AMGN’s Denosumab is superior in safety and efficacy compared to Merk’s Fosamax!

Posted by Jack Haddad on January 24, 2008 at 11:17 pm

Team,

I direct your attention to AMGN; yes, the shares have suffered the most in 16 years according to their CFO
Kevin Sharer. However, their blocbuster drug “Denosumab” has been yeilding very positive results in treating osteoporosis (loss of bone density). In fact, 7 times betten than Fosamax (made by Merk), according to phase 3 clinical trials; For completeness sake, phase 3 clinical trials are studies that incorporate larger population size subjects than phase 1 and 2. Moreover, in addition to testing for safety and efficacy, the FDA will demand that a competitor in the sector, such as Fosamax, be compared. In this case, Fosamax lost!

Researchers reported that subcutaneous injections of denosumab significantly increased BMD (Bone mass density)at the total hip from 1.9 to 3.6 percent in women who were administered the therapy twice yearly as compared with a decrease of 0.6 percent in the placebo group (p<0.001) at one year. The open label FOSAMAX® group receiving 70 mg weekly had an increase of 2.1 percent during the same time frame. Results also indicated that denosumab had a rapid onset of action. A significant decrease in serum levels of C-telopeptide, a biomarker of bone resorption, was achieved within 72 hours after dosing. The results of this one-year study appeared in the Dec. 23, 2007 issue of the New England Journal of Medicine. Data results also included an open-label FOSAMAX® (alendronate)* arm of the same clinical trial.

As to the current state of the stock, I rate it as a buy! The shares have discounted the new regulations that the FDA has imposed regarding the sales of AMGN’s anemia drug Aranesp. Sales were down 25% or 840 million in the 4th quarter; that coupled with the fact that Denosumab has the potential in generating close to 2 billion by 2010, makes the stock very attractive. The shares are about 12 points below their fair value.

I would simply buy and hold, but hedge the underlying shares with options. The Feb strike 47.50 is offering a juicy premium considering that there are only 3 weeks remaining to Feb option expiration. One can easily hold the underlying shares and roll options month to month.

I will keep you informed of any entry on AMGN.

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