Amgen Receives FDA Approval For BLINCYTO

Summary

• BLINCYTO scores FDA approval for patients with relasped or refractory B-cell precursor acute lymphoblastic leukemia in adults and Children.
• Market potential for BLINCYTO will expand.
• Financials are in good order.
• Combination studies between BLINCYTO and KEYTRUDA offer new opportunities.

Today, Amgen (NASDAQ:AMGN) announced that it had received FDA approval for its drug BLINCYTO. The FDA had approved the Supplemental Biologics License Application --sBLA-- for BLINCYTO, because of results from two positive clinical trials. The drug was approved because of results from a phase 3 study, known as the TOWER study. In addition, the company also included data from a phase 2 study, known as the ALCANTARA study, which was another reason for the approval.

Clinical Trial Results

Approval for BLINCYTO happened because of clinical results from the TOWER study. One thing to note with the link to the TOWER study is that it shows as being terminated. That is because the Data Monitoring Committee -- DMC -- recommended that the trial be terminated because the trial had met the primary endpoint. The trial recruited a total of 405 patients with Philadelphia Chromosome- negative relapsed/refractory B-cell precursor ALL -- acute lymphoblastic leukemia. The primary endpoint of the study was overall survival in patients between treatment with BLINCYTO compared to placebo. Patients that were treated with Amgen's drug achieved an overall survival rate of 7.7 months. That compares to those patients that were on placebo only achieving an overall survival rate of 4 months. That means that BLINCYTO was statistically significant over placebo with a p-value of p = 0.012. The FDA approval was also based on another study. The other study in question was a phase 2 clinical trial using BLINCYTO known as the ALCANTARA study. The patient population in this phase 2 trial is the same from the phase 3 trial noted above, but the primary endpoint was different. The primary endpoint for this trial looked at the possibility of patients achieving a complete response -- CR -- after two cycles of treatment with BLINCYTO. Of course, the phase 2 trial met the primary endpoint of the study. This trial was the sole reason for the FDA granting BLINCYTO an accelerated approval indication in this patient population back in 2014. These results are important because current standard of care therapy only allows for an overall survival rate of four months. Therapy with BLINCYTO just about doubled the survival rate.

Acute Lymphoblastic Leukemia

Acute Lymphoblastic Leukemia is a cancer that progresses to later stages in a rapid fashion. It is a cancer that occurs in the blood and bone marrow of the patient. The biggest issue with this type of cancer is that there was no widely accepted standard of care treatment for these patients beyond chemotherapy. Although, chemotherapy is a toxic treatment option for patients with cancer. There are about 200,000 U.S. cases of Leukemia. With 12% of those Leukemia cases being ALL.

Combination Study

BLINCYTO is a drug that is characterized as being a CD19-directed CD3 bispecific T cell engager -- BiTE -- immunotherapy. It is a complete creation from Amgen's platform known as the BiTE platform. The results from above show the power of this drug, which is why Amgen has been pushing it into combination studies. In a partnership with Merck (MRK) Amgen is combining BLINCYTO together with KEYTRUDA as a combination immunotherapy compound. This combination is expected to treat patients with Diffuse Large B-cell Lymphoma.

Financials

According to the 10-Q sec filing, Amgen has cash and cash equivalents of $38.4 billion as of March 31, 2017. About $35 billion of that was generated from operations in foreign tax jurisdictions and is intended to be invested outside of the United States. Amgen has sufficient cash on hand to fund operations. In addition, BLINCYTO generated revenue of $34 million in the first quarter of 2017. That means that sales of the drug grew approximately 26% year over year.

Risks

One big risk is that it may take some time for BLINCYTO to catch on in the ALL space. The results were positive, but there is no guarantee that it will sell well once it reaches the market. The combination study between BLINCYTO and KEYTRUDA may also not work out. In that case, the role of BLINCYTO in combination studies will not garner that much optimism. Both of these factors are a huge risk to the stock.

Conclusion

The positive results in both the TOWER study and ALCANTARA study positioned BLINCYTO for approval in the Philadelphia Chromosome- negative relapsed/refractory B-cell precursor ALL -- acute lymphoblastic leukemia population. A treatment option such as BLINCYTO is a lot more ideal than treatment with chemotherapy. The FDA approval gives BLINCYTO another indication to achieve sales upon. If the combination treatment does work out between BLINCYTO and KEYTRUDA that will open up a host of other combination trials for Amgen's drug.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.