Bloomberg.com

July 3, 2008

July 3 (Bloomberg) -- Amgen Inc.'s experimental osteoporosis drug may become the top remedy for the bone- thinning disorder, gaining about half of an $8 billion annual market and reviving shares.

 

Research has already shown Amgen's new treatment, denosumab, strengthens bones better than the top drug for osteoporosis, Merck & Co.'s Fosamax, with $3 billion in sales last year. Amgen, based in Thousand Oaks, California, will present data this year on how well its drug, the first in a new family of medicines, prevents fractures in the elderly.

 

Amgen's price plunged 32 percent in 2007 as its best- selling anemia therapies, Aranesp and Epogen, were linked to heart attacks. Positive study results for denosumab, which could reach the market next year, may boost shares of the world's largest biotechnology company to as high as $65 to $69, analysts say, an increase of as much as 41 percent.

 

``This is Amgen's savior,'' said Mark Schoenebaum, a Deutsche Bank analyst in New York, in a telephone interview. ``If this is a really clean drug on the safety side and it's as least as effective as Fosamax, there's no reason this can't be a blockbuster.''

 

Amgen shares rose $2, or 4.1 percent, to $50.84 at 1 p.m. in Nasdaq Stock Market composite trading, the biggest increase in three months. Merck, based in Whitehouse Station, New Jersey, rose 41 cents, or 1.1 percent, to $38.45 in New York Stock Exchange trading.

 

Stakes Raised

 

The company's top five shareholders all raised their stakes in the first quarter, ended March 31, according to data collected by Bloomberg. During that period, Amgen reported research showing that denosumab, injected twice yearly, was 40 percent more effective than Fosamax, a daily pill, at improving bone density in women.

 

More than 200 million people worldwide, including 25 million in the U.S., have osteoporosis, a disease that causes bones to deteriorate and break. The condition mostly affects elderly women, though 20 percent of cases are in men.

 

``Denosumab is the big wave we're waiting for with great anticipation,'' said James Daly, Amgen's senior vice president for North American commercial operations, at a June 11 meeting with investors.

 

Not all investors are convinced denosumab can bring enough revenue to spur a turnaround for Amgen. Sales of Epogen and Aranesp, which fell 8 percent to $6.6 billion last year, plunged 20 percent in the first quarter of 2008, to $1.3 billion.

 

`Not a Stabilizer'

 

``Denosumab is going to be a big drug, but it's not going to stabilize the company,'' said Jon Fisher, a portfolio manager at Fifth Third Asset Management in Minneapolis, in a telephone interview. Fisher sold his stake in Amgen when it was at $70 in January, 2007.

 

Amgen is betting doctors and patients want an alternative that adds benefit beyond those offered by drugs known as bisphosphonates, including Boniva, sold by Basel, Switzerland- based Roche Holding AG, Reclast, marketed by Novartis AG, also in Basel, and Fosamax, available in generic form.

 

Amgen's drug is faster acting, easier to give to patients, and free of side effects found with those drugs, said Bruce Ettinger, professor of medicine at the University of California San Francisco, in a June 24 review published online by the North American Menopause Society. Fosamax and similar medications can, in some cases, make jaw bones crumble, and are also tied to nausea, diarrhea and constipation, doctors say.

 

Fosamax Benefit

 

``Fosamax offers unsurpassed fracture prevention and is proven to reduce the risk of hip and spine fractures,'' Merck spokesman Ron Rogers said in an e-mailed statement.

 

Denosumab, a genetically engineered antibody, is designed to block the action of a protein called RANK Ligand, which leads to the breakdown of bones. Unlike bisphosphonates, which target bone-eroding cells that are fully formed and found on the bone surface, denosumab blocks the cells at the earliest stages.

 

``Doctors are very excited about this new drug,'' the University of California's Ettinger said in his review of the drug. The biggest concern with Amgen's therapy is whether it will cause infections.

 

In a three-year study of about 8,000 patients to be completed this year, Amgen is comparing fracture prevention with denosumab and placebo. Denosumab needs to show a 50 percent reduction in hip fractures to be superior to Novartis' Reclast, a once-yearly infusion therapy, said Michael Latwis, an analyst for market research firm Decision Resources, in a telephone interview. Reclast curbed hip fractures by 41 percent in a separate study.

 

``Denosumab's twice yearly dosing is already superior to all other drugs except Reclast, which is once a year,'' Latwis said. said. ``With much of the market going generic, denosumab will be the leading branded treatment.''