Amgen Proves It Has the Superior Drug

After-hours trading skyrocketed as the drug company released positive clinical results for denosumab.
Publish date:

Updated from Tuesday, July 7


(AMGN) - Get Report

said a pivotal clinical trial showed its experimental bone drug denosumab was superior to a competing drug from


(NVS) - Get Report

in preventing fractures and other bone-related problems in patients with breast cancer -- positive results that sent the company's shares sharply higher in after-hours trading.

Denosumab is the most important new drug to come out of Amgen's research labs in years and a key to the company's future growth as sales of its flagship anemia drugs, Epogen and Aranesp, have flagged in recent years.

The Food and Drug Administration is currently reviewing denosumab as a treatment for osteoporosis, with an approval decision expected later this year.

The breast cancer study is the first of several pivotal studies being conducted by Amgen to determine whether denosumab's ability to reverse bone loss might also help cancer patients who often suffer fractures when tumors grow, or metastasize, into bones.

Analysts and investors who follow Amgen were already expecting denosumab to be a blockbuster (read: billion dollar-plus revenue generator) for the company as an osteoporosis treatment. The cancer market could tack on another billion dollars in denosumab sales.

Amgen shares closed Tuesday at $52.33 ahead of the denosumab announcement, but advanced 14% to $59.37 in after-hours trading.

In the phase III study enrolling more than 2,000 breast cancer patients, denosumab was able to reduce the risk of developing an on-study skeletal-related event by 18%, compared with Novartis' Zometa.

A skeletal-related event was defined as a bone fracture, radiation to bone, surgery to bone or spinal cord compression.

When calculating the risk of developing the first and all subsequent skeletal-related events, denosumab was again superior to Zometa, with a relative risk reduction of 23%, according to Amgen.

Both results were statistical significant, the company added.

The fact that denosumab demonstrated superiority over Zometa was an upside surprise for many investors, who, generally speaking, were expecting the two drugs to show equivalent efficacy.

The superiority observed in the breast cancer trial also bodes well for the success of the ongoing denosumab cancer studies. The most important and potentially lucrative of these trials involves prostate cancer patients, who have a very high rate of bone metastases.

With these results, denosumab could become the dominant drug to treat bone-related cancer complications, totally supplanting Zometa, said JPMorgan biotech analyst Geoff Meacham, in a note to clients Tuesday night.

Meacham upped his 2012 denosumab sales estimate to $3.5 billion from $2.4 billion. He has an overweight rating on the stock with a $70 price target.

On the safety side, Amgen said the incidence of osteonecrosis, or death of bone, in the jaw was seen "infrequently" in patients treated with denosumab and Zometa, with no statistically significant differences between the two treatment arms.

Bone drugs like Zometa are known to cause osteonecrosis of the jaw, or ONJ, which has grown into a significant risk factor. A link between denosumab and ONJ could be a potential negative but won't likely be commercially damaging as long as the rates between the two drugs are reasonably close.

The rate of infections, overall survival and time to cancer progression also were similar between patients treated with denosumab and those treated with Zometa.

In an email note to clients Tuesday night, Deutsche Bank analyst Mark Schoenebaum called the breast cancer results a "best case outcome," with denosumab superior to Zometa and no apparent increase in ONJ. Based on these results, he said, Amgen's stock price should trade into the $60s.

Adam Feuerstein writes regularly for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;

click here

to send him an email.