“Now Is The Time” For Japan, Amgen Says; Inks Strategic Alliance With Astellas

After selling off its Japanese subsidiary in 2008, Amgen returns via an alliance and joint venture with Astellas, with the goal of establishing a wholly owned affiliate by 2020. But challenges remain in a country known for long memories.

TOKYO – After leaving the Japanese market in 2008, Amgen Inc. is back, promising it is committed to building a platform that will lead to a standalone affiliate by 2020 in the world’s second-largest pharma market.

In a strategic alliance announced May 29 in Tokyo, Amgen will team up with Astellas Pharma Inc. in a two-prong strategy for Japan. The first component is to co-develop and co-commercialize four Amgen biologics and one small molecule in oncology, osteoporosis and cardiovascular areas. The second component is a joint venture, 51% owned by Amgen, 49% by Astellas, which will open Oct. 1 in Tokyo.

Operating as Amgen Astellas BioPharma KK, the JV is structured to allow Amgen to turn the operations into a wholly owned Japanese affiliate as soon as 2020, and will be comprised of seconded employees from Astellas, transferred employees from Amgen and new hires. Eiichi Takahashi will serve as general manager of the JV, with additional management to be appointed by both companies.

Takahashi, a cardiology doctor, comes to the JV from Pfizer Inc.’s Japan subsidiary. The exec most recently led Pfizer’s medical affairs organization for the Asia Pacific region, including Japan, Korea, Australia and New Zealand.

Amgen currently has a small presence in Japan, left over from a previous push into the country. In 2008, the U.S. biotech sold its Japan affiliate, and Japanese rights to 13 clinical candidates, to Takeda Pharmaceutical Co. Ltd. as part of a restructuring move. Under that deal, Amgen retained certain co-promotion rights in Japan on all the programs, in addition to double-digit royalties on sales. (Also see "Takeda Makes $1 Billion Move For Amgen Development Rights" - Scrip, 5 Feb, 2008.).

“In 2008 we realized the time was not right to go it alone in Japan. Now the time is right for the strategic alliance with Astellas,” Amgen CEO Robert Bradway explained during a press conference in Tokyo May 29. In 2008, Bradway served as CFO of Amgen, under former CEO Kevin Sharer.

Even before Bradway took over as CEO in May 2012, Amgen launched an aggressive path toward international expansion, including acquisitions in Brazil and Turkey (Also see "Amgen Shrugs Off Turkish Price Cuts, Snatches Up Mustafa Nevzat For Broader Reach Into Emerging Markets" - Scrip, 26 Apr, 2012.). Most recently, the company also plunged into China via a commercially oriented JV for colorectal cancer drug Vectibix (panitumumab). Unlike the Japan JV, Amgen has a minority 49% stake in the China JV, with local company Beta Pharma Inc. holding 51% (Also see "To Jump Start China, Think Commercial: Amgen Ties Knot With Beta Pharma For Vectibix" - Scrip, 10 May, 2013.).

Amgen’s renewed interest in Japan and emerging markets is not a surprise.

During a business review in February, the company committed to tripling sales in emerging markets in five years from $580 million in 2012. At the time, Amgen said it was in advanced partnership discussions in Japan, with plans for a stand-alone subsidiary by 2020, and a first product launch by 2016. Global Commercial Operations EVP Tony Hooper commented: “We're not talking about growing 5%, 6% in Japan. We are talking about establishing a robust new business in Japan.”

Five Amgen Products

Among the compounds in the Amgen-Astellas alliance, the furthest in development is AMG 145, a PCSK9 monoclonal antibody (proprotein convertase subtilisin/kexin type 9) in global Phase III trials and in Phase II in Japan with a lead indication of hyperlipidemia; and romosozumab, a sclerostin mAb in global Phase III and Phase II/III in Japan for osteoporosis.

Amgen Pipeline Molecules Included In Astellas Alliance
Molecule	Lead Indication	Mode of Action	Global	Japan
AMG 145	Hyperlipidemia	Anti-PCSK-9 mAb	Phase III	Phase II
Romosozumab (AMG 785)	Osteoporosis	Anti-Sclerostin mAb	Phase III	Phase II/III
Rilotumumab (AMG 102)	Gastric Cancer	Anti-HGF mAb	Phase III	Phase I
AMG 337	Gastric Cancer	MET inhibitor	Phase I	N/A
Blinatumomab (AMG 103)	ALL and NHL	Anti-CD19 BiTE	Phase II	N/A

Source: Amgen

Amgen believes AMG 145 could be on the market in Japan as early as 2016. During the February business review, Hooper singled out AMG 145, AMG 785 and AMG 102 as particular opportunities in Japan.

