Amgen To Pump Up R&D Spend In 2006
This article was originally published in The Pink Sheet Daily
Executive Summary
Firm expects a 30%-40% increase in R&D expenditure, primarily driven by a significant increase in clinical development and regulatory spend.
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Amgen's planned significant escalation in research & development expenditure in 2006 includes a 75% increase in clinical development and regulatory spend. During Amgen's Jan. 26 annual business review in New York, the firm announced that it plans to increase R&D investment by 30%-40% in 2006 to more than $3 bil. The clinical development spend will be used to fund an anticipated 42% increase in new studies (54 vs. 38) and a 34% increase in active studies (95 vs. 71). In addition to the increase in clinical development and regulatory spend from $590 mil. to $1.03 bil., Amgen is increasing its R&D headcount by 22% to 5,500 and its research and preclinical spend by 21% to $930 mil. During the meeting, CEO Kevin Sharer characterized the R&D spend escalation as a "bold...and confident statement about the future....What that says, at least what we think it says, is that we have a lot of confidence in our pipeline," he added. Sharer noted that the expected rate of growth in R&D spend "is double the rate of sales growth, and sales growth is not low." Amgen anticipates 2006 revenue of $13.9 bil.-$14.4 bil., a 12%-16% increase over 2005. Revenue growth will be driven by continued 15%-20% growth in key franchises such as Aranesp , Neulasta/Neupogen and Enbrel , the firm said. Late-stage candidates that will be beneficiaries of the expanded R&D program include the epidermal growth factor receptor inhibitor panitumumab, the vascular endothelial growth factor inhibitor AMG-706, the RANK ligand agent denosumab and the thrombocytopenia therapy AMG-531. Panitumumab, which is under review at FDA for a refractory colorectal cancer indication, is the closest of the four compounds to market. Amgen acquired full rights to panitumumab in December as part of its acquisition of development partner Abgenix (1 (Also see "Amgen To Acquire Panitumumab Development Partner Abgenix" - Pink Sheet, 14 Dec, 2005.)). The company is also undertaking large Phase III trials of Aranesp and Sensipar to evaluate cardiovascular outcomes. Sharer characterized the pipeline as "opportunity-rich," but cautioned that "there is a difference between opportunity and delivery." "It will test Amgen to our limits to be able to conduct all of the many, many clinical trials, continue to integrate acquisitions and bring innovative new molecules to the clinic," he said. "We are absolutely up to the task, but we don't delude ourselves to the nature of that challenge." -Andrew Kasper |