West Coast Editor

Amgen Inc.'s stock gained ground as investors listened to pundits give forth their opinions on federal reimbursement changes disclosed Friday for the high-selling Aranesp (darbepoetin alfa) and Epogen (epoetin alfa), when used in kidney disease.

The minimal changes bode well not only for Amgen's marketing of ESAs in kidney indications, but also for the meeting by an FDA advisory panel, which next month will debate the safety of the drug class.

Due to take effect at the start of next year, the main policy revision by the Centers for Medicare & Medicaid Services for ESAs in kidney disease drops payments by half when hemoglobin levels reach 13 g/dL for three months in a row. Previously the boundary line was 13 g/dL for six months.

Still undecided is the CMS stance on the drugs in cancer - and that's where Thousand Oaks, Calif.-based Amgen, which made almost half of last year's revenue from the two drugs - could be in trouble.

But probably not, if you believe Jennifer Chao, analyst with Deutsche Bank in New York, who told BioWorld Today that CMS will enact "a repeal or dramatic amendment" of its proposal.

CMS said in May that it wanted to back off paying for ESAs for people with certain cancers and related neoplastic conditions, following advice from an FDA committee to curb their use. The agency added a "black box" warning to labels, too. (See BioWorld Today, May 16, 2007.)

The label warns that the drugs boosted the risk of death and cardiovascular events, cut the time to tumor progression in patients with advanced head and neck cancer who got radiation therapy and shortened overall survival while increasing deaths because of disease progression at four months in metastatic breast cancer patients on chemo.

Much of the buzz Friday and Monday focused on kidney disease, but Chao said the CMS renal decision was neutral with limited impact, and the "big fish" oncology decision is due by Aug. 12 - with a likely gutting of the drafted proposal.

In that document, CMS said ESA used in cancer patients should be triggered at hemoglobin levels of 9 g/dL, the length of treatment should go no longer than 12 weeks and patients with myelodysplastic syndromes should be excluded.

"I predict a repeal or dramatic amendment from the draft," Chao said, and forecast that the trigger would be changed from of 9g/dL to 10g/dL, 12 weeks' maximum use would be upped to between 18 weeks and 20 weeks, or as needed, and MDS patients would be included among potential users.

Chao hosted a conference call earlier this month with physician John Glaspy, a professor of medicine and director of UCLA's Jonsson Comprehensive Cancer Center, who has testified about ESAs to the FDA's Oncologic Drugs Advisory Committee.

Glaspy has been "directly and indirectly" involved with the CMS as it shaped the draft, Chao said.

"I can tell you what my understanding is, and I have shared this with them," he said, during the call. "Whether they accept it as their understanding or not, only they can say. But the data speak pretty strongly on the point of initiation and the impact on transfusions."

Even if an important consideration - quality of life - is set aside, "between one-fourth and one-third of transfusions in oncology happen before the hemoglobin has fallen below 9," he said. "So right away, if you say, 'Nobody can start until their hemoglobin is under 9,' you have taken between 25 [percent] and 33 percent of the cancer patients out of the pool of patients who have a chance of having their transfusions prevented by erythropoietic agents. You've left them behind."

The 9g/dL level is too late to start ESAs, Glaspy said, and "the data are very clear on this."

Glaspy has been much in demand. New York-based CIBC World Markets had its turn with him in May, when analyst Bret Holley wrote in a report that the doctor's view fell generally in line with CIBC's, which is that the "draconian" CMS proposal will be amended.

ESAs "meaningfully improve quality of life, but [Glaspy] believes the FDA should give Amgen and Johnson & Johnson [which markets the ESA epoetin alfa as Procrit] specific guidance as to what quality of life measures would be acceptable for labeling," Holley wrote.

During the CIBC call, the doctor pointed to another potential plus for Amgen - the "hypervigilant regulatory environment," which could pose a challenge for new ESAs trying to reach the market, such as Basel, Switzerland-based F. Hoffman-La Roche's would-be competing drug, called continuous erythropoiesis receptor activator (CERA, now branded Mircera).

Amgen's stock (NASDAQ:AMGN) closed Monday at $56.80, up 62 cents.