The development and commercial alliance in Japan for the five products will last through 2032 at the latest. Astellas CEO Yoshihiko Hatanaka said Astellas would pay undisclosed royalties to Amgen for any products that reach market. The companies will otherwise share development costs and profits 50-50.

In a note to investors May 29, UBS analyst Matthew Roden said the JV is an “incremental positive” for Amgen that will provide market access and mentorship for products with a “high level of need” in Japan. The analyst estimated that 3 million to 4 million Japanese patients are potentially addressable with AMG 145, and noted that Japan has the second highest rate of gastric cancer worldwide with more than 100,000 new cases per year.

Long Memories In Japan

However, Amgen’s previous exit from Japan could impact perceptions in the local market. A source with close ties to Amgen’s initial entry in Japan questioned the company’s ability to climb back quickly.

While the Takeda deal in 2008 injected Amgen with immediate cash, it also raised questions about Amgen’s ability to grow in the Asia Pacific region.

“It usually takes 10-15 years to establish a solid pharmaceutical company in Japan that becomes an insider of the local market,” the source said, speaking before the alliance with Astellas was announced. “It is too optimistic that they can establish a Japanese subsidiary by 2020 ... in particular considering the fact that at this moment there is no organization in place.”

“They may be also underestimating the challenge in terms of recruiting,” the source explained. “Amgen gave an impression that they can be here today and gone tomorrow if they face difficulty in their home market as they did in the past. It is going to be a huge challenge as to whether or not Amgen can attract quality people.”

Perhaps trying to dispel perceptions of a lack of commitment, Bradway told local reporters: “We expect to invest and invest significantly in Japan.”

The CEO also spoke to PharmAsia News, saying Amgen chose Astellas, as opposed to a previous partner like Takeda, because the “objective was, find a partner that could help us advance these five particular medicines. … Given Astellas’ capabilities in the area of cardiovascular medicines, of osteoporosis and oncology, we believe Astellas has the capabilities that are best suited to help us advance these five medicines.”

“We have three very successful partnerships that we’ve enjoyed through the years [in Japan],” Bradway added. “But this is the alliance we expect to create a platform for Amgen to have its own operations in Japan.”

The alliance with Astellas is not expected to impact Amgen’s earlier deal with Takeda. Takeda currently markets Vectibix in Japan and is developing AMG 386 (Phase III in Japan) and AMG 557 (Phase I), Amgen said, noting that certain compounds from that deal “did not progress.” In addition to Takeda, Amgen also has worked with Kirin Holdings Co. Ltd. since 1984 and more recently with Daiichi Sankyo Co. Ltd.

“One little worry that I still have is their level of patience,” the source said. “You cannot create a pharmaceutical company overnight as we all know and there is no guarantee that if profit erosion by biosimilars and generics start taking place in a big way, they may be forced to rethink about their strategy as they did in the past as it takes time and money to build a solid pharmaceutical company in Japan. This is going to be an interesting ‘test’ on the new executive management team in terms of level of patience, global sense for the pharmaceutical market, as well as genuine interest in delivering great drugs to patients.”

Astellas’ Gain

One plus for Amgen will be Astellas. In an annual survey conducted by International Alliances Limited, a local consultancy, to determine the “most admired pharma companies in Japan,” Astellas shared second place overall in 2012 with GlaxoSmithKline PLC, trailing only Takeda and Novartis AG, which tied for first. In particular, Astellas placed second in terms of both “quality of management” and “quality of medical reps,” two key factors for building a commercial operation in Japan.

For Astellas, CEO Hatanaka sees the alliance as a step to help the company develop its own biologics capabilities, in addition to any financial returns.

“These five compounds will be put under our core development and core commercialization. We will learn many lessons about biologics development from Amgen,” Hatanaka said.

Astellas currently develops biologics mainly through its acquisition Agensys Inc., which specializes in antibody research for oncology. An Astellas employee told PharmAsia News that the experience gained in the Amgen deal could help the Japanese company advance a biologic currently under development.

Astellas announced in May it would close Long Island, NY-based OSI Pharmaceuticals LLC and Redwood City, Calif.-based Perseid Therapeutics LLC , but would move some research operations back to Japan (Also see "Japan Pharma Annual Meeting Snapshot: Eisai, Dainippon, Shionogi, Ajinomoto, Astellas" - Scrip, 21 May, 2013.).

“We announced in May we are going to restructure our R&D and one of the purposes is to put enough resource and investment to lay strategic development,” Hatanaka said. The Amgen alliance “is already factored into that reform.”

[Editor’s note: This story was contributed by PharmAsia News, which provides in-depth coverage of Asia business and regulatory developments. Daniel Poppy is the publication’s Tokyo-based Japan bureau chief.]