GSK Denosumab Deal Gives Amgen A Leg Up In Primary Care

Thanks to a new deal with GlaxoSmithKline for the marketing of its cherished bone drug denosumab outside the U.S. in post-menopausal osteoporosis, Amgen gets a much needed, solid launch pad for its first major venture into primary care.

Denosumab, which is awaiting regulatory approval in Europe and the U.S., is critically important to Thousand Oaks. Calif.-based Amgen's future, given the continuing decline of the company's mainstays: anemia drug Aranesp (darbepoetin), which has run into safety issues, and looming U.S. patent expiries for rheumatoid arthritis drug Enbrel (etanercept), and for first-generation EPO Epogen and Neuopgen (filgrastim) for neutropenia, starting from 2012 (¹ (Also see "Amgen's D-mab: The New EPO" - In Vivo, 1 Mar, 2009.)).

If approved, the drug could bring Amgen a much needed growth driver - analysts estimate each indication could be worth $1.5 billion. Long-term, it also provides Amgen with a platform to expand its commercial capabilities. Based on the data presented so far, "experts view denosumab's efficacy as top notch, but anticipate only gradual adoption as primary care docs grow comfortable with its novel mechanism and lack of long-term data," observed Cowen & Company analyst Eric Schmidt in a July 27 note.

The RANK ligand inhibitor was submitted in December 2008 for FDA approval in treatment and prevention of osteoporosis in post-menopausal women, and treatment and prevention of bone loss in patients undergoing hormone ablation for breast or prostate cancer (² (Also see "Will Safety Issues Derail Denosumab? FDA Sets Advisory Cmte. Slot" - Pink Sheet, 22 Jun, 2009.)). A marketing authorization for PMO and bone loss caused by cancer therapy was filed in the European Union in January 2009.

But breaking into the challenging PMO market - already laden with cheap oral generic bisphosphonates aplenty - is not for the faint of heart and Amgen's strength lies in its knowledge of specialists, especially oncologists, not in primary care.

Ahead of approval, therefore, Amgen inked a potentially high-value deal with GSK, which the companies announced July 27, to manage major parts of the ex-U.S. side of the commercial equation. The deal, while complicated, gives GSK access to an important and promising new drug at a time when its primary care pipeline is deficient, while still leaving Amgen with an opening to eventually expand its own ex-U.S. capabilities.

Per the agreement, London-based GSK gets rights to sell denosumab for the PMO indications only in Europe, Australia, New Zealand and Mexico. GSK was one of 11 companies vying for the role, indicating the potential for the drug, as well as big pharma's dire need for new primary care products to plug in light of their own pipeline failures. Amgen is keeping all rights to the drug in the U.S. and Canada and will sell it in the oncology market in Europe and other markets.

GSK will register and commercialize denosumab for all indications in countries where Amgen does not now have a commercial presence, including fast-growing emerging markets such as China, Brazil, India and South Korea.

Primary Care: A Tough Nut To Crack

In Europe, GlaxoSmithKline will take the lead in marketing for the PMO indication, with support from about 1,500 primary care sales reps. The company will also be instrumental in gaining national access, by working with national health authorities, where required. Prices will be determined jointly on a country-by-country basis, but Amgen will retain the final say(see sidebar: " ³ GSK's Commercial Territories for D-Mab ").

For GSK, the cost of introducing the new drug will be small, compared to the cost of developing one in-house. Since 2001, the company has been co-promoting Boniva, a Roche drug indicated for PMO in Europe - a deal that is slated to end in 2011, so it already knows the market and can incorporate d-mab into its existing infrastructure.

In exchange, GSK will pay an upfront fee of $120 million and ongoing royalties. The companies will share profits, after accounting for expenses associated with the deal. In emerging markets, GSK will be responsible for all commercialization expenses and will purchase the drug from Amgen, based on market demand (⁴ (Also see "Amgen, GSK To Team Up On Denosumab Commercialization in Europe" - Pink Sheet, 27 Jul, 2009.)).

The split indication aspect of the deal - in which each partner can only sell the product for certain indications to certain kinds of physicians within the same geography - is unusual among partners in biopharma and allows Amgen to keep some rights to its star product in geographies that are growing faster than its home base, the U.S.

Amgen will deploy a small sales force in Europe to tackle the oncology indications and also to call on specialists in PMO. A feature of the deal gives Amgen "the option of an expanded role in commercialization in both Europe and certain emerging markets," according to the press release - a vague statement the companies wouldn't clarify, but which appears to give Amgen some room to maneuver. The two companies are discussing the extent of Amgen's commercial role in promoting denosumab in Europe, as the situation in each country may be different, according to GSK.

