By Joseph Walker
Biotechnology pioneer Amgen Inc. is racing to develop new drugs
from its pipeline to overcome the fallout of a multibillion-dollar
patent-expiration cliff last year, and the drug industry's stiff
pricing pressures.
Amgen is increasing its spending on research in a bet that its
laboratories can bring new breakthrough medicines to market,
including one that takes aim at a cancer target known by the
initials KRAS, which has thwarted drug researchers for decades.
The biotech needs wins. Sales of the company's top-selling
products, accounting for more than a fourth of its roughly $23
billion in annual revenue, are sagging as lower-priced competitors
enter the market. Meanwhile, health plans are tightening the screws
on drug spending.
"We're operating in an environment that none of the leaders in
our industry have ever experienced before," Amgen Chief Executive
Robert Bradway said in an interview. "So we're changing very
rapidly to stay ahead of the challenges of the world we're
competing in."
Signs are promising. The company this summer reported
encouraging results for a pill targeting the KRAS genetic mutation.
Last year, Amgen's Aimovig was the first drug approved in the U.S.
to prevent migraine headaches by blocking a protein thought to help
transmit pain. The approval was seen by analysts as the company's
most significant since its anti-cholesterol medicine Repatha in
2015.
Sales of Aimovig, which have been slower than expected because
of competing treatments, are projected to reach $994 million in
2023, according to FactSet.
Amgen shares have risen 24% in 2019, in line with the 25% gains
registered by the Nasdaq index of biotechnology companies and the
S&P Pharmaceuticals Select Industry Index.
But Amgen's transition won't be easy because it involves solving
some of biology's most challenging molecular puzzles and then
persuading health plans to provide reimbursement. To help with
those goals, the company is trying to get its scientists to think
about a drug's commercial considerations earlier in the research
process.
"It's very hard to make up for these massive franchises that are
declining. You have to come up with a billion-dollar product every
year, " SVB Leerink analyst Geoff Porges said.
Labs at Amgen, which is a shortened form of the company's
original name, Applied Molecular Genetics, starting in the 1980s
developed some of the first drugs made by cloning genes and
combining strands of DNA. These biotech drugs -- including the
anti-anemia treatment Epogen and the medicines Neupogen and
Neulasta, for preventing infections in cancer patients -- propelled
Amgen into the ranks of the world's biggest drugmakers by
sales.
The first biosimilar competitors to Epogen and Neulasta were
approved in 2018. Then Amgen, like its peers, confronted challenges
finding new products that could offset revenue declines resulting
from pricing pressures and stronger competition.
New compounds like osteoporosis drug Evenity were approved, but
for narrower uses than anticipated after encountering issues during
testing. Health plans, meanwhile, restricted prescriptions for
Repatha after Amgen priced it at $14,100 a year.
Amgen became better known for its skills selling existing drugs
than for inventing new ones. In the U.S., it litigated to protect
the patents of big sellers like rheumatoid-arthritis treatment
Enbrel after the government developed a path for rivals to sell
copies at lower prices.
Amgen also bought new products that could increase revenue, such
as multiple-myeloma drug Kyprolis, acquired in 2013 as part of a
$10.4 billion deal for Onyx Pharmaceuticals.
This past November, Amgen completed the $13.4 billion
acquisition of Otezla, a pill for the treatment of psoriasis;
Celgene Corp. was forced to sell it as a condition of its merger
with Bristol-Myers Squibb Co.
To recapture its homegrown lab prowess, Amgen is spending more
money on research and development. Amgen's R&D spending is
projected to rise 12% to $4.4 billion in 2020, according to analyst
estimates compiled by FactSet.
Amgen is eyeing diseases with large patient populations where
the company perceives its scientists have clear insight into the
genetics of the disease. "We've been very focused on being first to
market" with products that are "highly differentiated and not
easily leapfrogged" by competitors, Mr. Bradway said.
Amgen has largely stayed away from new treatments like gene
replacement therapy and gene editing, because so far they have been
effective only in ultra-rare conditions, David Reese, the company's
R&D chief, said.
Amgen has cut an average of three years off the time it takes to
bring a drug to market by deciding more quickly whether to advance
it, Dr. Reese said.
The company also is trying to bring its scientific and
commercial teams together earlier to make sure insurers will
reimburse newly approved drugs. This fall, Amgen made changes so
researchers understand what clinical evidence insurers will demand
before they agree to pay.
"I don't believe an M.B.A. should be sitting there telling a
chemist where to put a fluorine atom, nor should they have
significant input on very early discovery research," Dr. Reese
said. "Shortly after that stage, I think it's relevant to have
commercial pieces of the organization say, 'Here's where [the drug]
is likely to land five or 10 years down the line.' "
Amgen's KRAS cancer drug candidate will provide an early test of
the company's bet on revamped labs.
KRAS mutations are thought to drive more than a third of lung
cancers, 45% of colorectal cancers and 95% of pancreatic cancers,
according to the National Cancer Institute, making drugs that could
attack the mutation a prized pharmaceutical-industry target.
Yet researchers for decades were unable to design a treatment
because there appeared to be nowhere for a drug to attach on the
smooth surface of the protein expressed by the mutated gene. Many
drugs work by binding to a protein so it can't connect with other
molecules.
However, scientists -- including University of California, San
Francisco professor Kevan Shokat -- have made advances in the quest
to find docking places. Amgen scientists capitalized on Dr.
Shokat's insights, plus some of the company's own, to develop a
drug, Dr. Reese said.
By November 2017, Amgen scientists had the molecule that would
become the experimental drug AMG-510; the company began its first
human study less than 12 months later.
"I am surprised how fast they went," said Dr. Shokat, who
started a company that is partnering with Johnson & Johnson to
develop their own KRAS drug.
This July, Amgen said it would start a mid-stage study that it
hopes will be sufficient to win regulatory approval in the U.S.
Analysts say the drug could be on the market as soon as 2021. If
approved, yearly sales could eventually reach $2 billion, SVB
Leerink estimates.
Write to Joseph Walker at joseph.walker@wsj.com
(END) Dow Jones Newswires
December 29, 2019 12:14 ET (17:14 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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