In 1989 the FDA approved the use of recombinant human erythropoietin to treat anemia in patients with chronic kidney disease. In the ensuing 23 years, Amgen has harvested approximately $37 billion from sales of its recombinant protein sold as Epogen or Procrit (erythropoietin alpha) and $26 billion from sales of Aranesp (darbepoetin alpha) it’s longer acting relative. Erythropoietin is a protein produced by the kidneys that regulates red blood cell production. It acts on red cell progenitors in the bone marrow to induce differentiation to mature red blood cells and boost hematocrit. The most common need for exogenous erythropoietin is in patients with chronic kidney disease whose kidneys no longer produce enough protein because of kidney damage. It is also used to treat anemia as a result of cancer chemotherapy, anemia due to some HIV treatments, and to prevent transfusions in patients undergoing elective surgery. The initial cloning of the gene was performed in parallel by Amgen in Thousand Oaks, CA and Genetics Institute in Cambridge, MA in the 1980s when both companies were start-up biotechs. Both companies applied for patents on the recombinant protein for use to treat anemia. After a protracted legal battle, Amgen was awarded the US patent in 1991, and this decision directly led to the ultimate demise of Genetics Institute which was forced to sell 60% of the company to American Home Products for a much needed infusion of cash. In contrast, Amgen has grown into the world’s biggest biotech company with a market capitalization of $53.4 billion, largely based on anemia drugs. Amgen has been aggressively protecting their exclusive right to market recombinant erythropoietin in the United States. Because of intelligent patenting strategy by Amgen, the string of patents protecting Epogen will not expire until 2015. The drug is administered three times a week and is part of the regimen of almost every person on dialysis due to chronic kidney disease. Amgen has licensed the marketing rights for the identical protein that they call Procrit to Johnson and Johnson for the broader indications including cancer chemotherapy, HIV and prevention of transfusions.
This week, Amgen’s monopoly on drugs to treat anemia ended. The FDA awarded approval to Affymax of Palo Alto, CA for use of it’s drug Omontys (peginesatide) to treat anemia in adult patients undergoing dialysis due to chronic kidney disease. As opposed to Epogen, which is made by inserting a recombinant form of the human gene for erythropoietin into cells in culture and harvesting the secreted protein, Omontys consists of two small proteins, or peptides made directly on the benchtop. These peptides bind to the erythropoietin receptor and stimulate production of red blood cells in the same way that Epogen does. The FDA approval was based on two Phase III clinical studies that compared Omontys dosed once a month to Amgen’s Epogen dosed between one-to-three times per week in anemic patients with chronic kidney disease on dialysis. The studies showed Omontys was as safe and effective as Epogen, so Amgen has competition in the anemia market for the first time since 2001. In addition, now dialysis patients have the opportunity to receive treatment just once per month instead of as often as three times per week. It should be noted that Omontys was only approved for patients on dialysis. In clinical trials involving patients with kidney disease who were not undergoing dialysis, those who got Omontys had a higher rate of certain cardiovascular problems than those who received Amgen’s Aranesp.
It was expected that maintaining a robust hematocrit, or red blood cell level, would benefit a patient’s quality of life by making the patient feel more energetic. In fact, post approval observations performed in the mid 2000’s demonstrated that patients with higher hematocrit did not report feeling better, and even more concerning, patients on anemia drugs that were maintained at a higher hematocrit were more likely to suffer heart attacks and stroke. In 2011, the FDA changed the warning label on anemia drugs to require more frequent monitoring of hematocrit, and Amgen and the FDA agreed to change the guidelines for therapy to maintain hematocrit at a much lower level than previously desired. For this reason, the FDA is requiring Affymax to perform a post approval risk evaluation and mitigation strategy, and asked for an observational study to be completed in 2018 and a randomized controlled trial to be completed in 2019. The studies will evaluate cardiovascular safety and long-term use in adults on dialysis. In addition, the post-marketing commitment includes the initiation of studies in children with dates for completion between 2016 and 2027.
Amgen has been prepared for this competition, and has already negotiated agreements with two big dialysis chains (DaVita and Fresenius) for large discounts in exchange for agreeing to use the Amgen products at their centers. While use of anemia drugs has declined due to the safety concerns (Amgen’s sales of Epogen went from $2.5 billion in 2010 to $2 billion in 2011), John Orwin, CEO of Affymax, affirms there is still a substantial market in midsize and small dialysis providers. Affymax plans to aggressively market it’s drug in collaboration with the Japanese drug company Takeda, and is prepared to offer discounts in their contract negotiations. It also expects use of their product will be less expensive for the end user due to decreased nursing time as a result of less frequent administration.
Omontys is the first product approved for Affymax, which has a market capitalization of approximately $450 million. Shares rose to over $15 on Tuesday, and are now trading at $12.42. Shares of Amgen remain steady at $67.42.