The chief executive of Amgen said Monday that the company's decision to sell Japanese distribution rights to many of the drugs in its pipeline...
The chief executive of Amgen said Monday that the company’s decision to sell Japanese distribution rights to many of the drugs in its pipeline was not solely a response to financial pressures caused by the decline in sales of Amgen’s flagship anemia drugs.
Kevin Sharer, the chief executive, said the deal, which was announced early Monday and could bring the company as much as $1.2 billion, was forged because Amgen had too many experimental compounds to develop on its own.
“We just can’t, either operationally or financially, develop all these molecules in the three principal geographies,” he said, referring to the United States, Europe and Japan. He said financial pressures contributed to the timing of the deal. But “this was an inevitable development” because of the high costs of research and development, he said.
The pact calls for Amgen to sell Japanese rights to up to 13 of its experimental drugs to Takeda Pharmaceutical, Japan’s largest drug company.
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Takeda will pay Amgen $200 million up front. It will also chip in up to $340 million to help develop the drugs worldwide over the next several years, helping to defray Amgen’s costs of testing the drugs for use in the United States and Europe.
It will also pay up to $362 million more if certain milestones are achieved in development, plus royalties on sales of the drugs in Japan. Takeda is also buying Amgen’s Japanese subsidiary, Amgen KK.
Sharer said the deal validated the value of Amgen’s pipeline. But some analysts said pulling back from its Japanese operations could eventually diminish the company’s prospects.
“They are basically capitulating on having any real stake in the Japanese market,” said Geoffrey C. Porges, biotechnology analyst at Sanford C. Bernstein & Co. “It’s definitely a retrenchment, as well as all the retrenchments they’ve gone through.”
Japan, with its unique regulatory requirements and marketing issues, has been a tough market for some drug companies to penetrate on their own. Amgen’s existing drugs are all sold in Japan by partners.
The money they are taking in from Takeda isn’t “significant enough to move the dial, either on their revenues or in terms of their cost line,” said Eric Schmidt, an analyst who follows Amgen for Cowen & Co.
There are many issues of more importance to Amgen investors, particularly a meeting of the Food and Drug Administration next month to discuss the safety of the company’s anemia drugs, which once accounted for nearly half of its corporate revenue.
Sales of the drugs have been falling on those safety concerns, prompting the company to cut its work force by more than 12 percent last year. It was during their announcement of that revamping last summer that Amgen’s executives first said publicly that they would sell rights to some of the drugs under development.
The drugs included in the deal are mainly in early or middle-stage clinical trials, except for Vectibix, a colon-cancer drug that Amgen sells in the United States.
Amgen request to dismiss suit denied
Amgen must defend a lawsuit over claims it misled investors about safety issues with its top-selling anemia drugs, Epogen and Aranesp.
U.S. District Judge Philip Gutierrez, in an order filed Monday in Los Angeles, denied Amgen’s request to dismiss a consolidated shareholders’ complaint. Gutierrez dismissed the claims against five Amgen officers and directors, leaving the shareholder plaintiffs the opportunity to amend their complaint to again include those defendants.
The shareholders, led by the Connecticut Retirement Plans and Trust Funds, claim Amgen artificially inflated its stock price from April 2004 to May of last year by making false and misleading statements about the safety of the anemia drugs and by marketing the drugs for uses that weren’t approved by the U.S. Food and Drug Administration.
Aranesp is Amgen’s top-selling product, with $4.1 billion in sales in 2006.
Amgen has about 1,000 workers in the Seattle area.