Amgen to Join Astellas on Developing Cancer, Bone Drugs

Amgen Inc., the world’s largest biotechnology company by sales, announced a partnership with Japanese drugmaker Astellas Pharma Inc. to bring five of its experimental therapies to market in that country.

The companies will create a venture called Amgen Astellas BioPharma KK that will become an Amgen subsidiary as early as 2020, they said today in a statement. The venture will seek regulatory approval in Japan for drugs to treat high cholesterol, osteoporosis, stomach cancer, leukemia and lymphoma.

Amgen is developing new products and expanding its business outside the U.S. as sales decline for its anemia drugs Aranesp and Epogen. While most large U.S. drugmakers generate about half their revenue oversees, Amgen, based in Thousand Oaks, California, got just 22 percent in 2012. Chief Executive Officer Robert Bradway is looking to change that balance with expansion plans in 75 markets including Japan, China and Brazil.

“This is consistent with our desire to globalize and this is a very, very important step for us in that progression,” said Bradway, who took the company helm last year, in a phone interview. “This is a clear, tangible step in the direction of Amgen having its own presence in the world’s second-largest pharmaceutical market.”

Unmet Needs

Yoshihiko Hatanaka, president and CEO of Tokyo-based Astellas, said the alliance “will strengthen our pipeline to address unmet medical needs, as well as enable us to obtain growth drivers.”

Amgen fell 1.7 percent to $104.39 at the close in New York. The company has advanced 51 percent in the past 12 months. Astellas jumped as much as 3.2 percent to 5,500 yen in Tokyo and closed 1.9 percent higher at 5,430 yen. The stock has surged 76 percent in the past 12 months.

Amgen executives have signaled they were looking for partners in Asia. Arvind Sood, the company’s vice president of investor relations, said at a March conference headed by investment firm Cowen & Co. of Boston that Amgen saw a “tremendous amount of unmet medical need in the Asian markets” for products to treat gastric cancer, in particular.

One reason 33-year-old Amgen hasn’t expanded globally sooner is because of the complexity of manufacturing and distributing its biologic-based products, Bradway said. Unlike most drugmakers, which sell chemically-based pills, Amgen’s products are manufactured from living organisms, must be stored in specific conditions, and are injected rather than swallowed.

Amgen’s Footprint

“We were very successful and continue to be successful in the U.S. and western Europe, and the partnerships we struck served us well at that time, but as we’ve grown we have felt and increasing desire and need to have control of our business in these markets,” Bradway said. “We have sought to take back rights from our partners and establish our own footprint for the benefit of our pipeline molecules and others.”

Among the drugs Amgen and Astellas will co-develop are the gastric cancer therapies rilotumumab, also known as AMG 102, and AMG 337, the companies said today.

Two of the other experimental drugs that are part of the Astellas venture, the heart therapy AMG 145 and the osteoporosis treatment romosozumab, are among eight late-stage medicines that Bradway said should begin reaching the U.S. market by 2016.

The fifth drug, blinatumomab or AMG 103, is aimed at treating acute lymphoblastic leukemia and non-Hodgkins lymphoma.

Paying Royalties

Astellas will pay “a certain amount of royalties” to Amgen, Hatanaka of Astellas said in the briefing without elaborating on further financial details of the deal. The companies will split the costs, Bradway said. Amgen’s goal is to begin marketing the first drug from their collaboration as early as 2016.

Amgen sold its Japanese unit in 2008 to Takeda Pharmaceutical Co., the country’s largest drugmaker, for as much as $902 million. Amgen’s vice president of global marketing at the time, Dominique Monnet, said Japan’s drug regulations “make it pretty expensive for a company not established in Japan to be able to launch and commercialize” new products.

Unlike the Takeda deal, Amgen’s alliance with Astellas is designed to be a long-term deal that will result in a freestanding company by 2020.

Bradway said “the timing worked well” to re-enter Japan through the partnership.

“Japan was an important opportunity for Amgen, one that we felt that we needed to be represented in, in order to remain the world’s leading biotech company,” Bradley said in a briefing in Japan with reporters. “We have known that we would need and want a direct operating presence here, and timing worked well now to work together with Astellas.”

Goldman Sachs Group Inc. advised Amgen on the venture with Astellas. Morrison & Foerster LLP provided legal advice to Astellas.

(Updates share price in sixth paragraph.)
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