Analyst Says FDA Panel Lukewarm on Amgen Cancer Drug, As Company Deals With Split Personality

Published: May 01, 2015

Analyst Says FDA Panel Lukewarm on Amgen Cancer Drug, As Company Deals With Split Personality
April 30, 2015
By Riley McDermid, Breaking News Sr. Editor

Analysts are parsing through what a decision by a panel at the U.S. Food and Drug Administration (FDA) to approve the Biologics License Application (BLA) for talimogene laherparepvec monotherapy for Thousand Oaks, Calif.-based Amgen after a bumpier start earlier this month had its members asking for more data.

The dual acting cancer vaccine/viral therapy has a huge potential but “their comments make it clear that they do not think T-Vec is widely applicable in melanoma and that other new therapeutic options (e.g., anti-PD-1's, BRAF inhibitors, etc.) would be preferred treatment in most cases,” said Sanford Bernstein analyst Geoffrey Porges in a note to investors.

“We expect T-Vec to ultimately receive approval, but do not expect it to be a substantial source of revenues for Amgen, with global sales reaching [of around] $500 million in 2020,” said Porges. “We currently model limited revenues for T-Vec, with global sales of ~$210mm in 2016, increasing to ~$370mm in 2018 and then ~$480mm in 2020.”

The panel voted yesterday 22-1 in approval of T-Vec, a cancer therapy built out of a herpes simplex virus that has been engineered to produce granulocyte macrophage colony-stimulating factor (GM-CSF), a growth factor that stimulates stem cells to produce immune cells. As an immunotherapy, T-Vec is injected directly into tumors. There, it replicates inside the tumor cells, causing them to rupture and die. The cancer cell rupture releases tumor-derived particles along with GM-CSF, which stimulates the immune system to attack the cancer cells.

Analysts sat up and took notice when the FDA began asking questions about the therapy. Earlier this week the FDA raised a number of concerns, especially with regard to the conduct of the study, with investigator bias due to lack of blinding likely to favor the T-Vec arm, with the lack of any survival benefit and with the unclear evidence of systemic benefit.

“The agency noted that the high dropout rate in the control arm could reflect investigator bias and could also disadvantage the control arm relative to the T-Vec arm, skewing the results in favor of T-Vec,” said Porges. “The agency also noted that it was unclear how meaningful the primary endpoint (durable response rate) was, and pointed out that T-Vec was given as a local intra-lesional therapy, with limited evidence of a systemic effect or of response in un-injected lesions.”

Porges said that while the advisory committee members “generally felt” it had some effect, most “showed limited excitement” for T-Vec and felt it would not be appropriate for many patients.

Porges said that despite their limited excitement, the panel voted in such a way that will allow the therapy to come to market, but will leave the decision on how the drug should be used to the FDA’s largest regulatory body and to treating physicians. That ambiguity could be a boon to Amgen or a liability, but only time will tell, as the company struggles to come to terms with its multi-armed interests across a huge pipeline.

Amgen now consists in our opinion of two very different businesses held together by a common interest in profitable drug revenue and maintaining size and scale. Their legacy products contribute nearly 80 percent of revenue today, and 100 percent of their operating profit,” said Porges. “However, these products face an increasing array of branded and generic challengers and are likely to come under increasing price pressure in developed markets around the world.”

Porges said that Amgen also has “a handful of growth products,” which are based on “relatively recent” research investments and should soon be “bolstered” by the approvals for other breakthroughs such as evolocumab for lipid disorders, brodalumab for psoriasis and eventually romosozumab for osteoporosis. But those gains don’t come cheap, said Porges, and Amgen must be careful to watch the bottom line.

“The near term cost of developing and launching these potential blockbusters will be a brake on earnings growth through 2016, but should offer margin and growth upside after 2016, provided the launches are successful,” he wrote.

“The major risk and uncertainty facing the company now, is whether the market will be receptive to their new treatments, which could potentially be used by hundreds of thousands, if not millions, of patients,” said Porges. “We see modest growth for Amgen's net top line through our forecast period, which limits the stock's upside potential, but operating leverage the recent restructuring plan, should allow EPS growth to meet their ‘double digit average’ goal through 2018.”

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