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Amgen Inc.'s plan to buy out nephrology-focused Ilypsa Inc. for $420 million - thereby gaining a Phase II phosphate binder for chronic kidney disease - put little immediate fear into backers of Genzyme Corp., thanks to progress with the latter's CKD therapy Renvela.

The merger news came at the close of the American Society of Clinical Oncology meeting, where attendees heard renewed noise over risks with erythropoietin-stimulating agents (ESAs), such as the firm's Aranesp and Epogen, and Amgen posted comments on proposed changes by the Center for Medicare & Medicaid Services with regard to ESAs.

Robbert van Batenburg, head of research for Louis Capital Markets in New York, called the Ilypsa takeover an effort by Amgen to move away from an over-reliance on the anemia franchise, "but I'm not sure the EPO hit is going to be as big as people are buzzing [about]," he said.

The price paid by Amgen is "not an excessive number in biotech-land," he pointed out. "They've been aggressively buying back stock, but they have an enormous amount of free cash flow."

Amgen's stock (NASDAQ:AMGN) closed Tuesday at $57.66, up 70 cents. Genzyme's shares (NASDAQ:GENZ) ended at $65.76, up 84 cents.

Under the terms of the cash deal, Santa Clara, Calif.-based Ilypsa would become a wholly owned subsidiary of Amgen. Both boards have approved the deal, and the merger is expected to close in the third quarter of this year. Privately held Ilypsa's lead product is ILY101, an oral non-absorbed polymeric agent that has completed Phase II dose-ranging trials in CKD patients on dialysis.

Results are expected sometime between now and the fall, and Amgen might push into a Phase III trial yet this year, if the right dose is found, noted analysts at Raymond Baird & Co.

When at the Phase I stage, the drug charmed Tokyo-based Astellas Pharma Inc. enough to sign a deal worth up to $92 million for Japanese marketing rights. The non-metal polymer's mechanism of action is similar to that of Cambridge, Mass.-based Genzyme Corp.'s Renagel (sevelamer hydrochloride), cleared by the FDA in 1998 for patients with end-stage renal disease on hemodialysis. (See BioWorld Today, April 28, 2007.)

While Renagel is approved only for patients on dialysis, Renvela (sevelamer carbonate) will target the larger market of chronic kidney disease. Genzyme submitted Renvela's new drug application late last year and unveiled positive Phase III data in April.

Amgen needs to backfill its pipeline, but ILY101 is still a good distance from the market, and some question whether the firm can make up for revenues that might be lost if CMS goes ahead with its plan to limit coverage for ESAs.

The firm's Vectibix (panitumumab), approved by the FDA for colorectal cancer in the fall, made no great splash at ASCO, and the European Committee for Medicinal Products for Human Use recently gave a negative opinion on the compound, which Amgen said last week it would appeal. In March, Amgen stopped a Phase III trial testing Vectibix in combination with the VEGF inhibitor Avastin (bevacizumab, Genentech Inc.) and chemotherapy, due to lack of efficacy, along with concerns about toxicity. (See BioWorld Today, March 26, 2007.)

Van Batenburg called Vectibix "another disappointment, on top of what Amgen is dealing with right now. It's sort of dead, so anything that could rekindle the prospects could be good. I think people have written it off, to a large extent."

AMG-706, an oral VEGF inhibitor tested in a 180-patient Phase II trial for thyroid cancer, will not be advancing for that indication, Amgen said in April. A study with AMG-102, an antibody to the ligand for the c-Met receptor, got no response in 31 patients (as compared with other c-Met drugs reporting at ASCO, which performed better).

On the upside, the company has AMG-531 for immune thrombocytopenia purpura and (earlier stage) for myelodysplastic syndromes. AMG-531 stimulates the thrombopoietin receptor to boost platelets, and could be the subject of a new drug application for ITP in the second half of this year. AMG-655, a fully human monoclonal antibody that targets TRAIL receptor 2 patients with advanced solid tumors, proved encouraging in Phase I data at ASCO.

CMS made known last month its proposal to back away from paying for ESAs given to beneficiaries with certain cancers and related neoplastic conditions. That word followed advice from an FDA committee to curb EPO use, and the agency added a "black-box" warning to the labels. Congress is looking into the products, too. The products are approved for anemia caused by chemo in cancer patients, and for kidney failure. (See BioWorld Today, May 16, 2007.)

According to the warning, the drugs, when given to target a hemoglobin level of >12 g/dL, 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 hiking deaths because of disease progression at four months in metastatic breast cancer patients on chemo.

Amgen, of Thousand Oaks, Calif., makes all of the targeted EPO drugs: Aranesp (darbepoetin alfa), Epogen (epoetin alfa) and Procrit (epoetin alfa). Aranesp accounted for $4.1 billion of Amgen's total product sales last year. Procrit is sold by Johnson & Johnson, of New Brunswick, N.J. Sales of the drugs surpassed $10 billion last year.

Objecting to the CMS changes, Amgen hosted a three-hour satellite symposium at ASCO that reviewed the May findings of the FDA's Oncologic Drug Advisory Committee and included physician remarks. One pointed out that CMS pays $2.3 billion for chemo, which works, and $1.5 billion for ESAs, which have no clear impact on survival.

Joel Sendek, analyst with Lazard Capital Markets, cited an EPO expert's claim that the media and CMS conspired in a "coordinated attack" on oncologists to "drive a wedge between doctors and patients" - a claim that Sendek called preposterous, but indicative of the strong emotions evoked by ESAs.

"We conclude that most physicians came away from the session, and ASCO in general, inclined to use less EPO," Sendek wrote in a research note.

Van Batenburg remained skeptical about EPO fallout. "One can argue, 'Are [physicians] completely impartial?' They're doctors, and their backs are being rubbed by the pharmaceutical companies. The jury is still out [on ESAs]."

June 13 is the deadline for public comments on CMS guidelines, and "there seem to be a lot of public comments in favor of Amgen," he said.

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