Amgen faces tough one-two blow as competition mounts for Repatha and Sensipar

It’s been a tough few days for the world’s largest biotech company. Last Thursday, the FDA handed down its first approvals for generic versions of Amgen’s Sensipar, the company’s $1.7-billion-a-year calcium reducer. Then, at a cardiology meeting over the weekend, Amgen’s rivals in the PCSK9 cholesterol-lowering market, Sanofi and Regeneron, rolled out data showing their drug, Praluent, reduces death risks by 15%—and almost double that in high-risk patients.

Plus, the partners are working to lower Praluent's price to open up access to more patients. That would be a direct blow to Amgen’s PCSK9 drug, Repatha.

So Amgen will be forced to fight back with aggressive new marketing plans to help it hold onto its market share for both embattled brands, right? Not necessarily, analysts say. Amgen’s priority now will be protecting Repatha’s leading position in the PCSK9 market, which has been challenging to crack, to say the least. But the threat from Regeneron isn’t quite as clear cut as it may seem, despite the positive trial results, many analysts have said.

Given that Amgen holds an estimated 60% of the market for PCSK9 drugs, Regeneron and Sanofi “may be aggressive with rebating and doesn't have anything to lose” by offering insurers incentives to favor their Praluent over Amgen’s Repatha, said Jefferies analyst Michael Yee in a note to investors. On the other hand, Amgen bears could argue that the mortality benefits seen in the Sanofi/Regeneron trial “are positive for the whole PCSK9 class and confirm the clear benefit of treatment,” he said.

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The only certainty in all of this is that any benefit to Sanofi and Regeneron won’t happen over night. Yee reported that the duo will submit an application to the FDA for a label update midyear but that they would not be likely to get it until early 2019. Amgen already earned the right to update its label for Repatha, which in December became the first PCSK9 drug to boast the ability to reduce the risk of cardiovascular events.

The trial Amgen used to nab that label update didn’t show a significant reduction in the risk of death from any cause, as Praluent did, however—and that’s where Sanofi and Regeneron could differentiate themselves in negotiations with payers, analysts pointed out. It wasn’t a huge benefit: 58 deaths would be avoided for every 9,462 patients treated with Praluent, explained Leerink analyst Geoffrey Porges in a note to investors. But coupled with the offer of discounts to payers, the Sanofi/Regeneron mortality benefit could be meaningful, Porges added.

Sanofi has big plans for its Praluent marketing effort. While announcing the mortality data, it simultaneously said it would bring the product’s price “in alignment with” estimates from the U.S. drug-price watchdog Institute for Clinical and Economic Review, which says the drug is worth $4,460 to $7,975 for some patients.

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“Seizing on this aspect of clinical differentiation from Amgen’s Repatha,” Porges wrote, Sanofi and Regeneron “have indicated that they will offer additional rebates for Praluent that will bring the net annual cost to payers into the $4,500-8,000 range, compared to the current list price of $14,500 and our estimated current net price to the manufacturers of ~$8,000/year, for the high risk patients.” As a result, “we expect significant share recovery for Praluent,” he said.

What’s more, Amgen’s experience with positive post-marketing trial results does show a potential for a big impact, said Josh Schimmer, an analyst for Evercore ISI. In a note to investors over the weekend, he showed “a spike in new prescriptions of Repatha” after December, when Amgen updated the label with the new data.

Leerink’s Porges is assuming Amgen will match Sanofi/Regeneron on price, which would bring down the value per patient for the entire PCSK9 class. That being said, “there should be some acceleration in the current very slow pace of new starts in the class,” he wrote.

Indeed, sales of Repatha and Praluent have a long way to go to meet Wall Street’s high expectations. They came in at $225 million and $134 million respectively for 2017. Analysts are predicting Repatha sales of $1.8 billion and Praluent sales of $826 million in 2022.

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If Amgen can pull off such a big lead in the PCSK9 market, that would go a long way towards easing investors’ concerns about its growth prospects. In February, the biotech giant reported fourth-quarter earnings of $2.1 billion, which equated to a per-share figure that missed expectations by a whopping 15 cents, on disappointing revenues of $5.8 billion.

The problem was more than just sluggish sales of Repatha. Sensipar, which is used to treat hyperparathyroidism, also missed estimates, pulling in sales of $413 million in the fourth quarter. Back then, though, there was at least some hope that Amgen would be able to hold off generic competitors to Sensipar. It tried to block generics makers in December by suing the FDA for its denial to grant the company a six-month patent extension on the product.

Alas, that effort failed. In late February, a U.S. district judge ruled that the FDA was reasonable in denying the patent extension. Now Amgen is bracing for the competition. Generics makers Cipla and Aurobindo Pharma won the first two approvals for Sensipar generics. Amgen has filed an appeal and requested an injunction to delay the market entry of the inexpensive rivals.