Highly evolved

By Neil Davey

How can Amgen continue its impressive revenue growth? By continuing on its course as an “R&D-driven” company, according to Willard Dere, Senior Vice President of Global Development and Chief Medical Officer.

On the face of it, Amgen wouldn’t appear to share many common genes with the majority of its peers in the pharmaceutical industry. It might have the same ancestors and it certainly shares the same hunting ground, but there are some notable differences. For starters, as a biotech it is, by its very nature, the next evolution of pharma firm. It is also, at 26 years old, a mere upstart when you compare it to the likes of Merck. But right now centuries of history count for nothing, as the Californian company also sets itself apart from the crowd in terms of its performance. With revenue rising from $5.52 billion in 2002 to $12.4 billion last year, Amgen is in impressive form, and deservedly found itself ranked ninth in BusinessWeek’s 2006 list of Top 50 best-performing companies.

But when Willard Dere, Amgen’s Senior Vice President of Global Development and Chief Medical Officer, discusses his company’s success, he is modest. He stresses the importance of key capital expenditures that have been made in areas such as its manufacturing facilities in Rhode Island, Puerto Rico and, most recently, Ireland. He also acknowledges the value of a series of acquisitions as a complement to internal R&D efforts, in particular small molecule company Tularik (now Amgen San Francisco), Abgenics (now Amgen Fremont), Avidia with its promising technology platform and, of course, Immunex. It is worth recalling that at the time of this acquisition in 2001, the Immunex deal represented the biggest in biotech history, at an eye-watering $11 billion. With analysts forecasting peak sales of $4 billion a year, it now seems an astute piece of business.

“Last but not least, it really does get down to people making this work,” Dere adds. “I have had the tremendous fortune of working with a bunch of really smart and devoted people who are very focused on doing what our real mission is – which is to help patients in need and have a very positive impact on public health in society. I think as long as we as a company keep the big picture of that mission in perspective and keep that as our focus, we have a shot at continuing to be very successful.” This may seem modest. But then ultimately Amgen isn’t really so different from its pharma contemporaries. And it is certainly still subject to the same problems that are rattling the industry at present. No business in this sector is strong enough – or stupid enough – to suggest that it is immune to the present pressures.

Regulatory issues, for instance, are omnipresent. This only compounds the problem of the time-consuming and costly nature of bringing a drug to market. And then there is the matter of blockbuster drugs going off-patent in the near future – with no blockbusters to take their place. These are common problems in the industry and, while Amgen may have made a name for itself as a success story, it too feels the bite.

For a large proportion of its history, Amgen has been focused on only two major categories, cancer care and anemia. And while it racks up billions in sales in these areas, it has been highlighted that the biotech firm hasn’t introduced a big seller in a new category for 15 years. Millions of dollars were spent on drugs for diseases such as Lou Gehrig’s and Parkinson’s only for them to prove ineffective, whilst a prostate cancer drug was rejected by regulators. Most recently, 2000 saw the firm abandon trials for fat-fighting hormone Leptin. And with a high percentage of its revenue going off-patent within the next product cycle, there is no time for Amgen to be complacent.

An R&D driven company

In a bold statement of intent, Amgen recently announced that R&D spending would rise 37 percent this year, with the biotech overall forking out some $3.3 billion on research in 2006, around a quarter of its revenue. This commitment will encompass efforts in a host of fields including obesity, arthritis, lupus and diabetes, and there are already some 40 drugs in preclinical or patient trials – almost double the number the company undertook during the whole of the 90s. Amgen is on the hunt for major and moderate unmet medical needs and it is aiming at them with innovative targets.

“I would say – and it certainly is our intent – that we are an R&D-driven company and we have developed a great pipeline with a number of very promising molecules that we hope can be, again, more innovative medicines,” emphasizes Dere. “There is virtually nothing in our pipeline that is a ‘me too’. Now, that poses some risk, because there’s a great deal of comfort going with a ‘me too’ molecule that might be moderate size, or that you can maybe turn into a blockbuster through sheer marketing muscle. Our approach is a different one, and it is “let’s go after the unmet medical needs, let’s use a novel target, and then we have a chance, we have a better chance of really having something that impacts on human disease and can change clinical practice.” But it’s a bet. And not all bets turn out.”

And nobody can accuse Amgen of not putting its money where its mouth is in light of its R&D investment. “We’re increasing our spending because we have a lot of things to work on, tons of scientific targets, and very importantly, we need to ramp up our clinical research capabilities globally in order to handle all of this research productivity,” Dere explains. “It’s a matter of growing so that we can at steady state, where we think our research capabilities are going to be, handle all of the new molecules that are coming into our pipeline.”

