Amgen Suffers a Setback

Shares fell Friday after the biotech announced unsuccessful clinical trial results for cancer drugs

Amgen (AMGN) has been fighting to prove that its colon cancer drug Vectibix can help save patients who are using a chemotherapy treatment in combination with other medication. But when the Thousand Oaks (Calif.) biotechnology company announced that a recent study uncovered more disappointing results, investors sold the stock on Mar. 23.

The Food and Drug Administration already said in September that Vectibix works to slow tumor growth and can sometimes even cut down the size of tumors. Amgen started selling the drug in the U.S. during the last three months of 2006 for use in patients who have colon cancer that has spread to other parts of the body after chemotherapy.

Now Amgen wants to show that Vectibix should be used sooner, as part of a standard chemotherapy treatment. For patients who are newly diagnosed with the spreading colon cancer, researchers had hoped that adding Vectibix to its rival Genentech's drug Avastin in chemotherapy would improve the odds of survival by 30%. But a recent study of 1,054 patients showed that this was only a more toxic regimen than regular chemotherapy.

"Unfortunately, it appears that adding Vectibix to Avastin, when used in combination with oxaliplatin- or irinotecan-based chemotherapy, increased toxicity, without improving efficacy," Roger M. Perlmutter, M.D., Ph.D., executive vice president of Research and Development at Amgen, said in a press release late March 22.

Investors sold the stock 4.9% to $57.52 per share in early trading on the Nasdaq March 23.

It's not the first setback for Amgen. The company had announced results in January of another trial showing that patients who received Vectibix plus chemotherapy didn't show much response, except that in some cases, people had more diarrhea, dehydration and infection. At the same time, Amgen announced results that showed its blockbuster anemia drug Aranesp didn't help cancer patients who suffer from the deficiency of red blood cells. Then on Mar. 9 the Food and Drug Administration said Amgen should include more information on the labels of its anemia treatments Aranesp and Epogen, warning doctors about the risks associated with different doses of the drugs.

Meanwhile rivals loom. Amgen's rival Roche, for example, is seeking approval for a drug that would compete with anemia treatments like Aranesp. And shares of ImClone (IMCL), which produces Erbitux, a rival to Vectibix, gained Mar. 23 on news of Amgen's misfortune.

"Despite the negative impact of this (latest study) and other developments, including black box warning on Aranesp and Epogen labels, and subsequent lower growth outlook, we maintain our belief in AMGN's long-term strengths," Standard & Poor's equity analyst Steven Silver said in a research note. (S&P, like, is owned by The McGraw-Hill Cos.) Silver lowered his earnings estimate for 2008, bringing a 12-month target price to $67 from $75, but upgraded the stock to buy from hold nonetheless.

Amgen hasn't given up hope either. The company is still striving to come up with more new treatments that work. It's expanding its Puerto Rico manufacturing sites and building a new facility in Ireland. Amgen is also continuing to invest in research and development sites in San Francisco, Seattle and the United Kingdom, for example.

Before it's here, it's on the Bloomberg Terminal.