Gil Roth07.18.12
02 Amgen, Inc.
One Amgen Center Dr.
Thousand Oaks, CA 91320-1799
Tel: (805) 447-1000
Fax: (805) 447-1010
www.amgen.com
Headcount 17,800
Year Established 1980
Bio/Pharma Revenues $15,295 4%
Total Revenues $15,582 4%
Royalty Revenues $287 -27%
Net Income $3,683 -20%
R&D Budget $3,167 9%
Top-Selling Drugs
Drug | Indication | $ | (+/- %) |
Neulasta | chemotherapy-induced neutropenia | $3,952 | 11% |
Enbrel | rheumatoid arthritis, psoriatic arthritis | $3,701 | 5% |
Aranesp | chemotherapy-induced anemia | $2,303 | -7% |
Epogen | anemia | $2,040 | -19% |
Neupogen | chemotherapy | $1,260 | -2% |
Sensipar | renal disease complications | $808 | 13% |
Xgeva | bone metastases | $351 | n/a |
Vectibix | colorectal cancer | $322 | 12% |
Account for 96% of total biopharma sales, down from 98% in 2010
PROFILE
PROFILE
The biggest news out of Thousand Oaks was the retirement announcement from chairman and chief executive officer Kevin Sharer last December. Mr Sharer was replaced in May 2012 by Robert Bradway, who had been serving as president and chief operating officer. At the same time, Roger Perlmutter stepped down from his role as executive vice president of R&D, to be replaced by Sean Harper. Mr. Bradway joined Amgen in 2006 and Mr. Harper did in 2002.
So it’s a new day for Amgen! How’s the former biggest biopharma on the block doing?
Back in 2003, Amgen managed to post three new blockbusters in one year, as Aranesp, Neulasta and Enbrel all crossed the $1.0 billion mark with massive growth (Enbrel’s was partly fueled by Amgen’s acquisition of Immunex). Since then, Amgen hasn’t seen a single new product reach that milestone. That may change this year, with Sensipar sneaking toward the billion-dollar barrier. Amgen received some bad news about Sensipar in June 2012, when the drug failed a Phase III trial for reduction of risk of mortality and CV events in patients with secondary hyperparathyroidism (sHPT) and chronic kidney disease receiving dialysis.
As we noted in past profiles, Amgen’s future has been tied to the performance of Xgeva. The company filed an sBLA to expand Xgeva’s label to cover prevention of bone metastases in patients with prostate cancer, but in April 2012, the FDA sent Amgen a complete response letter contending that the risk-benefit profile was not strong enough to warrant approval. The agency requested data from “an adequate and well-controlled trial(s).”
Xgeva posted $351 million in revenues in 2011, and received clearance in the EU in July of that year. Prolia, the same API approved for osteoporosis indications in women, posted an additional $203 million in revenues. In 1Q12, they posted revenues of $153 million and $88 million, respectively. That’s enough growth to offset the declines in Epogen and Aranesp and eke out single-digit top-line growth.
Amgen needs to find some new growth engines, with several of its products getting long in the tooth. Top-seller Neulasta will face competition of Teva’s Neugranin by the end of 2013, and in March 2012, the FDA approved Omontys, a drug from Affymax that could dent the already-shrinking Epogen franchise. That said, the company hasn’t announced any in-licensing deals to bolster its pipeline in the past year, preferring to buy Micromet and KAI outright, as it did with Biovex last year.
In October 2011, reports surfaced that Amgen was planning R&D cuts. Those layoffs weren’t made public and aren’t noted in the company’s financial filings, but they were discussed in Amgen’s earnings call for 3Q11, when Dr. Perlmutter noted that the focus is on cutting discovery-stage scientists in favor of near-term R&D. In all, 380 employees at four R&D sites were to be fired, the majority of them from Thousand Oaks.
In April 2012, Amgen announced a deal with AstraZeneca to co-develop five Amgen MAbs. AZ paid $50 million upfront and will cover 65% of R&D costs through 2014, after which the companies will split R&D evenly. So Amgen gets to cut its R&D budget and still advance some promising antibodies, leveraging AZ’s MedImmune assets in the inflammation area. The most developed drug is brodalumab, which is expected to enter Phase III in 2012 for plaque psoriasis.
In last year’s profile, we noted Amgen’s admission that it’s no longer a growth company, moving to “mature” status with its conventional dividend and stock buybacks. The past year reinforced that notion that Amgen had grown quite similar to other major drug companies, as the company made moves to expand its geographical base (targeting 75 countries by 2015, up from 55 in 2011), develop a foothold in biosimilars (development and marketing with Watson, and clnical trials with PRA) and overseas generics (see the Mustafa Nevzat purchase in the Acquisitions box), and negotiate a big settlement with the feds tocover Medicaid fraud allegations and other suits ($780 million).
With a new chief executive and a new R&D head, Amgen will surely continue to change the shape of its business. We doubt the company will pursue radical cost cuts, but it’s clear that the R&D model is in a state of flux. For now Amgen seems to have faith that it can innovate its way past the decline of its first and second wave of products.
The Lowe Down
Amgen is providing us with some data that no one’s had a chance to gather yet: when happens as a successful biotech company grows old? Most of the others in that cohort have been bought out or merged with others along the way, but Amgen is still a relatively pure sample.
So far, the answers seem to be, “They try very, very hard to replicated their earlier biologic success, even though big biological successes have gotten harder to come by,” and, “They try very, very hard to diversify into small molecules, without much success at all”. Those aren’t really the answers the company would like, of course. Ten or 15 years ago I’m sure they would have predicted differently, but they’re not the only company you can say that about, are they?
But what made them big (the long lifetime of biologic products in the market) can cut both ways.
You could imagine that it gives a company the long perspective it needs to innovate — or it could make a company slower-moving than it needs to be when the crunch finally comes. If you’d like to place a bet on these two possibilities, you can buy some Amgen stock, or go short, as you please.
You could imagine that it gives a company the long perspective it needs to innovate — or it could make a company slower-moving than it needs to be when the crunch finally comes. If you’d like to place a bet on these two possibilities, you can buy some Amgen stock, or go short, as you please.
—Derek Lowe
ACQUISITION NEWS
Target: Micromet
Price: $1.2 billion
Announced: January 2012
What they said: “[Phase II antibody] Blinatumomab will serve as an important complement to our oncology pipeline and is representative of our corporate strategy, which is focused on developing and successfully commercializing therapeutics to treat patients with grievous illness.”
—Kevin Sharer, chairman and chief executive officer, Amgen (ret.)
Target: KAI Pharmaceuticals
Price: $315 million
Announced: April 2012
What they said: “Amgen is ideally positioned to bring KAI-4169 [for secondary hyperparathyroidism] to market and to patients, given the company’s decades of experience in developing and delivering therapies for patients with chronic kidney disease.”
—Steve James, president and chief executive officer, KAI
Target: Mustafa Nevzat
Price: $700 million
Announced: April 2012
What they said: “Together with MN’s staff and management team, we plan to grow our business with high quality and innovative medicines in Turkey and the surrounding region.”
—Robert A. Bradway, president and chief operating officer, Amgen