Amgen Gets More Good Data with Bone Drug Prolia, but Other Risks Await

(MoneyWatch)  Amgen's pipeline star Prolia (denosumab) beat competitor Zometa (zoledronic acid, from Novartis) in a key Phase III trial, reducing broken bones in prostate cancer patients. By all accounts that should be great news, but the stock languished, and a survey indicates investors are worried about near-term challenges to other Amgen products.

As BNET reported previously, analysts have called Prolia the key to Amgen (AMGN)'s future growth. The drug is chugging along toward an FDA approval for reducing broken bones in postmenopausal women with osteoporosis -- a billion-dollar market. But the bigger opportunity -- three times bigger -- is in cancer. Specifically, reducing fracture risk in various cancers, and preventing cancer from spreading to the bone.

Prolia had already beat Zometa in a Phase III breast cancer fracture reduction trial, and the two drugs proved similar in a second Phase III advanced cancer trial. Now Prolia has won again in a Phase III prostate cancer trial (the most important and biggest indication of the three), and analysts say this sets the stage for another FDA approval next year.

So why weren't investors jumping for joy? Why didn't the stock respond?

Deutsche Bank analyst Mark Schoenebaum surveyed buy-side investors to find out.

Overall, investors said Prolia's latest efficacy data were in-line to slightly better than expected, while the safety data were slightly worse. Some called the new data "baked in" to the stock already, and some said safety questions about a slightly higher but not statistically significant incidence of osteonecrosis of the jaw could have hurt the shares.

But most investors said it's all about what happens next.

Data from a highly-anticipated Phase III trial aiming to prevent bone metastases in prostate cancer patients are not expected until the second half of this year. Before then, Amgen will have to face a few challenges to its $5.2 billion erythropoietin-stimulating agent (ESA) franchise.

First, in March, a Medicare advisory panel is set to review the ESAs, which have come under fire for safety concerns, been slapped with warning labels and may now face increased reimbursement pressure.

Then, in the second quarter, potential competitor Affymax (AFFY) will have data from four Phase III trials of Hematide. The drug is a synthetic, long-acting version of ESAs like Amgen's Epogen (epoetin alfa) and Aranesp (darbepoetin alfa), and it may show fewer side effects.