Amgen ramps up Otezla expansion effort with positive data in mild psoriasis

Ever since Amgen bought Celgene’s psoriasis drug Otezla for an eye-popping $13.4 billion last summer, the company has been promising investors it would find enough new markets for the drug to justify the investment.

Now, it’s taking a step in that direction with a plan to apply to the FDA for a label expansion into mild to moderate plaque psoriasis. The filing comes after data were released from a phase 3 trial showing that patients taking Otezla experienced a significant improvement in their symptoms over those on a placebo.

Otezla, which brought in better-than-expected sales of $479 million in the first quarter, is currently approved to treat severe plaque psoriasis, psoriatic arthritis and oral ulcers from Behçet's disease. But ever since Amgen laid out more for Otezla than most analysts thought it was worth at the time, the company has been under pressure to show it works in the potentially much larger market of patients with milder forms of psoriasis.

After 16 weeks on the drug, patients in the trial showed statistically significant responses to the drug, meaning their skin was clear or almost clear, according to a statement from the company. They also showed improvements of 75% or more in the surface area of skin affected by the disease as well as the severity of symptoms. Amgen will provide more details about the results at an upcoming medical meeting.

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When the news first emerged last year that Celgene would have to sell off Otezla to resolve antitrust concerns raised during its $74 billion purchase by Bristol Myers Squibb, analysts thought the drug was worth somewhere between $8 billion and $10 billion. That was based on the consensus estimate that Otezla would bring in about $2 billion in sales this year.

Amgen’s executives were considerably more optimistic, however. They estimated the drug’s sales could grow by double digits every year for the next five years, reaching the break-even point in 2024.

New approvals will be key to Amgen’s ability to make good on that prediction. In addition to pursuing the mild to moderate psoriasis market, the company is testing Otezla in pediatric psoriasis and other indications.

Now, Otezla is also a contender in the race to find cures for the novel coronavirus. During the company’s first-quarter earnings announcement last week, Amgen disclosed a plan to test the drug’s effectiveness in preventing respiratory distress from COVID-19. Dave Reese, head of R&D at Amgen, told analysts the drug would be investigated in a range of settings, including in patients who have been hospitalized but who haven’t advanced to intensive care.

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Otezla has been a key asset for Amgen as biosimilar competition continues to erode sales of Neulasta, Sensipar and other flagship drugs. In fact, Otezla’s 23% year-over-year sales growth in the first quarter helped drive total revenues up 11% to $6.2 billion. The company reaffirmed its expectations for full-year revenues between $25 billion and $25.6 billion and non-GAAP earnings per share between $14.85 and $15.60.

Analysts are expecting more from Amgen’s pipeline beyond the Otezla label expansions, however. The company plans to report highly anticipated data from a pivotal trial of its KRAS drug, AMG 510, in non-small cell lung cancer (NSCLC) in the second half of this year. The Big Biotech had to pause a trial testing a combination of AMG 510 with a PD-1 inhibitor in NSCLC due to enrollment challenges caused by COVID-19, but the company still expects to release data from the trial in late 2020 or early 2021.