Amgen Drug's Prostate Study Results May Boost Sales by $2 Billion a Year

Amgen Inc.’s denosumab delayed the spread of prostate cancer to men’s bones in a study that may help boost sales by $2 billion a year. The company’s shares rose the most since June.

Use of the drug stalled the malignancy’s spread by 4.2 months, Thousand Oaks, California-based Amgen said in a statement yesterday. The study, part of the final phase of testing usually needed for U.S. approval, didn’t find a survival benefit.

Amgen, the world’s biggest biotechnology company, markets the drug as Xgeva for use in cancer. If the medicine can eventually win U.S. clearance to prevent breast cancer and prostate cancer from moving into bone, it may add $2 billion in sales a year for each use, said Eric Schmidt, a Cowen & Co. analyst in New York. The drug was approved Nov. 18 to reduce fractures after tumors had already migrated to bones.

“If it also works in breast cancer prevention, Xgeva could become one of the biggest cancer drugs ever,” Schmidt said in a Dec. 10 telephone interview. “No drug has ever before shown the ability to prevent bone metastases.”

Amgen rose $2.65, or 4.9 percent, to $56.76 at 4 p.m. New York time in Nasdaq Stock Market composite trading. The stock has fallen less than 1 percent in the past 12 months.

Denosumab targets a protein called RANK ligand that Amgen scientists discovered in the mid-1990s. This protein works with others in a process that breaks down old bone in the body and replaces it with new. It also plays a role in weakening the bones of people with osteoporosis and cancer.

Osteoporosis Approval

The medicine entered the U.S. market in June when a lower- dose version, sold under the name Prolia, won approval from the U.S. Food and Drug Administration to treat osteoporosis in older women. Schmidt said it may have $1.9 billion in U.S. sales in 2015 for the two approved uses. Sales outside the U.S. should be about the same, he said.

Amgen started a trial in June that aims to enroll 4,500 women with breast cancer to see if Xgeva can delay or prevent the malignancy from spreading to their bones. That study’s results aren’t expected to be released until about 2016, said Roger Perlmutter, Amgen’s executive vice president for research and development, in a telephone interview yesterday.

“We feel that the success of the prostate cancer study certainly augurs well for the ultimate outcome of the breast cancer study,” he said.

Data to be Analyzed

Amgen will analyze data from the prostate cancer study of 1,432 men, and meet with regulators, before deciding whether to seek approval for that indication, Perlmutter said.

The FDA may require evidence that the drug extends men’s lives before approving it as prevention agent, said Robyn Karnauskas, an analyst for Deutsche Bank in New York. Preventing cancer from reaching the bones is an $800 million opportunity, she said yesterday in a note to investors.

“Investors have been ignoring this company and its potential,” said Bill Smead, a portfolio manager at Smead Capital Management Inc. in Seattle, in a telephone interview yesterday. “It’s been stuck in the $45 to $60 trading range forever and we’d like to see the thing break out. This is a big deal.” Smead owned almost 111,000 Amgen shares on Sept. 30.

Cowen’s Schmidt predicted that positive results from the study would push shares up by as much as $10. That would be an 18 percent rise over yesterday’s closing price of $54.11. Yaron Werber, a Citibank analyst, said Amgen may rise as high as $65, in a note to investors.

In Schmidt’s best-case scenario, worldwide revenue for all uses of denosumab may climb to $12 billion or higher, making it one of best-selling drugs in the world.

High Cancer Risk

The men who took part in the prostate cancer study released yesterday were considered to have a high risk that their malignancies would spread to bones. They had high levels of prostate specific antigen, or PSA, which continued to rise even after the men took different drugs or had surgery to lower their testosterone levels.

PSA, a protein produced by the prostate gland, rises as a result of cancer or some prostate conditions and is used to help diagnose and monitor cancer.

To contact the reporter on this story: Rob Waters in San Francisco at rwaters5@bloomberg.net.

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net.

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