Amgen investors focus beyond Kyprolis trial data
A trial’s failure does not often result in a share price rise for the company sponsoring it, but Amgen has managed to defy convention. Completion of the Focus study, which did not show an overall survival benefit for Kyprolis in relapsed multiple myeloma patients, became a clear entry point for investors who drove shares up 4% to $131.86 yesterday.
The Europe-pitched trial did not have high expectations attached to it for efficacy; the more important finding was that it did not throw up any unexpected cardiovascular safety signals. It was taken as a sign for investors to become more enthusiastic about the next phase of the California-based group’s near-term development, which is expected to feature both corporate restructuring and launch of what could become the first blockbuster cholesterol drug in a decade.
Kyprolis passed its bigger test earlier in August when the Aspire trial read out with statistically significant improvement in progression-free survival (PFS) when combined with Revlimid and dexamethasone in refractory patients, giving a median of 26.3 months compared with 17.6 months for just a two-drug regimen.
Overall survival data were not mature enough for the company to make any statements beyond positive trends, but the PFS result was in line with or slightly better than analysts had expected (Amgen meets aspirations with Kyprolis data, August 5, 2014).
The Focus study was smaller, and pitted Kyprolis against best supportive care in a last-line setting. The overall survival endpoint was a much higher standard to meet and, as analysts from Cowen noted before data were announced, advances in myeloma treatment had the potential to confound the trial. In any case, Focus was not believed to be necessary to allow filing for approval in earlier lines of treatment.
What it did represent was a potential banana skin on safety – cardiovascular complications are a well known risk of Kyprolis and, like Aspire, Focus found an event rate consistent with its FDA label. A renal signal was disclosed, but Amgen revealed very little about it.
Thus the news was viewed with relief. According to EvaluatePharma current forecasts put the net present value of Kyprolis at $8.1bn – less than the $10.4bn Amgen spent to acquire Onyx Pharmaceuticals last year – so the group needs to see its usage expand, rather than shrink because of safety risks, to rebut the case that it overpaid.
Amgen, of course, is much bigger than this single drug, and there are plans afoot that could move it increasingly into investors’ good graces. The table has been set by layoffs announced last month and planned closures of R&D facilities in Colorado and Washington; more news on restructuring is expected at an analyst meeting later this year (Amgen switches from hiring to firing ahead of 2015 launches, July 30, 2014).
The potential for Amgen to be the first to launch one of the newest cholesterol-lowering drugs in evolocumab must have some investors excited. Evolocumab is expected to be filed before the end of September, which could see it get approval around mid-2015. Like Kyprolis, evolocumab evokes some controversy among analysts, with the biggest 2020 forecast at $2.5bn more than 10 times that of the smallest forecast.
Finally, shareholder activism could accelerate plans to split up Amgen or hive off certain units in a bid to release value. Third Point recently bought 450,000 shares in Amgen, and has been an activist investor in the past, wrote ISI Group analyst Mark Schoenebaum; its stake strengthens the bull case that more significant corporate action is coming.
This week was a good time for investors to come off the sidelines and become active Amgen traders as the perceived risks to its biggest growth driver diminished. Significant activity should be expected around any news on a restructuring, regulatory action on evolocumab filing or detailed clinical data on Kyprolis.