07.15.09
#1 Amgen
One Amgen Center Dr., Thousand Oaks, CA 91320-1799
Tel: (805) 447-1000 Fax: (805) 447-1010
www.amgen.com
Headcount | 17,000 | |
Year Established | 1980 | |
Biopharma Revenues | $14,687 | +3% |
Royalty Revenues | $316 | +4% |
Total Revenues | $15,003 | +2% |
Net Income | $4,196 | +33% |
R&D Budget | $3,003 | -7% |
2008 Top Selling Drugs | |||
Drug | Indication | Sales | (+/-%) |
Enbrel |
rheumatoid arthritis, psoriatic arthritis |
$3,598 | +11% |
Neulasta | chemotherapy-induced neutropenia | $3,318 | +11% |
Aranesp | chemotherapy-induced anemia | $3,137 | -13% |
Epogen | anemia | $2,456 | -1% |
Neupogen | chemotherapy-induced neutropenia | $1,341 | +5% |
Sensipar | renal disease complications | $597 | +29% |
Account for 98% of total pharma sales, same as in 2007.
PROFILE
We launched this report in 2001, and in all the years since, I never thought, “Boy, I wonder if Amgen is going to get acquired.” But the premiere biopharma company has cropped up in several buyout rumors in the past year, most recently as the unnamed “U.S. drug company” that Sanofi-Aventis steadfastly denies it’s interested in acquiring.
The Lowe Down
Amgen is finding itself the reluctant center of attention, as the biologics giant that’s the first to run into aging-pipeline worries. Aranesp and Epogen have been incredible products, but their best years are too clearly behind them, what with all the safety warnings and biosimilar competition coming along. “Welcome to the world that the rest of us live in‚“ is the unspoken feeling of some other people around the industry. “You know, that real world that you’ve been hearing about.” The company could keep the dream going though a big success with denosumab, but that’s very much an open question, to be decided later this year. You have to think that the psychological impact has already been felt. The door’s been opened, and the cold wind from outside has been let into the building. Small molecules aren’t going to take the chill off any time soon. They’ve been messing around with them for years, but not to any great effect yet. For now, Amgen is still going to be considered the pure parable of biotechnology — the rise, the mighty profits, and (potentially) one variety of available fall.—Derek Lowe |
Until recently, it was unthinkable that Amgen would be in play, so how did a #1 company end up in this position? The hard way! For years, Amgen has relied on five key products for virtually all of its revenue. With no significant additions to its lineup after the Enbrel (which it gained by acquiring co-marketer Immunex in 2002), Amgen’s reliable growth engines left the company vulnerable.
Label restrictions and warnings for its top seller, Aranesp, trimmed $1.0 billion in sales from 2006 to 2008. In 1Q09, sales dropped another 18%, to $626 million, with U.S. sales plummeting 28%. Same story for Epogen, which is also staring at competition from several biogenerics. Enbrel, meanwhile, faces heavy competition from other TNF-alpha inhibitors and the next generation of autoimmune treatments (see “FOB Off” for more). That means 60% of Amgen’s revenues are under siege.
At $597 million in 2008 sales, Sensipar is the only Amgen product to break out of the dreaded “Other” category, a group that contributed only $240 in sales for Amgen last year.
Mr. Wonderful and the Others
In August 2008, Amgen added to the “Others” when the FDA approved Nplate, its weirdly named treatment for immune thrombocytopenic purpura (ITP). It’s not regarded as a future blockbuster (sales estimates peak around $500 million), but at least Amgen was able to develop it and reach the market before GSK’s competitor, Promacta. The EU approved Nplate earlier this year.
One analyst pointed out that Amgen’s done a great job of treating the side effects of cancer treatment, but hasn’t developed muchto treat cancer itself. That’s easier said than done, of course. Amgen did manage to get colorectal cancer treatment Vectibix on the market in 2006, but that was a lengthy process and the drug, an anti-EGFR MAb a la Erbitux, is struggling to gain a foothold in the market. Amgen hopes to get broader approval for the treatment, and has a pair of major studies going on to establish the benefits of Vectibix with chemotherapy to treat metastatic colorectal cancer. Results from those trials should be available in 3Q09. The company’s also trying out Vectibix against head and neck cancer. If it proves effective in those situations, Vectibix could become a billion-dollar drug for Amgen within a few years.
