Amgen's Bone Drug May Face Delays In FDA Decision
October 14 2009 - 1:44PM
Dow Jones News
Biotech investors had circled Oct. 19 as the day that Amgen
Inc.'s (AMGN) osteoporosis drug denosumab gets approved, but they
may have to wait longer.
Denosumab, a potential game-changer for the Thousand Oaks,
Calif., company, is expected to be the most notable launch in the
biotech industry in years. However, many on Wall Street expect the
decision to be delayed, possibly by three months, because the Food
and Drug Administration has a history of missing deadlines and may
want more time to analyze the safety record of a new drug like
denosumab.
"It would not surprise me to see the timeline slip," Credit
Suisse analyst Michael Aberman said.
He believes a delay is already reflected in the stock, with
limited downside, but that an on-time approval decision could move
the stock into the mid-$60s. Amgen shares recently traded up 1.7%
to $60.28.
Amgen officials didn't answer questions related to the issue.
The company reports third-quarter results on Oct. 21.
A 90-day delay, during which the FDA could OK the drug at any
point, might push approval into next year. A protracted delay would
be negative because it forces investors to change their launch
expectations and subsequent 2010 sales projections.
Osteoporosis treatments aren't new to the FDA, and there is a
competitive market led by a cheap oral generic of Merck & Co.'s
(MRK) Fosamax. But denosumab works through a new mechanism, by
blocking a protein that is involved with bone destruction, and the
agency is likely to be cautious before clearing it.
Furthermore, it will be the first biologic therapy - a drug made
from biological processes - to be sold to primary care physicians,
aside from vaccines. That target population means investors are
closely watching the label warnings and risk management strategy
related to the drug.
To be sure, the drug is widely expected to get approval, as it
has the support of six Phase III trials involving more than 11,000
patients, with a relatively clean safety profile.
Despite the delay and crowded market, denosumab is expected to
see quick adoption among some patients, because it is injected just
under the skin twice a year and used by patients that can't
tolerate bisphosphenates, the drug class of current popular
therapies.
Amgen doesn't need to corner the market; Aberman's peak U.S.
sales estimate of $1.3 billion in osteoporosis assumes that
denosumab will grab only 16% of the market.
Still, many see a bigger opportunity for denosumab in treating
bone complications in cancer, where Amgen is expected to file for
approval next year. UBS recently projected that total worldwide
sales will reach $2.5 billion for 2013, with additional indications
possibly adding more momentum to its sales.
Amgen already sells a number of blockbuster products, but its
troubles in recent years have made it more dependant on the success
of denosumab. It has struggled with safety and reimbursement issues
related to its anemia drugs, increased competition for
arthritis-treatment Enbrel, as well as exposure to looming health
care overhaul and generic biologics.
"It is transformative in the sense that this drug will put them
back on the road to growth," Aberman said.
Indeed, denosumab has reinvigorated Amgen's stock by driving it
up 31% since hitting a 52-week low in April. But long-term
investors may be hoping for more as the shares hit an all-time high
of $86.92 in September 2005 and first crossed the $60 mark almost
ten years ago.
Regardless, little is likely to occur until some clarity comes
from the FDA.
"For the time being, we think the stock is going to be
range-bound," Citigroup analyst Yaron Werber said.
-By Thomas Gryta, Dow Jones Newswires; 212-416-2169;
thomas.gryta@dowjones.com