate cancer patients, and possibly extending survival. This would be a big win – analysts reckon $1bn sales potential – but unfortunately the phase III study being conducted in this setting is widely expected to fail.

Takeover rumors

Rumors that an acquisition of Actelion might be on the cards have been circulating all week - shares in the European company have gained 11% this week to close at an 8-month high of Sfr56.25, valuing the company at Sfr7bn ($7.1bn). However, it is unclear just how much value Actelion would represent for Amgen (Actelion back on the M&A scene, October 8, 2010).

Mark Schoenebaum, analyst at ISI Group, suggests an acquisition would be “accretive to Amgen at virtually any price”, adding it would not need financing to afford the buy-out.

Amgen would inherit $1.4bn pulmonary arterial hypertension drug Tracleer, Actelion’s most valuable asset, which loses patent protection in 2015. So the value would have to come from Actelion’s pipeline, which is certainly no sure thing – stroke drug clazosentan failed phase III in September, and Tracleer failed in the additional indication of idiopathic pulmonary fibrosis (IPF) earlier in 2010 (Actelion can’t catch a break after another phase III failure, September 27, 2010).

Mr Schoenebaum postulates that Amgen could see this as a financial transaction only to bolster its bottom line, making use of substantial funds outside of the US. This is, however, compounded by Actelion’s interests in small molecules and lung disease treatment, areas for which Amgen has little overlapping infrastructure.

The rumor mill is in full swing over Actelion, but it is unclear if Amgen is an interested suitor. However the biotech has clearly reached a pivotal point this year in terms of growth.