Amgen's Uphill Marketing Battleby
When biotechnology giant Amgen (AMGN) announced study results for its experimental bone-loss treatment denosumab, Wall Street cheered.
In a head-to-head trial against the popular Novartis (NOVN) drug Zometa, denosumab was clearly superior in treating breast cancer patients who suffered bone loss when their cancer spread, according to research results released July 7. Deutsche Bank (DB) added $550 million to its forecast of the drug's peak annual sales, suggesting it could someday bring in $3 billion a year. Other analysts were even more bullish, predicting the drug could generate $1 billion to $2 billion in the breast-cancer market alone—that's on top of what Amgen might haul in by selling the drug to women with post-menopausal osteoporosis. Early in the day's trading session, Amgen's stock soared 15%, to 60 a share, before closing at 59.50.
The rally was fueled by some mighty big expectations that won't be easy for Thousand Oaks (Calif.)-based Amgen to meet. For starters, the Food & Drug Administration won't decide whether to approve the drug until October. More important, in getting doctors to prescribe the drug and patients to clamor for it, Amgen may be facing its biggest marketing challenge yet. The osteoporosis market is dominated by some of the most famous names in pharmaceuticals: Roche's Boniva, Novartis' once-yearly version of Zometa called Reclast, and Merck's (MRK) Fosamax, which went generic last year. About 38 million prescriptions are written for bone-loss treatments every year, and the market reached $4.6 billion in sales in 2007, according to IMS Health (RX). Total sales dropped 22% last year when cheap versions of Fosamax became available.
Breaking Down Barriers
Denosumab will offer some distinct advantages over its rivals. In post-menopausal osteoporosis, patients will be able to get denosumab as a twice-yearly injection from primary-care doctors. That will make it more convenient than Fosamax, which is a daily or weekly pill, and Boniva, which patients take monthly. And unlike some of the older drugs, denosumab does not seem to touch off a frightening side effect called osteonecrosis of the jaw (ONJ), which can cause pain and bone protrusions in the mouth. (In the most recent trial, ONJ was rare in the Zometa group, too.)
But Amgen will have to achieve what none of its peers has ever attempted before: getting primary-care physicians comfortable with the idea of injecting a biotech drug into their patients. Denosumab, which will likely carry the brand name Prolia, will be the first nonvaccine biologic product to be marketed to general practitioners. It's a gigantic market where the 29-year-old company has until now been a complete nonplayer. Amgen's biggest products, such as Araesp and Enbrel, are sold to rheumatologists, oncologists, and other specialists. What's more, denosumab is not the type of product patients can inject themselves, so doctors will have to prod them to come into the office twice a year. That could be a hard sell, especially when physicians have the option of prescribing inexpensive pills. Roger Perlmutter, Amgen's vice-president of research and development, isn't worried. "Most elderly people are seeing a doctor every six months anyway," Perlmutter said in a June interview.
Even though Amgen has not yet detailed its marketing plans, it's a safe bet the company will have to hit the airwaves with direct-to-consumer (DTC) ads. Its competitors have been spending heavily on ads for their products: In 2008, Roche spent $92 million on Boniva ads featuring actress Sally Field, according to TNS Media Intelligence. About $60 million of that was spent on TV spots. And Novartis spent $53 million pitching Reclast as the most convenient osteoporosis drug on the market, due to its once-yearly dosing. Perlmutter is quick to point out that Reclast has to be given by IV infusion, making it not quite as convenient as it may appear to be on TV. "General practitioners would have to set up infusion centers," he says. "They won't want to do that. The hassle factor is significant."
Itching for a Blockbuster
Amgen does have some experience with DTC ads, though it hasn't always been positive. In 2005, the FDA asked the company to withdraw ads for Enbrel, a rheumatoid arthritis drug that was also approved to treat psoriasis. The agency felt the psoriasis ads overstated the drug's efficacy and understated its risks. It took eight months for the company to revamp the campaign. And last year, Congressmen John Dingell and Bart Stupak, both Michigan Democrats, looked into whether aggressive advertising of anemia drugs developed by Amgen and marketed both by it and Johnson & Johnson (JNJ) encouraged oncologists to prescribe them in excessive doses. The FDA added "black boxes" to the drugs' labels, warning that they were associated with increased tumor growth.
Such troubles have investors itching for Amgen to prove that denosumab can be its long-awaited next blockbuster. The company's net income grew just 2% last year, to $4.8 billion, on sales that also increased 2%, to $15 billion. But the latest trial results had even the most conservative analysts sitting up and taking notice. Christopher Raymond of Robert W. Baird raised his price target on the stock from 60 to 65. "Dmab," he wrote, invoking the drug's nickname, "hit one out of the park." Soon it may be up to Amgen's marketing staff to follow up with a home run of its own.