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Science & Technology: Biotechnology
A Blood Booster for Amgen?
Potential blockbusters are nearing the pipeline's end
For Gloria Gregory, enduring dialysis sessions three times a week isn't the worst aspect of her kidney disease. What really gets her down is the fatigue caused by anemia, the shortage of red blood cells that commonly accompanies kidney disease. While receiving several injections per week of Amgen's anemia-fighting drug Epogen, she felt terrible for weeks at a stretch. It wasn't until Gregory entered a trial of Amgen Inc.'s (AMGN) new longer-lasting drug, Aranesp, that the 51-year-old mother of four was able to return to her normal routine for the first time since she started dialysis in 1995. "I love cooking, but sometimes I was so weak I couldn't stand at the stove," says Gregory, who hasn't required any anemia medication since mid-October. "Now I just go, go, go all day. My whole life has changed."
Aranesp could change Amgen's prospects as well. Riding on the success of blockbusters Epogen and Neupogen--used primarily to fight infections in cancer patients--the 20-year-old biotech giant pulled in $3 billion in sales and $1.1 billion in profits last year. But sales of Epogen and Neupogen started sagging in the third quarter. When the Thousand Oaks (Calif.) company lowered its sales targets for the year on Oct 26, its stock dropped 15% the next day.
Clearly, Amgen could use a new hit. And the company is hoping that Aranesp and two other new medicines will fit the bill. In December, 1999, the company filed for Food & Drug Administration approval for Aranesp for kidney patients with anemia. Next year it hopes to gain approval for two other biotech drugs: IL-1RA for rheumatoid arthritis and Abarelix for prostate cancer. Together, the three products could open up markets worth more than $6 billion, Amgen estimates.STAYING POWER. Aranesp is by far the biggest gun in Amgen's arsenal of new products. Among kidney patients in the U.S. alone, anemia treatment is a $2 billion market. And Amgen says Aranesp is poised to dominate, thanks to a quality-of-life improvement it offers patients. The drug stays in a patient's bloodstream longer than Epogen and other blood boosters, so it only needs to be injected once a week or less, as opposed to the three times a week now recommended for drugs on the market. And unlike Epogen, whose sales are restricted due to marketing agreements with other drugmakers, Aranesp will be marketed without constraints.
Perhaps most important, Amgen should be able to extend the market for Aranesp by gaining FDA approval to use the drug to treat anemia in cancer patients, which could bring in an extra $1.4 billion. That could happen by 2001, based on announcements made at a November 8 analyst meeting in New York. "We're enthusiastic about the future," says Amgen CEO Kevin W. Sharer, who took over the reins from longtime chief Gordon M. Binder in May. "The challenge is delivering."
All of Amgen's new drugs will face competition. Abarelix, for example, will be up against several established prostate cancer treatments. As for IL-1RA, studies have shown it to be less effective than existing treatments for rheumatoid arthritis, leading some experts to question its market potential. Even Aranesp won't be an easy win. Among other things, the drug is positioned to help patients before they require dialysis--but because of previous marketing restrictions, this is new territory for Amgen. And competing head-to-head with J&J's well-established Procrit won't be easy. Meanwhile, in Europe, Aranesp will have to duke it out with Hoffmann-LaRoche Inc.'s NeoRecormon.
While battling the competition, Amgen is also being tested in court. A shadow has been cast over Amgen by a patent infringement lawsuit the company filed against Transkaryotic Therapies Inc. (TKTX). Analysts and patent experts expect Amgen to prevail, but a loss would come as a real blow to the company, resulting in even more competition in an already cutthroat arena.
Amgen believes Aranesp will make up for any market-share loss Epogen suffers. The company hit on the idea for Aranesp almost by accident, when its scientists discovered that a random mutation occurring during the Epogen production process increased the drug's potency. To replicate that in the lab, the researchers had to change the Epogen molecule chain one link at a time until they came up with a compound that was both potent and safe. "We made several hundred molecules before we came to Aranesp," says Anthony J. Gringeri, vice-president for product development. The company expects FDA approval by mid-2000.LESS PRICKLY. With two to three times the staying power of existing drugs, Aranesp translates to fewer needle pricks for patients. "When patients get stuck three times a week for anemia medication, plus more sticks for dialysis, they start to feel like pincushions," says Dr. Jill Lindberg, who managed Aranesp trials at the Ochsner Clinic in New Orleans. In the pre-dialysis market--meaning kidney patients who are not yet sick enough to require dialysis and therefore don't have to visit the doctor as often--Aranesp could be in great demand. "We have a terrible no-show rate with those patients," Lindberg says.
Indeed, the pre-dialysis market may hold the greatest near-term potential for Aranesp. But it may also be the hardest to tap. Only 25% of anemic pre-dialysis patients are treated with currently available remedies. "Because the dosing schedule is so frequent, and the drug is expensive, [medical plan] reimbursement can be an issue," says Camilo Martinez, a former internist who now co-manages Dresdner RCM's biotech fund. Many physicians, he adds, are simply not aware that anemia might be causing their patients' fatigue and that treating it could help delay the onset of total renal failure. "Educating doctors will be a challenge," says Martinez.
The company hopes that the once-weekly dosing required with Aranesp will be the key to overcoming resistance. And Amgen could score a major coup in the oncology arena if the FDA approves Aranesp for dosing every three weeks. "Chemo is given every three or four weeks, and if patients don't have to come in extra times for injections [of anemia medication], that will make their lives easier," says Dr. Edward M. Wolin, a medical oncologist at Cedars-Sinai Comprehensive Cancer Center in Los Angeles.WAITING ON DECK. Beyond Aranesp, Amgen has high hopes for IL-1RA and Abarelix. IL-1RA combats rheumatoid arthritis pain by blocking one of the molecules that causes inflammation. But here, Amgen will be up against Immunex Corp. (IMNX), which has a drug called Enbrel that blocks a different pain-causing factor. It is already on the market and has been effective in more than 70% of patients. Prospects are better for the prostate-cancer drug Abarelix. Developed with Praecis Pharmaceuticals Inc., it appears to have a safety advantage over currently marketed medicines.
Amgen's plans to conquer new markets extend beyond 2001. Drugs for treating breast cancer, Lou Gehrig's disease, obesity, and thyroid disease are moving through the trial process. Sharer is so optimistic about Amgen's prospects that during a November analysts' meeting he predicted the company's sales and earnings would grow at a compound annual rate of 20% over five years. Winning the TKT lawsuit and the FDA's endorsement of Aranesp will be crucial--but it's only a first step. Aranesp is like a Ferrari in the garage, says Mark Kelliher, an analyst at First American Asset Management. "People know you've got it, but they've never seen you drive it." Now it's up to Sharer and his staff to ensure Aranesp can race out of that garage.For more on Amgen as an investment play, go to the Nov. 20 Daily Briefing at www.businessweek.com/today.htmBy Arlene Weintraub in Los Angeles, with David Shook in New YorkReturn to top