FOB Off
In a recent BusinessWeek article by Arlene Weintraub on the possibilities of generic/biosimilar/follow-on biologics, the writer mentions that the biotech industry opposes the concept, “fearing an end to the unlimited pricing freedom it has enjoyed throughout its three-decade history.” Note that this wasn’t a quote from a biogenerics advocate; it came from the writer herself. Now, I know there are plenty of biologics that have extraordinarily high prices, and I know there are all sorts of patient reimbursement and access issues around that. But doesn’t the fact that Amgen saw a 20% drop in revenues from Enbrel in 1Q09, a quarter of which it attributes to reduced demand, tell us that there isn’t “unlimited pricing freedom”? Sure, price competition isn’t driven by a generic version of Enbrel, but it IS driven by Humira, Remicade, Cimzia, Simponi, Stelara and the next generation of treatments. Amgen certainly doesn’t have unlimited pricing freedom for its products, especially now that regulatory warnings have restricted the market size of some of them. They can raise prices for Aranesp to offset the loss of volume, but even the oil cartels learned that there’s such a thing as “demand destruction,” where the price of a good reaches a breaking point. (N.B.: for gasoline in the U.S., we now know that price is $4.00/gallon.) Similarly, they can increase Neulasta prices to try to cover losses in other products, but it can only go so far before third-party payors decide they’re not paying. None of this is to say I’m against follow-on biologics, provided they’re safe, effective, and their pathway provides innovator companies with enough incentive (as in, more than a couple of years of commercialization) to keep innovating. I’ll get off my high horse now, especially because I don’t have any disorders that require treatment with a high-priced biologic. |
With partner Takeda, Amgen is also conducting lung cancer trials on on motesanib, a small molecule anti-VEGF treatment. The companies had to suspend part of a trial against non-small cell lung cancer in November 2008 because of higher deaths in one subgroup of patients. After a three-month hiatus, the trial’s independent data monitoring committee approved resumption of the trial, excluding that subgroup.
Prolia Good Idea
But really, what’s it going to take for Amgen to remain an independent company? One word: denosumab.
Ostensibly a treatment for osteoporosis, denosumab (tentatively named Prolia) may also be Amgen’s trojan horse. Submitted to the FDA in December 2008, denosumab’s BLA is for treatment and prevention of postmenopausal osteoporosis, and treatment and prevention of bone loss in patients undergoing hormone ablation for either prostate or breast cancer. While it has a novel method of action, osteoporosis treatment is a crowded field. With Merck’s Fosamax going generic, denosumab would have to show tremendous results to warrant its expense. In the area of preventing bone loss in cancer patients, denosumab could be in competition with Novartis’ Zometa.
Ah, but what if denosumab also turns out to have oncology benefits? That would be a game-changer for our beleaguered biopharma. The drug is currently being studied in the prevention of bone metastases in prostate cancer, an indication for which there is no other available treatment. Results of the study — which are part of a mega-trial of denosumab — are expected to come out by September.
If the drug proves beneficial in blocking bone cancer in prostate and breast cancer cases, then Amgen is going to be sitting pretty. Some analysts project its potential revenues in those two cancer indications to be as high as $3.0 billion a year. (And I’m sure the osteoporosis indication would at least have better revenues than the “Other” category.)
The FDA has scheduled an August 2009 meeting of its reproductive health drugs advisory committee to discuss denosumab’s initial BLA, with a PDUFA action date (ha-ha) of October 2009.
Out-License To Print Money?
A denosumab launch is going to cost plenty as the company ramps up sales and marketing and continues major trials. To conserve cash Amgen finished up the first major restructuring in its history last year, incurring around $900 million in downsizing charges from 2007 to 2008. Along with the cost-cutting, Amgen is continuing its efforts to monetize its pipeline through out-licensing. In last year’s edition, we documented the extensive development and commercialization deals Amgen signed with Takeda in February 2008, providing Takeda with rights in the Japanese market to 13 early-stage molecules.
The company continued the practice in July 2008, when it licensed one of those molecules, a potential treatment for chronic and neuropathic pain, to Ortho-McNeil-Janssen, a J&J unit. Amgen received $50 million upfront, with a potential for as much as $385 million in development milestones and subsequent royalties and sales bonuses.
In September 2008, Amgen sold off rights to its drugs Kepivance and Stemgen to Biovitrum, which also bought an exclusive worldwide license to Kineret for its approved indication. Biovitrum paid $110 million in cash and $20 million in shares, and the agreement includes sales milestones for Amgen and possible royalties if Biovitrum develops modified forms of Kineret. The three drugs added up to $70 million in 2008 sales. Announcing the deal, Mr. Sharer remarked, “This deal will allow Amgen to focus its resources on developing new, innovative therapies for serious illnesses, and on expanding its core products to benefit more patients in markets around the world.”
Moves like this show an Amgen that understands that even the biggest biopharma doesn’t have the resources to do everything. But it needs to do a couple of things very well in the near future if it wants to stay Amgen.
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