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Little Orphan Amgen: Sales of Its New Wonder Drug Are Always a Day Away

If there was one Q3 2010 earnings report designed to make you do a spit-take with your afternoon coffee, it was Amgen (AMGN) reporting just $10 million in sales from its new wonder drug, Prolia (denosumab). Some analysts forecast this drug will generate $10 billion in sales, annually, for Amgen. (That's "billion" with a "B.") If you've been following the denosumab saga, you'll know that it's a lot like Little Orphan Annie. This drug will love Amgen tomorrow, it's always a day away.

Prolia fights osteoporosis and bone cancer, the company believes, although an FDA decision on the latter disease isn't due until Nov. 18.

Wall Street predicted $31 million in sales for Prolia this quarter. It's been on the market since early June and now has four months' of revenue under its belt. It is early going, of course, and one can't make predictions on such a small amount of data. But the drug sold $3 million in its first month out of the gate and only added another $7 million in the three months after that. Even if you factor in "stocking" -- in which wholesalers stock up on a newly launched product and then temporarily reduce their orders until they know how much demand there is -- this seems tepid at best.

That's a problem because Wall Street -- as usual -- is frothing at the mouth for Prolia revenues. Analyst estimates for peak sales are comically divergent, except for one thing: They're all magnitudes of massive:

There's a lot of talk as to whether Prolia will end up like Roche (RHHBY.PK)'s Avastin, a cancer drug that doctors like to use for a variety of indications (even when some of those uses don't seem to be all that effective). Avastin is on course to get $6.8 billion in sales this year.

But what if it's more like Byetta or Effient or Onglyza or Multaq -- drugs that Wall Street convinced itself would be huge, but which are now mere niche products in their respective companies' portfolios?