Amgen's Xgeva Prostate Indication Expansion Could Be Blockbuster On Its Own

| About: Amgen Inc. (AMGN)

Xgeva, part of the Denosumab family, is Amgen’s (NASDAQ:AMGN) latest bone related drug. Its current indication is for the treatment of skeletal related events (SREs) caused by bone metastases in all cancers excluding multiple myelomas. These metastases are incredibly common in advanced stages of prostate cancer, occurring in about 90% of castration resistant prostate cancer patients, as well as in other common cancers such as breast and lung. Xgeva and its sister drug Prolia, used to treat postmenopausal women with osteoporosis, had combined sales of over $500 million in 2011 and Amgen continues to launch the drug in other geographic markets.

Since it’s approved for the treatment of symptoms related to bone tumors, Amgen is now seeking to use Xgeva to prevent the tumors from forming. It recently completed the ‘147 Phase III clinical trial which showed a 4.2 month increase in median bone metastasis free survival and a 3.7 month increase in the time it took for metastases to appear. Last June, Amgen submitted a supplemental Biologics License Application (sBLA) to expand the indication of Xgeva to include prostate cancer patients whose cancers have not yet spread to the bone, but who have Prostate Specific Antigen levels that would likely lead to metastases; a PSA >8.0 and/or a PSA that doubled in 10 months or less.

Xgeva works to prevent the breakdown of bone by binding to the Rank Ligand and preventing it from attaching to osteoclasts. This in turn inhibits the function and creation of new osteoclasts which work to break down bone cells. Normally osteoclasts ensure that bones don’t grow too much, but tumors are known to increase their production and activity, causing the process to occur at a much more rapid pace.

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Just before the New Year, the FDA announced they had invited Amgen to participate in the Oncologic Drugs Advisory Committee meeting on February 8th, 2012 to discuss the ‘147 trial and indication expansion. The committee’s recommendation is not binding, but will greatly impact any ultimate FDA decision, which is expected by April 26th. If approved, it would be the first and only prostate cancer drug specifically indicated to prevent bone metastases from forming.

Also potentially benefiting from an expanded indication would be GlaxoSmithKline (NYSE:GSK) which has an agreement to commercialize Denosumab in countries where Amgen doesn’t have a presence and Daiichi Sankyo (OTCPK:DSKYF) which holds the commercialization rights in Japan.

In his presentation at the JP Morgan Healthcare Conference today, current president and soon to be CEO Robert Bradway said the company was “delighted with the performance” of Xgeva and highlighted its potential new indication.

In addition to a strong set of products, Amgen continues its recent strategy of returning capital to shareholders. It recently introduced a dividend and raised it to $0.36 cents/quarter, completed a $5 billion share buyback and expects to purchase $5 billion more. The company plans to return more than 60% of net income to shareholders in 2012. Though trading near its 52 week high, the company continues to execute. With a strong pipeline, cash on hand to make acquisitions with, and a shareholder friendly strategy, look for the company to continue to show strong earnings and EPS growth in 2012 and beyond.

Disclosure: I am long AMGN.