Amgen Gets Much Needed Denosumab Boost

Positive phase III data from Amgen (AMGN) on Denosumab, which significantly reduced the risk of bone fracture in post-menopausal women, has reinforced many commentators' belief that the drug is set to become a big seller, sending shares in the biotechnology group up 12% yesterday, to a 14-month high.

The antibody is already seen as the company’s biggest growth driver over the next five years with consensus for sales in 2012 of $1.65bn, and the encouraging data means that figure is likely to rise in the coming months. A look at the value of the product to Amgen explains the share price jump; according to EvaluatePharma’s NPV Analyzer it has an NPV of $6.82bn, equal to 12% of the group’s share price at Friday’s close.

Denosumab is the most valuable R&D project in the industry, and interestingly the only un-partnered candidate within the top five.

Phase III products ranked by NPV ($m) - top five  Rank    Product  Company(s)  Pharmacological Class  Today's NPV  1  Denosumab (AMG 162)  Amgen  Anti-RANKL MAb   6,822   2  VX-950  Vertex Pharmaceuticals + Johnson & Johnson  Hepatitis C protease inhibitor   6,114   3  Byetta LAR  Amylin Pharmaceuticals, Alkermes + Eli Lilly  Glucagon-like peptide 1 (GLP-1) agonist   5,880   4  Bapineuzumab (AAB-001)  Elan + Wyeth  Anti-beta amyloid MAb   5,508   5  HuMax-CD20  Genmab + GlaxoSmithKline  Anti-CD20 MAb   4,376

 

The 7,800 patient, three-year trial found that a twice-yearly injection of Denosumab significantly reduced the incidence of new spinal fractures, compared with a placebo. The risk of new non-spinal and hip fractures was also significantly reduced, and side effects were similar for both patient groups.

Full results will not be available until September, but the headline figures were enough for many analysts to lift price targets for the group, and reiterate peak sales estimates, which currently range from $1.5bn to $3bn.

Needs a 50% reduction

In order to compete with other osteoporosis drugs, many of which will be available in cheaper, generic form by the time Desosumab makes it to market, the drug will have to show at least a 50% reduction in the risk of fracture. Until that data is published in September, some analysts may be reluctant to lift estimates substantially.

Still, even on today’s forecasts, the product is set to be the second-biggest selling drug to treat osteoporosis in 2012, behind Procter & Gamble’s bisphosphonate Actonel.

The troubles with its EPO franchise over the last 12 months or so, which pushed Amgen’s shares to a five-and-a-half year low of $41 in March, means the group desperately needs this product to revive growth. Both sales and profits are forecast to fall this year, for the first time in the company's history . If Denosumab is launched in 2009 as anticipated, an upward trend should resume and 2008 prove to only be a temporary dip.

Thus, because the product is so critical, a delay in the registration process or less than efficacious results when full data is published will weigh heavily on the shares. The novelty of the treatment means it is likely to receive a very rigorous review by regulators, and safety signals, including a higher rate of infection seen in early trials, means there is still a fair degree of caution around the drug.

The rise yesterday to $60.85, is still a long way off of the peaks of $85 seen at the end of 2005. If Denosumab is a runaway success that price is achievable again, price targets of $70-$80 were set by analysts in response to yesterday’s news. But the drug still has some proving to do before those sorts of prices are fully justifiable.

Disclosure: none