West Coast Editor

The bound-to-happen changes disclosed Wednesday by Amgen Inc. failed to shock Wall Street, and eyes now have turned to the firm's date with an FDA panel on erythropoietin stimulating agents (ESAs) and a court fight over patents with F. Hoffmann-La Roche Ltd. - even as hopes remain in some quarters that the feds might modify their reimbursement guidelines for anemia drugs.

And that's not all.

Concern lingers regarding how bad the impact for the red-blood cell boosters Aranesp (darbepoetin alfa) and Epogen (epoetin alfa) might be among private payers, who tend to follow the lead of the coverage decisions made by the Centers for Medicare & Medicaid Services.

Thousand Oaks, Calif.-based Amgen made known its restructuring plans, including layoffs of as many as 2,600 employees, after the market closed Wednesday. Shares (NASDAQ:AMGN) closed Thursday at $49.02, down $1.57. (See BioWorld Today, Aug. 16, 2007.)

"I'd love to be able to tell you exactly what's happening in 2008, but we don't know right now," Kevin Sharer, Amgen's CEO, told investors during a conference call. "All I can tell you right now is that we've got some uncertainties to go through here. We're signaling here some pretty aggressive cost moves."

Regarding private payers, patients' hopes rose - along with those of Amgen's investors, no doubt - in early July, when Blue Shield of California reversed its policy for erythropoietin stimulating agents (ESAs).

Blue Shield first planned to follow CMS' original guideline, requiring hemoglobin levels to fall to 9 grams per deciliter of blood or lower in order for coverage to begin, except for heart-condition patients, where the trigger point was 10 g/dL. Later, though, Blue Shield put the coverage trigger at 10 g/dL for all patients. CMS' final decision put the coverage starting point at 10 g/dL, too - but Amgen (as well as many doctors) say even that level is too low.

Next month, the FDA's Cardiovascular and Renal Drugs Advisory Committee will discuss the use of ESAs in kidney disease, and the FDA's final label revision for the drugs when used in oncology is expected in the second half of this year.

Chemotherapy-caused anemia is the main use for Aranesp, a second-generation product of Epogen. Together, the compounds' sales make up about half of Amgen's revenue. But research lately showed an increased risk of death in cancer patients on Aranesp not undergoing chemo. In March, the FDA ordered a "black box" warning on ESA labels, asking doctors to use the lowest dosing possible to avoid the risk of heart attack and stroke.

ESA sales last year reached $10 billion, in a market where Amgen's Aranesp has conquered its only competitor, Johnson & Johnson's Procrit (epoetin alfa). Also in September, though, Amgen's court battle over a would-be anemia competitor - Roche's continuous erythropoiesis receptor activator (CERA, branded Mircera) - goes to trial.

The FDA issued Basel, Switzerland-based Roche an approvable letter for Mircera in May, with approval expected this year.

What's might be ahead for Amgen? A projected drop in capital expenditures of about $1.9 billion during the period from 2007 to 2008 could let the firm plug a pipeline hiatus until the launch of denosumab for osteoporosis and cancer treatment-induced bone loss in 2009. Amgen partnered the antibody this summer in Japan with Tokyo-based Daiichi Sankyo Co. Ltd.. During the conference call Wednesday, Sharer called denosumab "a molecule that we hope is an absolute double blockbuster." (See BioWorld Today, July 13, 2007.)

Meanwhile, potentially tempting acquisitions for Amgen include intravenous ferumoxytol iron in development by Cambridge, Mass.-based AMAG Pharmaceuticals Inc. (formerly Advanced Magnetics Inc.) AMAG in July reported positive data from the fourth and final Phase III trial with ferumoxytol in 230 chronic kidney disease patients on hemodialysis, hitting statistical significance vs. oral iron in the primary endpoint of increased hemoglobin levels. The trial nailed secondary endpoints, too.

Analysts had questions about the company's research and development, and how Amgen measures productivity. Sharer said the question is "one that has bedeviled us all for a long time," and pointed to "a pipeline that is dramatically more full than we had before."

The traditional tools for gauging R&D - "project returns, discounted cash flows and what have you" - are "relatively unsatisfying," he said.

"In effect, we just started here in 2002," Sharer said. "The current team showed up in 2001, and we were faced with starting an R&D organization again. I'd say it's a bit early, but here in the next year or two, we're going to be able to make some judgments."