Prolia, Xgeva fall short of analysts' Q3 sales forecasts

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Amgen's global sales, up 3% in the third quarter, met analyst estimates, but its new denosumab franchise reflected slower growth than expected.

In addition to announcing earnings today, the company said it took a $780 million charge to settle allegations relating to a previously disclosed federal investigation into its sales and marketing practices. Executives also spoke briefly about an R&D restructuring announced last week.

Excluding erythropoiesis-stimulating agents (ESAs), a product class which shrunk after strong warnings were issued this year, the biotech's sales were up 13%. Newer products grew 81%, and total revenue of $3.9 billion was roughly in line with analyst estimates. “I feel like we're well on track,” said CEO Kevin Sharer during an earnings call.

But total sales of the denosumab franchise, which consists of Prolia and Xgeva, fell 3% short of analyst consensus—$153 million vs. $158 million. Analysts have been saying the launches of the two products have been somewhat sluggish, and third-quarter sales (Prolia/Xgeva sales of $51 million/$102 million, respectively) did nothing to assuage the pessimism.

In April, Amgen's Robert Bradway, president and chief operating officer, had said he hoped to build the denosumab franchise to $3-$4 billion of worldwide sales by 2015.

“At the current denosumab sales run-rate, we maintain our below-guidance/consensus total denosumab sales estimate of $2.085B for 2015 (vs. AMGN's guidance of $3B-$4B and consensus of $2.93B),” said Jefferies analyst Eun Yang in an investor note issued this evening.

Prolia is approved for increasing bone mass in patients with osteoporosis and certain cancers. A higher dose of the denosumab injection, Xgeva is marketed to help prevent bone-related complications in some patients with advanced cancer.

Prolia revenue and new patient starts were soft in the US in July and August due to seasonal trends in the osteoporosis market, Bradway said, but have rebounded in September and so far in October. The FDA recently approved two new Prolia indications in the oncology setting, and the company is now focusing on smoothing out reimbursement issues.

Bradway also touted Xgeva's uptake among physicians: “In terms of use in urology clinics, twice as many use a bone-targeting agent as compared to the period prior to the launch of Xgeva.” The drug is being launched in the EU, and the FDA is set to rule on another indication—for use in delaying bone metastases in castrate-resistant prostate cancer—next April.

Turning to other products, loss leaders included the ESAs Epogen and Aranesp, which fell 27% and 4%, respectively, in response to recent label changes, proposed CMS actions and bundling. Earlier this year the FDA issued strong warnings for the drugs, which are used to treat anemia caused by chronic kidney disease, after clinical trials found an increased risk of death, serious adverse cardiovascular reactions and stroke in patients.

Sales of Amgen's biggest product, the biologic Enbrel, were flat, up just 1% to $925 million in the third quarter vs. $914 million in the third quarter of 2010, due to higher competition in the dermatology segment, the firm said. The leading plaque-psoriasis treatment, Enbrel lost six share points to competitors, which include Johnson & Johnson/Merck's Remicade, Abbott's Humira and a newer treatment, J&J's Stelara.

Amgen launched new DTC marketing this year to draw attention to autoimmune-related disease and the need to manage it. “Our ‘On Course with Phil' campaign featuring Phil Mickelson has received positive early feedback for building awareness of treatment options for patients with psoriatic arthritis,” said Bradway.

Among other highlights, sales of thyroid treatment Sensipar increased 18% to $206 million in the third quarter vs. $175 million in the third quarter of 2010; Vectibix for metastatic colorectal cancer rose 13% to $79 million; and Nplate for low blood-platelet counts grew 28% to $77 million.

Commenting on Amgen's previously announced headcount reduction of 380 people (about 2% of its workforce) in R&D, Amgen R&D chief Roger Perlmutter said the move was necessary to refocus R&D on efforts likely to have a near-term clinical impact and that the burden will fall most heavily on those scientists engaged in early discovery. He said it will be reflected in 2012.

The company also announced authorization of $10 billion for share buy-backs and said it reached an agreement in principle with the federal government to settlement an investigation into its sales and marketing. The settlement should happen in the next three to four months, said Sharer.

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