Amgen and J&J: Falling in Love All Over Again

With most of our bloggers on vacation, we haven't yet troubled ourselves to analyze the Bristol bid for ImClone (if imitation is the sincerest form of flattery, we trust Roche is feeling good). And we didn't jump on Sanofi's buyout of Acambis either. (Thank goodness our colleagues at "The Pink Sheet" DAILY actually work in August!)

But even the dog days of summer can't stop us from taking note of this one: Amgen is giving global rights (except for Japan) to a clinical stage neuropathic pain project to...(drum roll please) Johnson & Johnson.

Considering the companies have spent the past two decades in an endless series of disputes, arbitration and litigation over their last licensing deal, involving a little product called EPO, that is news indeed.

If there ever was a case of adversity bringing people closer together, this is it.

Amgen and J&J have both said that their working relationship has been improved by the all-out effort to save the EPO franchise from regulatory and reimbursement challenges. So much so that Amgen CEO Kevin Sharer told the JP Morgan conference in January that “I never thought I would say this, but this circumstance has made us and J&J quite effective partners.” That may not be much of a silver lining from everything that has befallen EPO--but it sure is hard to imagine the two companies reaching this agreement two years ago, when the only place their executives were likely to exchange confidential information was in court.

Amgen's willingness to deal with J&J also suggests that it really means business when it talks about winnowing down its pipeline. In fact, Amgen has already shown it means business, in fact; Japanese rights to the neuropathic pain compound were already sold as part of a large partnership with Takeda in Japan.

Now the terms. Amgen receives $50 million up front--or a refund of one-quarter of the $200 million Amgen paid to settle antitrust litigation with J&J over EPO last month. Amgen will also receive development milestones of up to $385 million. There are additional commercial milestones and a sales royalty too.

And, no, there is no copromotion agreement.

Amgen's Denosumab: NOW How Much Would You Pay?

Monty Hall is back, because it sounds like it may be now or never to secure a partnership with Amgen for one of the most eagerly awaited Phase III projects in the industry—the post-menopausal osteoporosis treatment denosumab.

Recall that Amgen is considering partnering the project, a once-unthinkable option but now an oh-so poignant sign of the times for an industry struggling to reinvent itself. Recall also that we offered you complimentary access to the profile of denosumab from Elsevier’s Inteleos database to help you decide how much to pay for a share of this potentially huge market opportunity—and to shoulder some of the risk that denosumab will instead become another spectacular Big Pharma flameout.

The latest development: Amgen has announced positive Phase III results in a big osteoporosis trial, involving about 8,000 patients studied for three years. The company certainly isn’t underplaying the results. R&D chief Roger Perlmutter told The New York Times that the trial “exceeded my expectations”--which seems hard to do, given that denosumab is essentially a bet-the-company project for Amgen at this point.

During Amgen's quarterly call July 28, Perlmutter explained his ebulliance. “The fact that we saw statistically significant reductions across all primary and secondary endpoints was really very impressive. I will also say that when you look at the safety database, you have nearly 24,000 patient years of experience here, so it is far greater than anything else that we had to look at. The fact that the safety profile is so balanced as compared to placebo was extremely encouraging.”

Now, we might take those comments with a grain of salt, since all indications are that Amgen is still actively soliciting interest in partners for the drug. As CEO Kevin Sharer noted during the call, the positive study “certainly doesn’t preclude the necessary work we will do to see what our options are.”

Amgen, of course, wants to raise the price of any deal: “This data certainly makes us more confident in our ability to launch ourselves,” Sharer declared.

And Amgen certainly faces other pressures. The company is deep into cost-cutting mode as it adjusts to the new, sharply reduced realities of its flagship EPO franchise. The last thing it wants to do is embark on aggressive new spending to build a massive primary care sales presence to support denosumab.

Sharer, understandably, declined to provide any estimates on how much Amgen would have to spend to support a go-it-alone launch—no sense showing all your cards, is there?

"Our view is that we've got really strong data here," he said. "We're going to have to take this data, look at it carefully, see what physicians think. But I just want to assure our shareholders that we're going to make a full and complete analysis and surface the right set of options, and I'm confident we'll pick the right one.”

Sharer also suggested that an internal launch might not be as expensive as the conventional Big Pharma model would suggest. "We see this medicine with its high science component as being something that will take the kind of high science and medicine approach that we've historically taken. So we do not see this as a normal general practitioner kind of sales product that you just throw in the bag."

On the other hand, Sharer clearly has a bit of a one-track mind when it comes to thinking about the importance of denosumab to Amgen. Asked to comment on Amgen's overall approach to infrastructure-building, and whether there might be any opportunities in the current climate of consolidation, Sharer replied succintly. "I can't imagine buying a company to acquire a sales force. That' s inconceivable."

So I guess those Genentech sales reps are going to have to look elsewhere....

Good News for Amgen and J&J on EPO—but not for the Rest of Pharma

CMS: The Other Drug Safety Agency

Amgen and Johnson & Johnson got some good news when the Centers for Medicare & Medicaid Services finalized its proposed policy on coverage of erythropoietin stimulating agents (ESAs) in cancer patients. The final policy is about as good as it could be for the companies under the circumstances—much better than the agency originally proposed.

CMS agreed to continue to cover EPO in a number of important chemotherapy settings and also dropped some of the toughest dosing restrictions in the proposed policy. So the worst may be over for darbepoetin (Aranesp) and epoetin (Procrit) in the cancer market. Both Amgen and J&J reported sharp revenue declines for their respective brands during the quarter in response to safety concerns—and especially payment changes—but both expect growth to resume from the new, lower baseline.

CMS may have backed off from the most draconian aspects of its proposed limits on EPO coverage, but the agency is not backing off from the position that it does not have to defer to the Food & Drug Administration when it comes to responding to emerging drug safety issues.

In that sense, the final coverage policy is not a change from the agency’s initial proposal—and that is a message that the rest of the biopharmaceutical industry cannot afford to miss.

The RPM Report has written extensively about the activist role taken by CMS in the EPO safety debate. Simply put, there are now two agencies—FDA and CMS—that manufacturers have to consider when thinking about regulatory responses to drug safety issues.

CMS made it abundantly clear in the proposed EPO policy that it does not intend to wait for FDA to finalize its review of the safety issues before acting. And in the final policy, CMS is sticking to that position.

“CMS and FDA are separate agencies with different statutory missions, and operate under distinct legal authorities,” the final policy notes. “We are encouraged that the separate and independent analyses of the FDA and CMS have raised similar serious concerns about the use of ESA treatment in patients with cancer and related neoplastic conditions.”

“FDA deliberations are not public and their timeline for making changes (if any are made) in the labeling for ESAs is unknown. We believe the safety concerns that we have identified in this document required CMS to act quickly to protect beneficiaries.”

There are still plenty of regulatory hurdles ahead for ESAs. FDA hasn’t finalized labeling changes for EPO in response to the safety issues—and both FDA and CMS are just getting started on reviewing use of the agents in the renal failure market.

But one thing is clear: CMS is not going to take a back seat to FDA when safety issues arise.