Amgen CEO Robert Bradway kicked off the company’s third-quarter earnings call by declaring that its new migraine drug, Aimovig, “is shaping up to be one of the industry's most successful recent launches.” Then the company’s chief of global commercial operations, Murdo Gordon, ramped up the enthusiastic language even more, calling Aimovig “one of the strongest launches that I've seen in my experience in this industry.”
Analysts weren’t quite ready to share Amgen’s Aimovig-fueled euphoria, however. They spent much of the call peppering Bradway, Gordon and their colleagues with questions about everything from how willing insurers are to cover the migraine med to how many patients are actually getting billed rather than benefitting from the giveaway program Amgen put in place to bring on new scripts.
They’re all good questions, to be sure. Aimovig, approved in May and launched for $6,900 a year, brought in $22 million during the quarter. It was the first in a new and highly competitive class of drugs called CGRP inhibitors, and it’s expected to be a $1-billion-a-year blockbuster by 2022.
But Aimovig, which Amgen co-markets with Novartis, already faces competition from Eli Lilly and Teva—and all three contenders are hitting the market amid loud complaints from payers and politicians about high drug prices, not to mention proposed policy changes that could dampen sales of Amgen's older drugs.
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That may be why the blustery talk from Amgen’s executives was tempered by clear indications that they expect the Aimovig growth curve to hit a few bumps. During its last earnings release in July, they reported a large “bolus” of patients were waiting in the wings to get Aimovig, but they didn’t offer many details. Then, during Tuesday night’s earnings call, Gordon said “there will be a slight change in the slope of the uptake curve” as Amgen works through that pile.
Gordon said more than 100,000 patients had started Aimovig since its launch, a number that RBC analyst Kennen MacKay called “really spectacular.” But he wondered, how many of the patients who were getting it for free have been transitioned to insurance reimbursement?
Gordon largely deflected the question, saying only that “we're closing the gap on the ratio quite quickly.”
When another analyst asked whether Amgen is being forced to offer discounts or rebates to payers in return for positive formulary placement, Bradway admitted “you will see some gross to net in the form of rebates. Where we end up with that? It's just very early to tell, but we want to make sure that patients have access to Aimovig.”
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No doubt the competition in the CGRP market is driving much of that discounting. Teva picked up FDA approval for its CGRP drug, Ajovy, in September, as did Lilly for its entry, Emgality. Leerink Partners analyst Geoffrey Porges predicts the total market for CGRP migraine drugs will be $6.9 billion in 2025 and that Amgen and Novartis will lead the pack.
The two companies are working hard to get and maintain an early lead for Aimovig. Just last week, they launched an aggressive TV, print and social media marketing campaign to bring attention to the new drug.
Analysts are counting on Amgen newcomers like Aimovig to boost the company’s growth as its older franchises face biosimilar competition. During the third quarter, sales of Enbrel and Neulasta came in better than expected, at $1.3 billion and $1.1 billion respectively. But Enbrel was down 5% year-over-year and Neulasta declined 6%. Pricing pressure on Neulasta both in the U.S. and overseas prompted Bernstein analyst Ronny Gal to lower his sales forecasts for the product going forward “because of expectations of multiple biosimilars,” he said in a note to investors.
Policy changes affecting Medicare aren’t helping. In August, the Centers for Medicare and Medicaid Services authorized Medicare Part B plans to negotiate drug prices and put in place “step therapy” for new patients, forcing them to try inexpensive biosimilars before branded drugs—a change that Gal predicted would hurt Amgen. That’s because the first Neulasta biosimilar, from Mylan, won FDA approval in June.
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When asked during the earnings call how the Medicare changes would affect Neulasta, Gordon said it was too early to tell. But there may be more changes coming to Medicare: President Donald Trump is advancing an “international pricing index” that would force drug companies to accept Medicare reimbursement rates on drugs that are comparable to lower prices they charge overseas—an idea that Bradway was asked to comment on during the call.
“We think there are some things that can be done to eliminate unnecessary cost and friction in the system and make sure the patients who need innovative therapies can get them,” he replied, “and we will continue to advance those ideas in our discussions in Washington.”
All the talk about drug pricing and the like drew attention away from an otherwise positive quarter for Amgen. The company reported that its third-quarter revenues grew 2% year-over-year to $5.9 billion, beating the consensus estimate of $5.7 billion. Earnings per share minus one-time items rose nearly 13% to $3.69, surpassing analysts’ expectations of $3.42.