Only a few split indication deals among external partners exist in the industry, but they are worth noting as pipelines increasingly fill with large molecules that work on multiple biological mechanisms and therefore apply to a variety of therapeutic areas, potentially creating big money opportunities for separate selling. Such arrangements seem desirable because they leave enough on the table for each party - enabling a so-called win-win situation.

Managing Messiness Of 'Indication-splitting'

Split indications, however, are complicated to manage, for reasons Amgen knows only too well: How can each participant be sure the other is sticking to its side of the road?

Amgen's partnership with Johnson & Johnson starting in the 1980s for Epogen became a case study for industry about the potential messiness of such arrangements. In that partnership, J&J wound up selling the drug - under a different brand name - for chemotherapy and other broad uses while Amgen managed the smaller dialysis market.

A feud between the two partners began largely because Amgen feared that J&J would sell its brand of EPO to customers who would then use it for indications reserved to Amgen, while sales would go to J&J. Meanwhile, J&J accused Amgen of slowing approvals for J&J indications.

Products that grew out of the partnership also were in dispute and J&J wound up suing Amgen over a spin-off drug, although the case ultimately was settled in Amgen's favor.

Some industry observers speculated that Amgen's new denosumab deal could create a temptation for GSK to try to sell the drug in the EU cancer market, on top of PMO. Though details of the contract are not available, it's presumed that sufficient checks and controls are in place to prevent that from happening.

From GSK's perspective, it wouldn't make sense to tiptoe over the boundaries of the deal, some analysts say. "That wouldn't be good business practice. I don't think they would want to pull a fast one and get a reputation that they don't honor a corporate contract," commented Michael King, Merriman Curhan Ford analyst, in response to a question about the likelihood of such a scenario occurring.

Another potential concern is that if, as expected, the pricing for osteoporosis is lower than for the oncology indications, cancer patients might try to obtain the cheaper bone treatment. One way the company could manage this potential risk is to price the cancer treatment no higher than two to three times the cost in osteoporosis, King said.

Taking Stock Of Regulatory And Commercial Risks

The financial terms of the new marketing deal suggest that denosumab has a good shot at getting approved. FDA's Advisory Committee for Reproductive Heath Drugs is expected to review the drug Aug. 13 for the osteoporosis and cancer indications, ahead of an Oct. 19 PDUFA date (⁵ (Also see "Will Safety Issues Derail Denosumab? FDA Sets Advisory Cmte. Slot" - Pink Sheet, 22 Jun, 2009.)).

Cowen's Schmidt noted that in a July 24 conference call, two osteoporosis experts said they expect the advisory panel to recommend approval of denosumab, but they also cautioned that the drug is not free of potential safety issues (such as erysipelas, cataracts and rebound in bone turnover) that will need to be vetted.

There also will be commercial hurdles. In the osteoporosis space, Amgen and GSK must confront tough competition from the likes of Novartis, Merck and Lilly. Amgen has been playing up the convenience of d-mab as a twice-yearly subcutaneous injection. But in June, Novartis won FDA approval for its Reclast/Zometa (zoledronic acid) as a once-every-two-year infusion to prevent (rather than simply treat) osteoporosis in post-menopausal women with low bone mass (⁶ (Also see "After D-mab: Next-Generation Osteoporosis Drugs Focus On Building Bone" - Pink Sheet, 3 Jun, 2009.)).

Then in late July, Lilly's Forteo (teriparatide rDNA) injection secured FDA approval for the most common cause of secondary osteoporosis - osteoporosis associated with sustained, systemic glucocorticoid therapy in men and women at high risk of fracture.

"Although we believe Street expectations ($500 million in 2010) for denosumab in osteoporosis are too high, we are bullish on the drug's prospects in oncology, and view Amgen's base business as solid," Schmidt wrote. "As such, we expect Amgen shares to outperform the market."

Oncologist consultants said they view denosumab as moderately more efficacious, safe, and convenient than Zometa, but think the drug's economic appeal to physicians may be its most important attribute, Schmidt explained in a July 9 note.

"[Physicians] suggest Amgen knows how to incentivize oncologists, and that urologists will also find the drug economically more appealing than Zometa," Schmidt wrote. "While there is risk that the economics of [health care] delivery could change, the current system would be very receptive to premium pricing."

- Emily Hayes (⁷ [email protected]) with Melanie Senior (⁸ [email protected]) and Wendy Diller (⁹ [email protected])