Physicians' Financial News for September 2007

By Querida Anderson
Published: Monday, Jul 12, 2010
%u25BA Amgen Oncology Under Review

Amgen’s foundation as the leading biotech company by sales is made up of five multibillion- dollar drugs. This is largely an oncology base, as three of these products are related to the treatment of cancer symptoms. Amgen only stepped into the cancer therapy market, however, in 2006 with Vectibix for metastatic colorectal cancer (mCRC). While Vectibix hasn’t faired as well as predicted, the company is now betting on another anticancer candidate currently in Phase III.

The blockbuster drugs are Epogen for anemia in kidney dialysis patients, Aranesp for anemia in the renal and oncology settings, Neupogen /Neulasta for treating chemotherapy-induced neutropenia and Enbrel for inflammatory conditions.

These products netted sales of almost $3.44 billion, over 95% of Amgen’s total sales for the second quarter of 2007. The cancer drugs themselves racked in $1.99 billion. Yet, while the company gained 3% in overall worldwide sales, it’s best seller, Aranesp, lost 10% quarter over quarter, bringing in $949 million.

In light of these circumstances, Amgen is planning to slash 12-14% of its staffas well as $1.9 billion in capital expenditures. The restructuring will yield savings between $1 billion and 1.3 billion in 2008. The company will endure charges between $600 million and $700 million in 2007 and 2008.

Even though Amgen seems to be executing cost saving methods, the company is ramping up its lobbying efforts by an unspecified amount. Last year, Amgen spent $10.22 million on capitol hill and has already shelled out $9.08 million in the first half of this year. As it is, the 2006 expenditure was close to 80% more than its 2005 contribution of $5.72 million. Amgen now ranks second only to Pfizer in terms of lobbying efforts.

Label and reimbursement changes were the main drivers of Aranesp’s sales decline for this quarter as well as Amgen’s increased lobbying budget. Both Epogen and Aranesp have garnered special interest from the FDA because of safety issues. Additionally, the Centers for Medicare and Medicaid Services want to stop paying for certain uses of Aranesp and suggest limited use of Aranesp (See the June issue of Oncology & Biotech News for more details).

Combined worldwide sales of Neulasta and Neupogen rose 4% to $1.041 billion in the second quarter of 2007 versus the prior year’s second quarter. Vectibix, however, approved in the U.S. as a third-line treatment for patients with EGFr-expressing mCRC, was not able to gather steam. Launched in September 2006, the product had sales of $39 million for the fourth quarter of 2006. While sales did go up the next quarter to $51 million, they dropped offin the current quarter to $45 million.

Blockbuster potential of Vectibix has not been fully realized. Toxicity results reported in March from a label-extending study pushed the possibility of the drug as a first-line treatment further away (See OBN May for more details).

Adding to its woes, Vectibix has not yet been able to break into the European market. On May 25, Amgen received notice from the EMEA that the European Committee for Medicinal Products for Human Use (CHMP) rendered a negative opinion.

The company’s cancer pipeline consists of three different Phase III compounds as well as four Phase II and five Phase I candidates. It’s lead drug is Denosumab, and data from the 252-patient study in breast cancer patients undergoing hormone ablation therapy showed that all primary and secondary endpoints were successfully met, Amgen reports.

Amgen’s shares were priced at $49.59 as of August 22, down about 35% from its 52-week high of $76.5 in late October. The company hasn’t traded this low since October 2004. Analysts are vary Amgen is putting too much faith on the shaky grounds of its anemia franchise and believe that their lobbying efforts are likely to not change much.

Amgen is probably set to hold it’s number one position even through tumultuous times. It’s profit and value, however, could decrease, somewhat mirroring the ways of pharmaceutical companies, as patents expire, competition steps up and regulations tighten the proverbial noose. Hopefully, unlike its pharmaceutical counterparts, the company will come out of its R&D recesses.

  Amgen Oncology Pipeline

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