Biotechnology pioneer Amgen Inc. is racing to develop new drugs from its pipeline to overcome the fallout of a multibillion-dollar patent-expiration cliff last year, and the drug industry’s stiff pricing pressures.
Amgen is increasing its spending on research in a bet that its laboratories can bring new breakthrough medicines to market, including one that takes aim at a cancer target known by the initials KRAS, which has thwarted drug researchers for decades.
The biotech needs wins. Sales of the company’s top-selling products, accounting for more than a fourth of its roughly $23 billion in annual revenue, are sagging as lower-priced competitors enter the market. Meanwhile, health plans are tightening the screws on drug spending.
“We’re operating in an environment that none of the leaders in our industry have ever experienced before,” Amgen Chief Executive Robert Bradway said in an interview. “So we’re changing very rapidly to stay ahead of the challenges of the world we’re competing in.”
Signs are promising. The company this summer reported encouraging results for a pill targeting the KRAS genetic mutation. Last year, Amgen’s Aimovig was the first drug approved in the U.S. to prevent migraine headaches by blocking a protein thought to help transmit pain. The approval was seen by analysts as the company’s most significant since its anti-cholesterol medicine Repatha in 2015.
Sales of Aimovig, which have been slower than expected because of competing treatments, are projected to reach $994 million in 2023, according to FactSet.
Amgen shares have risen 24% in 2019, in line with the 25% gains registered by the Nasdaq index of biotechnology companies and the S&P Pharmaceuticals Select Industry Index.
But Amgen’s transition won’t be easy because it involves solving some of biology’s most challenging molecular puzzles and then persuading health plans to provide reimbursement. To help with those goals, the company is trying to get its scientists to think about a drug’s commercial considerations earlier in the research process.
“It’s very hard to make up for these massive franchises that are declining. You have to come up with a billion-dollar product every year, ” SVB Leerink analyst Geoff Porges said.
Labs at Amgen, which is a shortened form of the company’s original name, Applied Molecular Genetics, starting in the 1980s developed some of the first drugs made by cloning genes and combining strands of DNA. These biotech drugs — including the anti-anemia treatment Epogen and the medicines Neupogen and Neulasta, for preventing infections in cancer patients — propelled Amgen into the ranks of the world’s biggest drugmakers by sales.
The first biosimilar competitors to Epogen and Neulasta were approved in 2018. Then Amgen, like its peers, confronted challenges finding new products that could offset revenue declines resulting from pricing pressures and stronger competition.
New compounds like osteoporosis drug Evenity were approved, but for narrower uses than anticipated after encountering issues during testing. Health plans, meanwhile, restricted prescriptions for Repatha after Amgen priced it at $14,100 a year.
Amgen became better known for its skills selling existing drugs than for inventing new ones. In the U.S., it litigated to protect the patents of big sellers like rheumatoid-arthritis treatment Enbrel after the government developed a path for rivals to sell copies at lower prices.
Amgen also bought new products that could increase revenue, such as multiple-myeloma drug Kyprolis, acquired in 2013 as part of a $10.4 billion deal for Onyx Pharmaceuticals.
This past November, Amgen completed the $13.4 billion acquisition of Otezla, a pill for the treatment of psoriasis; Celgene Corp. was forced to sell it as a condition of its merger with Bristol-Myers Squibb Co.
To recapture its homegrown lab prowess, Amgen is spending more money on research and development. Amgen’s R&D spending is projected to rise 12% to $4.4 billion in 2020, according to analyst estimates compiled by FactSet.
Amgen is eyeing diseases with large patient populations where the company perceives its scientists have clear insight into the genetics of the disease. “We’ve been very focused on being first to market” with products that are “highly differentiated and not easily leapfrogged” by competitors, Mr. Bradway said.
Amgen has largely stayed away from new treatments like gene replacement therapy and gene editing, because so far they have been effective only in ultra-rare conditions, David Reese, the company’s R&D chief, said.
Amgen has cut an average of three years off the time it takes to bring a drug to market by deciding more quickly whether to advance it, Dr. Reese said.
The company also is trying to bring its scientific and commercial teams together earlier to make sure insurers will reimburse newly approved drugs. This fall, Amgen made changes so researchers understand what clinical evidence insurers will demand before they agree to pay.
“I don’t believe an M.B.A. should be sitting there telling a chemist where to put a fluorine atom, nor should they have significant input on very early discovery research,” Dr. Reese said. “Shortly after that stage, I think it’s relevant to have commercial pieces of the organization say, ‘Here’s where [the drug] is likely to land five or 10 years down the line.’ ”
Amgen’s KRAS cancer drug candidate will provide an early test of the company’s bet on revamped labs.
KRAS mutations are thought to drive more than a third of lung cancers, 45% of colorectal cancers and 95% of pancreatic cancers, according to the National Cancer Institute, making drugs that could attack the mutation a prized pharmaceutical-industry target.
Yet researchers for decades were unable to design a treatment because there appeared to be nowhere for a drug to attach on the smooth surface of the protein expressed by the mutated gene. Many drugs work by binding to a protein so it can’t connect with other molecules.
However, scientists — including University of California, San Francisco professor Kevan Shokat — have made advances in the quest to find docking places. Amgen scientists capitalized on Dr. Shokat’s insights, plus some of the company’s own, to develop a drug, Dr. Reese said.
By November 2017, Amgen scientists had the molecule that would become the experimental drug AMG-510; the company began its first human study less than 12 months later.
“I am surprised how fast they went,” said Dr. Shokat, who started a company that is partnering with Johnson & Johnson to develop their own KRAS drug.
This July, Amgen said it would start a mid-stage study that it hopes will be sufficient to win regulatory approval in the U.S. Analysts say the drug could be on the market as soon as 2021. If approved, yearly sales could eventually reach $2 billion, SVB Leerink estimates.
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