As Amgen Inc. gears up for its legal skirmish over Mircera, the erythropoietin stimulating agent (ESA) from F. Hoffmann-La Roche Ltd., the Centers for Medicare & Medicaid Services last week issued its edict on reimbursement for the class of drugs in oncology, including Amgen's and Epogen (epoetin alfa) and the second-generation product Aranesp (darbepoetin alfa). Both drugs are approved for anemia in cancer patients and in chronic kidney disease (CKD).
Overall, the Tuesday news for Amgen was good. Or else it was bad. Depends on who's talking - and Amgen kept mum while analysts and Wall Street digested the news, not formally speaking up until Tuesday night.
The particulars: CMS backed off its earlier plan, which was to pay only for ESAs begun when the cancer patient's hemoglobin reached 9 g/dL. The federal agency adjusted the trigger level to 10 g/dL, and allowed for longer total ESA treatment than originally proposed - up to 8 weeks after the final dose of chemotherapy (rather than 12 weeks total for the year).
As for the use of ESAs in myelodysplastic syndromes, CMS chose to make no decision, noting that MDS is pre-malignant and officially does not fall within the agency's review area. This didn't stop officials from making known their view that clinical evidence of ESAs' value in MDS is less than persuasive, but whether to cover their use in the indication was left to local Medicare contractors.
CMS "copped out on a lot of issues," Jennifer Chao, analyst with Deutsche Bank, told BioWorld Financial Watch, and MDS is one of them. "Without an explicit exclusion, we think regional providers will cover MDS as they have in the past."
Also, under the national coverage decision, or NCD, ESAs are covered when used in combination with Genentech Inc.'s Avastin (bevacizumab) or ImClone Systems Inc.'s Erbitux (cetuximab).
"CMS in its NCD manages once again to exhibit a complete lack of knowledge, setting forth policy more destructive than beneficial for patients," Chao said. She called the agency's last word on ESAs an "unbelievable turn of events."
In the late-Tuesday press release, Amgen's Roger Perlmutter, vice president of global research and development, said the coverage restrictions "have no scientific basis and are incompatible with good clinical practice." The 10 g/dL trigger for coverage of treatment will mean an increase in blood transfusions will "severely compromise" the quality of cancer care, since CMS has "undermined the ability of physicians to decide how best to administer ESA therapy to their patients through carefully defined dosing guidance articulated by the FDA."
Perlmutter's view is backed by patient records gathered by Amgen, showing that 98 percent of ESA use in chemo-induced anemia started in patients with hemoglobin below 12 g/dL, and 84 percent in patients with levels below 11 g/dL, with the "vast majority" starting at levels below 10 g/dL.
The bottom-line impact of the CMS changes? Bret Holley at CIBC World Markets expected that the most serious restrictions from the CMS proposal would not make the final NCD, so he did not alter sales estimates for Aranesp (which, with Epogen, made up almost half of Amgen's revenue last year).
"Following the decline [in the second quarter of this year], we expect sales of Aranesp to generally stabilize in the near term," Holley wrote in a research report. "With the CMS decision behind Amgen, the next key regulatory event is the FDA's Cardiovascular and Renal Drugs Advisory Committee meeting, and we would not expect major negative recommendations for Aranesp's use in CKD." Holley called Amgen's stock "attractive ahead of this event."
Also ahead in September, though, is the court clash between Amgen and Roche over Mircera, the brand name for Roche's continuous erythropoiesis receptor activator (CERA). At the start of the year, a judge granted Amgen's motion requesting from Roche cell lines for testing, in order to determine what Roche is making. The trial is expected to last about a month. (See BioWorld Financial Watch, Jan. 29, 2007.)
Roche's European erythropoietin product, NeoRecormon (epoetin beta), already is blocked in the U.S. by Amgen's six patents. The overseas firm has claimed that NeoRecormon acts differently from Amgen's products in the body. But Amgen argues that Mircera amounts to pegylated EPO similar enough to Aranesp that Amgen's patents ought to apply.
CERA won approval in late July in Europe, as expected, for anemia in CKD, and probably will chew into the ESA market, with similar products due to hit the shelves by the end of the year not only from Roche but from Shire plc and Sandoz GmbH. Another is due from the collaboration between Stada Arzneimittel AG and Hospira Worldwide Inc.
Amgen reported second-quarter earnings per share of $1.12, excluding stock option expenses, above the consensus of $1.06, with revenues of $3.73 billion, beating Lazard Capital Markets' estimate of $3.68 billion, thanks to better than expected sales of Aranesp ex-U.S. sales. Disappointing, though, were sales of the colorectal cancer drug Vectibix (panitumumab), which sold $45 million in the second quarter, 12 percent less than in the first.
The likely reason: In March, Amgen stopped a non-registrational Phase III trial with Vectibix in a dual-biologic, first-line treatment regimen because of a lack of efficacy and toxicity concerns.
Hopes had been high that data from the Phase IIIb trial would show improved progression-free survival in patients receiving both Vectibix and the VEGF inhibitor Avastin in addition to chemotherapy. But results from the interim analysis - conducted after the first 231 events of death or disease progression - showed that adding Vectibix had the opposite effect.
But maybe, as Amgen maintains, oncologists are turning a little sour on the whole class of EGFR inhibitors for colorectal cancer drugs. The only other approved one, Erbitux (cetuximab), from ImClone Systems Inc., showed a second-quarter decline in U.S. sales. Erbitux sold $162.1 million, down 6 percent from the $172.4 million reported last year, though ImClone blamed the drop on the approval last year of Vectibix, and on a one-time bolus of $15 million in sales last year, after Erbitux was cleared by the FDA for head and neck cancer as well.