Yesterday, Amgen Inc (AMGN) announced that the US Food and Drug Administration (FDA) delayed the approval of its osteoporosis drug denosumab, with a proposed trade name of Prolia. 

In response to the Biologic License Applications (BLA) filed by Amgen in Feb 2009 for Prolia, the Complete Response Letter (CRL) issued by the FDA requested several items, including further information on the design of Amgen’s previously submitted post-marketing surveillance program. The FDA has asked the company to develop a strategy to evaluate the risks of Prolia. However, the agency did not ask for further clinical trials, which would have resulted in a longer delay. 

Management believes that it can satisfy the queries of the FDA. The company intends to market Prolia for the treatment and prevention of postmenopausal osteoporosis (PMO) and bone loss in patients undergoing hormone ablation for either prostate or breast cancer. 

Based on encouraging late-stage results, we believe the candidate, once launched, has the potential to capture a major share of the osteoporosis market. The osteoporosis market represents huge commercial potential with global sales of osteoporosis medication coming in at about $8.4 billion in 2008, including vitamin brands and drugs such as GlaxoSmithKline’s (GSK) Boniva and Merck‘s (MRK) Fosamax. Osteoporosis affects about 10 million Americans, while nearly 45 million people are at risk globally. Denosumab, a twice-a-year injection, functions differently from the currently available medicines by targeting a protein that activates bone-destroying cells. 

We were pleased to hear about the company’s collaboration with GlaxoSmithKline whereby both the companies will share commercialization of denosumab for osteoporosis indications in Europe, Australia, New Zealand and Mexico. Glaxo will be responsible for commercializing denosumab for all indications in countries like China, India, Brazil and Taiwan where Amgen does not have a commercial presence. Glaxo’s strong marketing presence in these areas and expertise in primary care markets should help denosumab capture significant share. 

However, we are concerned about the company’s dependence on denosumab for future growth. With all of Amgen’s key products slated to lose patent protection over the next few years, the company has a lot riding on the approval and successful commercialization of denosumab. 

Since no new trials are required, we believe denosumab could receive FDA approval by mid-2010. We have a Neutral rating on Amgen.
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