Amgen, Inc. (AMGN), Teva Pharmaceutical Industries Ltd (ADR) (TEVA): The Neulasta Question

Xgeva and Prolia contain the same active ingredient and are used in the prevention of skeletal-related events in patients with bone metastases from cancer. Sales have soared from $41 million in 2010 to $1.2 billion in 2012. These drugs compete against Novartis AG‘s Zometa and a generic form of Zometa. In some quarters, Xgeva is perceived as more expensive and less effective in the treatment of bone complications in multiple myeloma patients. However, sales of Xgeva for the first two quarters of 2013 are up on the fourth quarter of 2012 on increased unit sales. Should Xgeva and Prolia maintain a quarterly sales growth of 4% (annualized at 17%), it would bring an additional $200 million in annual revenue. However, outside of the U.S. Xgeva is performing particularly well: It secured 40% of the French market since its launch in Q1 and is enjoying 33% quarter-on-quarter growth. It’s likely that the final sales figure for 2013 will be more than $1.4 billion.

Amgen has also reported positive phase 3 data for T-Vec, for the treatment of malignant melanoma and trebananib for ovarian cancer. Survival analysis data for T-Vec is expected in the first half of 2013 and for trebananib in the second half of 2014. The ovarian cancer market is expected to reach $1.4 billion in 2021 (up from $460 million in 2011), with the malignant melanoma market likely to be comparable. While it’s still in the early days for these treatments, solid progress is being made.

Expectations
Amgen stands to lose nearly $2 billion to $3 billion in annual sales once the Neulasta patent expires. Sales from other drugs in its pipeline will need to take up the slack, particularly with fast-growing Xgeva and Prolia facing generic competition. More difficult for the company could be managing the falling sales of Aranesp and Epogen, as efficacy was already under question prior to the dosage restrictions, even if the slippage is relatively modest. However, the patent extension on Enbrel gives a sound footing going forward and will be key in securing a consistent revenue stream, especially given the size of the rheumatoid arthritis market.

The article The Neulasta Question originally appeared on Fool.com and is written by Declan Fallon.

Declan Fallon has no position in any stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson. 

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