Positive Comments on Amgen's Arthritis Drug May Foretell Approval

U.S. drug regulators Wednesday issued generally positive comments about Amgen's(AMGN Quote - Cramer on AMGN - Stock Picks) experimental rheumatoid arthritis drug. The drug, Kineret, faces scrutiny tomorrow from an advisory panel of the Food and Drug Administration.

In documents released on the FDA Web site, drug reviewers found Kineret to be "helpful in reducing the signs and symptoms of rheumatoid arthritis as measured by the ACR20 response," which is a clinical measurement used to assess the reduction of pain and swelling in the joints of rheumatoid arthritis patients.

While the reviewer comments were generally positive, they were somewhat offset by unanswered questions about Kineret's overall safety, which could hurt the drug's approval chances.

Amgen is seeking FDA approval for Kineret as a new treatment for the disease. Thursday's FDA advisory panel will consider the biotech firm's application as well as the reviewer comments, in making a recommendation for, or against, approval. The final word belongs to the full FDA, which historically follows the panel's advice.

But even if Amgen succeeds in getting a positive recommendation for Kineret, the drug is not likely to be a big seller or have a major impact on the biotech firm's bottom line. Two other rheumatoid arthritis drugs -- Enbrel from Immunex(IMNX Quote - Cramer on IMNX - Stock Picks) and Remicade from Johnson & Johnson(JNJ Quote - Cramer on JNJ - Stock Picks) -- are much more effective and already on the market.

Most investors and Amgen watchers are more interested in the pending FDA decision on Aranesp, the company's highly anticipated successor to its blockbuster anemia drug, Epogen. A final decision on Aranesp seems to be stuck in some kind of regulatory limbo. The company and Wall Street were disappointed when the FDA failed to act on the drug in the first half of the year, as expected.

If anything, a thumbs-up at tomorrow's panel meeting for Kineret will be a morale booster for Amgen shareholders and biotech investors. The FDA has been a viper pit for biotech companies in recent months, with safety issues derailing all but a few new drug candidates.

Salomon Smith Barney biotech analyst Elise Wang says Kineret, if approved, could rack up about $250 million in peak annual sales for Amgen. That's not much, especially compared with Epogen, which along with European sales of Aranesp, posted second-quarter sales of $518 million.

"Although Kineret is a late-stage product for Amgen, it is relatively less important than Aranesp," Wang said in a research note. "We believe that a positive response from the [FDA advisory panel] will help to convey a more positive outlook on the FDA actions on new biotechnology products, Amgen's relationship with the FDA and, in general, may lift investor concerns on the timeline for product approvals." Wang rates Amgen a buy and her firm hasn't done underwriting for the company.

Amgen shares were down $1.55, or 2.5%, to $60.37 in Wednesday trading.