A potential new use for a drug developed by Amgen Inc. to strengthen the bones of cancer patients is now fortifying the company’s prospects.
After a mixed year for Amgen’s flagship drugs, such as anti-anemia therapy Epogen and infection fighter Neulasta, the Thousand Oaks biotech firm hopes to rebound in 2012 in part on the strength of bone drug Xgeva, analysts said.
Shares recently hit a 52-week high after the U.S. Food and Drug Administration announced it would consider approving a new use for Xgeva, which was introduced in late 2010 to prevent fractures in patients whose cancer had spread to the bones. If approved, which could happen as soon as April, analysts believe the company could see significant revenue growth in the drug line.
“Any development on Xgeva … is very important,” said Judson Clark, an analyst with Edward Jones & Co. in Des Peres, Mo. “Amgen doesn’t have a ton of things waiting in the wings and this is one of the higher-profile drugs that’s expected to drive the company’s growth.”
As the company shifts its focus from new drug development to later stage research, Xgeva has become one of the few remaining growth drivers for the company, which is the largest biotech firm in the world and one of the L.A. area’s largest publicly traded companies. And the drug proved to be a bright spot in an otherwise down year for Amgen.
Income through the first three quarters of last year was $2.7 billion, down 24 percent from the first three quarters of 2010. The company is expected to announce fourth quarter earnings later this month and did not return calls requesting comment.
Geoff Meacham, an analyst with JP Morgan Securities LLC in New York, expects fourth quarter revenue declines in all of Amgen’s drug lines except Xgeva, which he called in a research report “the key franchise to watch.”
“We believe (Xgeva) will rapidly approach blockbuster status,” he said.
Xgeva’s generic name is denosumab and is marketed as an osteoporosis treatment as Prolia.
The company plans to meet next month with the FDA to discuss the use of Xgeva to help prevent the spread of prostate cancer to patients’ bones. If approved, it would become the first drug used for that purpose.
The government is expected to make a final decision by April 26.
News of the FDA meeting sent shares as high as $65.19 last week, the highest price in more than three years. Shares closed Jan. 4 at $63.76.
Amgen’s stock has also been bolstered by a series of recent shareholder-friendly moves. The company announced a $5 billion stock buyback effort and began paying a quarterly dividend. Last month, the company said it would increase its dividend by 29 percent to 36 cents a share.
“Amgen has been progressive with returning cash to shareholders … which should broaden the investor base for the company and focus on areas of the highest return to shareholders,” Meacham said.
