At the J.P. Morgan Healthcare Conference in January—back when few could predict the looming destruction of COVID-19—Amgen CEO Bob Bradway vowed the company would find new ways to make its $13.4 billion acquisition of Celgene’s psoriasis drug Otezla worth the investment.
Now, COVID-19 is presenting one such opportunity.
During Amgen’s first-quarter earnings announcement, the company disclosed that the drug, which blocks an enzyme called PDE4, will enter a clinical trial soon to study its effectiveness in preventing respiratory distress from COVID-19. It joins a large and growing list of anti-inflammatories that have entered clinical trials for the virus. They include Roche's Actemra, Sanofi and Regeneron's Kevzara and Novartis' Ilaris.
“There will be utility in studying Otezla in a variety of settings ranging from … hospitalized patients, but those that are not yet in the ICU” to those with more serious symptoms, Dave Reese, head of R&D at Amgen, said on a conference call with analysts. The company is in “active discussions” and has already committed to some trials. “The one real guiding principle we have here is that we want these to be rigorous studies to provide the highest quality answers,” he added.
Even before those discussions started, Otezla was enjoying a good quarter. Sales in the first quarter rose 23% to $479 million, beating the consensus estimate of $459 million. That helped drive Amgen’s first-quarter revenues up 11% year over year to $6.2 billion, beating the consensus estimate of $6 billion. Earnings per share came in at $4.17. Analysts had expected $3.78 on average.
Amgen bought Otezla last August, when the Federal Trade Commission required Celgene to cast off the asset in order to close its $74 billion merger with Bristol Myers Squibb. At the time, analysts expected the drug to peak at $2.5 billion a year in sales, which would make it possible for Amgen to recoup the investment by 2024.
Otezla is a pill, an attribute that Amgen’s executives believe may be a key selling point as it continues to build the markets in which it is currently approved.
“We’re listening to what our customers are telling us and we definitely think that we’ve got a little bit of buffer supporting Otezla right now because it is a convenient oral option,” Murdo Gordon, Amgen's commercial chief, said during the call. “I think it’s the ideal kind of product at a time like this, where a lot of patients are concerned about visiting a healthcare professional.”
Aside from launching the new COVID-19 trials, Amgen is testing Otezla in mild to moderate psoriasis, with data expected this quarter. It also has trials underway in scalp psoriasis, juvenile idiopathic psoriasis and more. In fact, the company’s overall R&D spend was up 8% this quarter to $927 million due to Otezla. The company also attributed its 12% hike in sales and administrative expenses to the drug, which has been heavily advertised.
Otezla marks Amgen’s second effort directed at COVID-19. Earlier this month, it unveiled a partnership with Adaptive Biotechnologies aimed at discovering and developing fully human antibodies that can neutralize SARS-CoV-2, the virus that causes COVID-19.
With Otezla on track to meet the high expectations Amgen set when it bought the drug, the company is already facing a question that has come up many times in the past: Will there be more acquisitions to come?
When an analyst posed that question to Bradway during the first-quarter earnings call, the CEO said he’d continue to look for “attractive, innovative assets,” though he made no promises that there would be any big acquisitions this year. “The trick is always to be able to license or acquire molecules at a price that [offers] return for our shareholders, and we're pretty comprehensive in the way we assess the marketplace,” Bradway said.