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12:00 AM
 | 
Jul 13, 2009
 |  BioCentury  |  Finance

Ebb & Flow

Amgen Inc. got its biggest one-day pop in four years on last week's positive Phase III data for denosumab to prevent skeletal-related events associated with breast cancer. The company announced the data after market close on Tuesday, and the next day Amgen shares climbed $7.27 (14%) to $59.38, adding $7.3 billion in market cap.

Achieving superiority in the trial drove the bounce, buysiders told Ebb & Flow. The primary endpoint was non-inferiority to Zometa zoledronic acid from Novartis AG (NYSE:NVS; SIX:NOVN), but denosumab was superior on the primary endpoint of time to the first on-study skeletal-related event (SRE).

"The expectation for superiority was extremely low; everybody thought it was going to be equal to Zometa. This is a huge surprise and changes the market potential," said Sven Borho of OrbiMed Advisors.

venBio's Kurt von Emster agreed. "This further enhances the already high likelihood of approval in PMO [postmenopausal osteoporosis] in the next few months," he said.

von Emster added it was important that the rates of osteonecrosis of the jaw (ONJ) were equal across both treatment arms. ONJ was not reported in previous Phase III denosumab studies, but this time the dosage was 12 times higher, Amgen VP of Global Development Roy Baynes told Ebb & Flow.

Retaining momentum

Several milestones this half could keep Amgen's momentum going.

On Aug. 13, FDA's Reproductive Health Drugs Advisory Committee will meet to discuss a BLA for denosumab to treat and prevent PMO and to treat and prevent bone loss in patients undergoing hormone ablation for prostate or breast cancer. The PDUFA date is Oct. 19.

Approval in PMO is widely anticipated on the Street, although Oliver Marti of Columbus Circle Investors cautioned that FDA could delay action, given the size of the filing.

Meanwhile, Phase III data in solid tumors/multiple myeloma are due by year end and data from a Phase III trial in prostate cancer are expected in 2010.

Borho also is looking for a European partnership for denosumab this year. In addition, he's watching for Phase III data in 3Q from two trials of the company's Vectibix panitumumab, one in first line and the other in second line metastatic colorectal cancer. Both studies are in patients with wild-type K-Ras (KRAS) tumors, in combination with chemotherapy.

One potential sticky point, Borho said, will be the presentation of last week's breast cancer data at the San Antonio Breast Cancer Symposium in December. He cautioned that given the high expectations, it will be easy to disappoint.

"Stocks almost always rise on the PR and fall off on the actual presentation. There's almost always something in the data which is worse than what people thought," Borho said.

What's it worth?

According to Marti, denosumab currently accounts for about $4 billion of Amgen's roughly $59 billion in market cap. He said the company's marketed products account for $55 billion, using 3X-4X 2009 sales of about $15 billion.

But by 2015, Marti said, denosumab could be a $3.5 billion product. Based on a 5X-6X sales multiple, higher since it would have a faster growing, patent protected product, he sees the discounted value of denosumab as about $15 billion. That would translate into a total market cap of $70 billion, or 20% upside from here.

Borho and von Emster both see Amgen now attracting large, plain vanilla investors. "Amgen can now be considered a growth story, so traditional global equity funds will likely be adding to positions over the coming months," said von Emster.

"People who look at major biotech and pharma as a whole universe will find Amgen extremely attractive," said Borho. Any run-up relies on the big vanilla funds, he said, who will view Amgen "as a good value with a P/E of 12."

Amgen finished the...

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