As an example of this surge in operations, Dere highlights that this year Amgen has started nine studies involving 200 or more sites in one protocol compared to last year when they did not start a single one. In the clinical research arena Dere estimates that the company is now in 37 different countries compared to around 24 in 2005. In addition, he also emphasizes that the biotech is entering a phase in which it is launching new molecules – last year Kepivance, this year Vectibix. And these new molecules require further study for additional indications and to answer clinical practice questions in the medical affairs arena.

“This type of clinical research activity will continue to grow, so we will need to grow as an organization in order to handle this work,” he adds. “And fortunately Kevin [Sharer, Amgen CEO] and his senior team and the board of directors have felt it is the right thing to do to continue to invest in R&D.”

Innovative medicines

This focus doesn’t come at the expense of sales and marketing, however. Indeed, one of the reasons attributed to Amgen’s present strong performance in the marketplace has been its deft touch at simultaneously developing promising new treatments whilst successfully boosting sales of existing drugs. The key to finding the right balance between marketing and R&D is, Dere suggests, in the clinical and commercial collaboration.

“It’s that single purpose of making sure that we benefit patients and provide that information to patients, or in the setting of, say, evidence-based medicine, that appropriate evidence to patients, to prescribers and other stakeholders, to highlight the value of the marketed medicine,” he continues. “To provide that commitment to evidence, you actually have to do studies. And studies provide data that we hope becomes information and ultimately knowledge. And if you just look at our marketed therapies after that initial indication, we continue to study the medicine a lot.”

Aranesp emerges as an excellent point of reference in this respect. Amgen has embarked on two huge clinical outcome studies – a 4000 patient study in patients who have chronic kidney disease to see whether Aranesp improves clinical outcomes, particularly cardiovascular disease, and another which targets over 3000 patients to assess the effect of Aranesp in CHF or congestive heart failure patients who have anemia. “That’s just like one molecule, one therapy, and the example of a commitment to continuing to study it.”

And when it comes to Enbrel’s recent recognition as “Brand of the Year” by Med Ad News there it is this commitment, along with a focus on unmet medical needs, that Dere again focuses on. “We have continued to study Enbrel quite extensively. I think we would probably have the best prospective cohort analyses of patients on Enbrel to assess patient safety. The scientific community believes that we truly understand the benefit/risk profile of Enbrel as a chronic therapy. And […] our commitment to study innovative medicines once they are on the marketplace is in an important part of its success.”

Still, all the marketing muscle in the world can’t necessarily turn up a new blockbuster. Amgen’s Epogen is widely recognized as the first biotech blockbuster drug. But many industry experts are now forecasting that such blockbusters are going the way of the dinosaurs. One by one they are gradually going off patent, with fewer and fewer innovative blockbusters hitting the market to fill the gap. The ‘blockbuster era’ is coming to a close, according to a growing number of observers. The ‘nichebuster era’ lies ahead, they say, where personalized medicine and more specific therapies will change the face of pharma.

Dere remains uncommitted when it comes to how personalized medicine will influence the industry (“I love it from the scientific perspective and it’s fun to give lectures on…I think time will tell whether it is indeed true”), but whatever the future holds for pharma, whether the ‘blockbuster’ reign continues or the ‘nichebuster’ era begins, he fancies Amgen will have a significant place in it. “I like our chances of succeeding because I think we focus on the right stuff. And by going after novel targets, novel enzyme and novel receptor, if anyone is going to differentiate and to provide added value to patients, I think we have a great shot at it.”

And ultimately he remains clear on the secrets to success for Genentech as it follows pharma’s windy road ahead. “Our responsibility is for producing innovative medicines,” Dere concludes. “The only way you can do that is invest in R&D, have your discovery scientists focus on that which you think can have the biggest impact and the most innovative and then make sure that you develop these molecules in the critical arena as efficiently and quickly as possible. We have been investing very heavily in R&D and we have great confidence in how our pipeline looks – early stage, mid stage, late stage. Anything can happen. This is a risky business so there are no guarantees for anything. But if I were a betting man I would like our chances.”

Highly evolved

How can Amgen continue its impressive revenue growth? Willard Dere, SVP of Global Development and Chief Medical Officer, explains.

“It certainly is our intent that we are an R&D-driven company”

“There is virtually nothing in our pipeline that is a ‘me too’”

“This is a risky business so there are no guarantees for anything”

“Our commitment to study innovative medicines once they are on the marketplace is in an important part of Enbrel’s success”