Amgen Names GSK as Denosumab's International Marketing Partner, Reveals 1.6% Y/Y Fall in Q2 Sales

Amgen Signs Up GSK as International Marketing Partner for Denosumab

Leading U.S. biotech Amgen has unveiled GlaxoSmithKline (GSK; U.K.) as its marketing partner for denosumab in the area of post-menopausal osteoporosis (PMO). The alliance—which will generate some US$120 million for Amgen through an upfront payment and near-term milestones—will see GSK register and market denosumab in this indication in several markets around the world, including Europe, Australia, New Zealand, and Mexico. Denosumab has yet to be approved for PMO in any of these markets, and is currently awaiting U.S. FDA approval in the United States, where Amgen intends to sell it under the brand name Prolia (see United States: 1 July 2009: Amgen to Appear Before FDA Committee to Discuss Denosumab's Approval for Osteoporosis). Amgen will retain U.S. and Canadian marketing rights to denosumab in both PMO and all oncology indications, and has the option of expanding its marketing role in Europe and specific emerging markets at a later date. GSK and Amgen will split all profits from the alliance after accounting for expenses, which GSK will pay alone in emerging markets.

Return to Stability in Q2 Sales

Amgen's group revenues and product sales continued to decline in the second quarter, but to nowhere near the same extent witnessed during the first three months of the year (see United States: 24 April 2009: Amgen Lowers 2009 Revenue Forecasts as Sales Drop 8% Y/Y in Q1). Net revenues contracted by 1.4% year-on-year (y/y) to US$3.7 billion, while product sales were down by 1.6% y/y at US$3.6 billion. With denosumab now awaiting regulatory approval in major markets, spending on drug research and development (R&D) fell by 14.3% y/y to stand at US$693 million euro. Amgen's other operating costs were kept in check as well, leaving the firm with room for a 2.5% y/y rise to US$1.5 billion in operating profit, calculated by IHS Global Insight as product sales minus cost of sales, R&D, and sales, general, and administrative (SG&A) costs. Net income, meanwhile, saw a stellar 40.1% y/y leap to US$1.3 billion, and was boosted in part by a US$115-million income-tax benefit as a result of resolving non-routine transfer pricing issues with the U.S. Inland Revenue Service.

Anaemia drug Aranesp (darbepoietin alpha) continued to suffer double-digit losses to its sales during the second quarter, both in the United States and in other markets. Its U.S. sales drop, at -20.8% y/y, was slightly less intense than in the previous quarter. Slower demand for Aranesp and other drugs within the same class has plagued Amgen for two years now, particularly since the FDA's labelling change on erythropoietins. Unlike the first quarter, the three months to end-June 2009 saw Amgen's U.S. sales perform better than its international turnover, with a slower downturn recorded domestically than abroad.

Colorectal cancer drug Vectibix (panitumumab) saw its U.S. sales eroded by a further 4% y/y in light of its reported links to poor survival times. Internationally, however, Vectibix continues to make inroads thanks to its 2007 European approval for KRAS wild-type colorectal cancer; international sales of Vectibix more than tripled, and amounted to US$32 million.

Outlook and Implications

Amgen has retained its full-year revenue guidance of US$14.4-14.8 billion, although it now expects revenues to reach "the upper end" of this range. Guidance on adjusted earnings per share, however, has been raised to US$4.80-4.95 from the previous US$4.55-4.75. Full-year capital expenditures are seen at under US$600 million, compared with the US$650 million foreseen earlier.