Immunex Offers Data That Enbrel Has Broader Potential

Immunex IMNX released scientific data Sunday that bolsters its plans to expand the use of its rheumatoid arthritis drug, Enbrel.

Attending the annual meeting of the American College of Rheumatology this week, the Seattle-based biopharmaceutical firm is presenting data that show Enbrel to be effective in psoriatic arthritis as well as in ankylosing spondylitis, a type of arthritis that affects the spine and is especially prevalent among teenagers and young adults.

Launched three years ago, Enbrel has quickly become one of biotech's biggest drugs -- sales should reach $750 million this year -- despite well-publicized supply constraints that have restricted growth. But in the past couple of months, Immunex has taken steps to convince Wall Street that it has solved its manufacturing shortfalls. The company is now forecasting Enbrel sales to reach a range of $900 million to $1.3 billion next year. And if the company can get Food and Drug Administration approval to expand the drug's use starting in 2002, sales potentially could double.

In July, Immunex asked the FDA to approve Enbrel for the treatment of psoriatic arthritis, and in September, regulators granted the application "priority review," which means a decision could be made in the beginning of next year. Psoriatic arthritis is a chronic inflammatory disease that causes both pain and swelling of the joints as well as irritating, scaly red patches on the skin.

The data Immunex is presenting at the ACR conference will be used by the FDA to make its decision. In a 24-week study of 205 patients with psoriatic arthritis, 59% of patients receiving Enbrel showed significant improvements in their arthritislike symptoms, compared with 15% of patients receiving placebo. The study also showed that Enbrel patients demonstrated a greater improvement in their skin lesions than did placebo patients.

Goldman Sachs analyst May-Kin Ho says that an Enbrel approval for psoriatic arthritis would open an opportunity to target another 250,000 U.S. patients who suffer from the disease -- representing $2 billion in revenue potential. There are already more than 1 million Americans who suffer from rheumatoid arthritis. Ho rates Immunex a market outperform, and her firm hasn't done banking for the company.

In a midstage test of Enbrel for ankylosing spondylitis involving 40 patients, 80% of patients receiving Enbrel achieved a clinical response, compared with 30% of patients receiving placebo. A clinical response was defined as a greater than 20% improvement in three of five outcome measures, including duration of morning stiffness, nighttime spinal pain and swollen joints.

Immunex has already begun a late-stage test of Enbrel for ankylosing spondylitis, which will be used to seek FDA approval to treat the disease. The company also intends to seek FDA approval for use in psoriasis.

Immunex needs to expand the use of Enbrel into as many different inflammatory diseases as it can because serious competition is on the way. Abbott Laboratories ABT is developing its own rheumatoid arthritis drug, dubbed D2E7, which has the convenience of being administered once every two weeks. Enbrel, by comparison, needs to be taken twice a week.

Abbott missed the deadline to present data from its late-stage D2E7 tests at this week's ACR conference but will, instead, discuss previously released data. If all goes well, Abbott could file D2E7 with the FDA in the middle of 2002 and get the drug on the market one year later.

British biotech firm Celltech CLL, with partner Pharmacia PHA, is also developing a second-generation rheumatoid arthritis drug dubbed CDP870. The companies are expected to offer an update to previously released midstage test results at the conference this week. Late-stage tests are expected to start early next year, so any FDA filing wouldn't occur until the middle of 2003.

The fact that Immunex spends so much time and energy on Enbrel also highlights the painful truth that the company doesn't have much else in the drug development cupboard. Immunex, like Biogen BGEN, is a classic, one-drug biotech firm. Last March, one of the company's most promising young drug candidates, Nuvance, proved ineffective in two early clinical trials.

And Immunex isn't cheap. At its closing price of $24.85 on Friday, the company trades at almost 83 times expected 2002 earnings of 30 cents a share.

But Immunex executives are on record predicting that Enbrel revenue could reach as high as $5 billion a year if the drug's expansion plans play out successfully. If that happens, investors may not worry too much about the company's lack of a second hit drug.