Amgen’s Newest Drug Takes Lead Over Rival’s : Medicine: Observers say it’s too early to tell whether the firm will stay ahead of Immunex with sales of its infection-fighting product.
One drug is a clear liquid, shipped in refrigerated trucks, then kept in cold storage at hospitals until it’s injected into patients. Drug No. 2 leaves the laboratory as a powder packed in vials and is later mixed with sterile water at hospitals, then kept cool until used. The first biotechnology drug is G-CSF, made by Amgen Inc., the second GM-CSF, a rival product from Immunex Corp.
Each drug triggers production of white blood cells, one of the body’s key infection fighters, and each company thinks it has the latest biotechnology wonder drug. Certainly the science is impressive: in just three months white blood cell drugs have been used to fight infections in cancer chemotherapy patients, bone marrow transplants and AIDS patients. In five years, analysts say, these drugs will grow to a $600-million-a-year business, maybe more.
Amgen, based in Thousand Oaks, was the first to market, winning U.S. Food and Drug Administration approval to sell G-CSF in February. Immunex, headquartered in Seattle, got the green light for GM-CSF two weeks later. Since then, Amgen’s stock has soared 27% and closed Monday at $121.50; while Immunex’s stock has tumbled 19%, after closing Monday at $43.
Wall Street has placed its bets, and Amgen has sprinted to an early sales lead. But can Amgen stay in front? David Stone, biotechnology analyst with the investment firm Cowen & Co., isn’t sure. “In the long term, it could turn out a more or less equal” market between the two drugs, he said.
For now, Immunex can only try to catch up. In the quarter that ended March 31, Amgen sold $52.9 million of G-CSF in just five weeks. Immunex had only three weeks to sell its new product in the March quarter, but its GM-CSF sales were less than $4.2 million.
Amgen’s sales are “a blowout,” Stone said. He expected Amgen to sell $205 million of G-CSF in its first full year, now he looks for $280 million. Still, he cautions that $50 million in Amgen’s G-CSF sales went out the door in the first week as drug wholesalers stockpiled inventory. Immunex, meanwhile, is selling directly to doctors and hospitals, so there’s less of an inventory buildup.
And what do doctors think of the rival drugs? “They’re both the same,” said Dr. George Canellos, chief of oncology at the Dana Farber Cancer Institute in Boston. How about a second opinion? “I think they’re different drugs,” said Dr. Jordan Gutterman, chairman of clinical immunology at the M.D. Anderson Cancer Center in Houston.
The medical debate exists because G-CSF and GM-CSF are gene-spliced laboratory reproductions of different human proteins. While there is little difference in price between the two drugs, there are subtle chemical differences, and doctors may eventually prefer one product over another.
Of the pair, Immunex’s GM-CSF is the more complicated drug and it stimulates a broader variety of cells, not only white blood cells but sometimes platelets (platelets clot the blood). Some doctors think this will make Immunex’s drug more valuable in combatting a wider variety of infections.
On the other hand, Amgen’s G-CSF appears to have fewer side effects, while GM-CSF can produce fever, fatigue and appetite loss. How much of the market each company wins may turn on the results of the first head-to-head clinical studies of the two drugs, now under way, to see how effective they are in fighting various ailments.
Meanwhile, Amgen and Immunex battle each other like Coke vs. Pepsi, and Hertz vs. Avis. Both white blood cell drugs are expensive--treatments can cost thousands of dollars per patient--and analysts say each drug could produce hefty pretax profit margins of 35%.
“This is going to be a long battle in the marketplace, and we’re only beginning to understand the best ways to move the product,” said Steve Gillis, Immunex’s head of research.
For now Amgen seems to have a marketing edge, partly as a result of the Byzantine, marathon-like effort needed to get a new drug approved by the FDA. Several years ago Amgen beat Immunex in the race to one critical medical check point: actually testing its experimental drug on humans. Because Amgen was in front, it was free to set up clinical tests of G-CSF on patients undergoing cancer chemotherapy--a big market.
It was also a big medical problem in need of a solution, because chemotherapy destroys both cancerous and white blood cells, often leaving patients with raging fevers and infections that can be fatal. G-CSF dramatically cut the number of infections. The FDA then approved G-CSF for use in chemotherapy, and about 225,000 chemotherapy patients are potential candidates for Amgen’s drug.
By comparison, Immunex’s GM-CSF drug, while also medically impressive, was tested on--and approved by the FDA--for bone marrow transplants. However there may be only 5,000 transplants a year. “It’s serendipity rather than science that one drug is indicated for one use and the second drug for another,” said Dr. Robert Livingston, chief of oncology at the University of Washington Medical Center.
But it makes a big difference in the marketplace. When a drug is approved, doctors are free to prescribe it as they like. Insurance companies, however, are sometimes cautious about paying for a new drug, especially when it’s expensive and is used for something other than what the instructions say. A doctor can always send to the insurer a medical article or a letter from a specialist to support his drug treatment, but it means extra paperwork. “If you’ve got a choice between two drugs that look similar, and you know the patient may get nailed on reimbursement from insurance companies, you will use the drug that’s clearly approved” for a specific treatment, Livingston said.
As a result, “I assume (Amgen’s) G-CSF will dominate with between 60% and 80% of the market in the first couple years,” said Jim McCamant, editor of the Medical Technology Stock Letter.
The white blood cell market may grow even bigger than many now expect because of spinoff uses for two drugs. Doctors are excited about G-CSF and GM-CSF because the drugs may allow them to use megadoses of chemotherapy to attack especially virulent cancers, without patients being susceptible to major infections.
“Will it translate to higher cures? It might,” Gutterman said. There’s also hope that both drugs will prevent many other types of infections, including those plaguing diabetics, burn patients, old people with pneumonia, and others recovering from general surgery.
Another unknown is how the marketing battle will change when Schering-Plough, the Madison, N.J., pharmaceutical giant, gets approval to sell its version of GM-CSF, probably this year. But Amgen and Immunex are thinking ahead. Both are testing second generations of their drugs, so-called twin molecules. Early results show that when G-CSF or GM-CSF is combined with another gene-spliced drug, it is more potent, producing more cells than when the drugs are given separately.
So which of these second generation drugs will dominate the market? “It’ll be three or four years before we sort that out,” Livingston said.
