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Wall Street Is More Optimistic on Amgen's Next Blockbuster Drug

  • Migraine treatment projected to have six months’ head start
  • Pricing key after heart drug Repatha missed early expectations

For Amgen Inc., the launch of its next would-be blockbuster medicine may be a chance to avoid pitfalls of the past.

After sales of heart drug Repatha finally showed signs of traction in last month’s quarterly earnings, investors are focusing on Amgen’s first-in-class migraine therapy as the stock seeks to recover from a rough few months for mature biotech companies.

Amgen and its partner Novartis AG are due to hear by May 17 from U.S. regulators about Aimovig. While approval from the Food and Drug Administration is widely expected by investors and analysts, the main concerns are how the migraine drug will be priced and how many patients it can attract before new competitors reach the market.

“The focus will be on an agreeable price with managed care companies that allows access to patients,” Michael Yee, an analyst with Jefferies, said in a telephone interview. Yee expects Amgen may list Aimovig in the mid- to high-thousand-dollar range with a net price falling closer to $5,000 after rebates.

Pricing remains key after the Thousand Oaks, California-based biotech struggled to win over insurers with its $14,000-a-year Repatha injection. Rising list prices in the industry have prompted pharmacy benefits manager Express Scripts to take aim at the coming class of migraine preventives, known as CGRP inhibitors, pressuring drugmakers to bring costs down, Reuters reported last month. Analysts expect Amgen’s entrant to produce almost $1 billion in sales by 2023 as the company looks to diversify to help replace revenue from its aging line.

In a review of CGRP inhibitors last month, the Institute for Clinical and Economic Review, a Boston-based nonprofit that evaluates the cost-effectiveness of new drugs, used a placeholder price of $8,500 per year for Aimovig (erenumab).

“You can point to that recent evaluation that gave an upper-mid-single thousands price which I think would be appropriate and support uptake,” William Blair analyst Matt Phipps said by phone.

“The big thing with this class of drugs is that it is attacking a much more patient-symptomatic disease and has pent up patient demand that is notable,” Phipps said. “Nobody is knocking on their doctor’s door for a PCSK9 like Repatha because they don’t feel better immediately” while Aimovig may offer them quick relief.

Another difference: Amgen will be first to market with an expected lead time of about six months. Rival treatments from Eli Lilly & Co., Teva Pharmaceutical Industries Ltd., and Alder Biopharmaceuticals Inc. are expected to be approved closer to year-end or into early next year.

The anticipated lead time and patient demand were highlighted by Tony Hooper, Amgen’s head of global commercial operations, on the company’s April 24 earnings call: “Unlike the PCSK9 situation where we had to follow, we will actually be setting the price ourselves.

“This is clearly a market where patients have huge symptoms and actually know when they’re not being properly treated,” he said. “We look forward to a large bolus of patients who want to come on this drug as quickly as possible.”

While the FDA decision expected this week will serve as an important next step for some investors and analysts, Yee at Jefferies notes that another approval brings more potential for complications to successfully launch billion-dollar drugs at a time when U.S. health care is particular sensitive to drug pricing.

“The upcoming approval of the CGRP drugs will be another test for the industry, as well as Amgen,” he said.

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