Little Surprise. Big Stock Move.

We all knew a Food and Drug Administration approval for Amgen's (Nasdaq: AMGN  ) osteoporosis drug Prolia was coming; the agency's first response to Amgen's marketing application didn't request any new studies, so an approval on the second attempt seemed little more than a formality.

But I'm not sure anyone was expecting an approval quite this early; the PDUFA goal for the agency wasn't until July 25. Nevertheless, early approvals are one surprise that investors can get behind; shares are up 9% today, well ahead of the overall market.

Approval to sell Prolia in the U.S. and Europe, which Amgen and marketing partner GlaxoSmithKline (NYSE: GSK  ) announced on Friday, should help return Amgen to stronger revenue growth after being relatively flat over the last couple of years.

Metric

2006

2007

2008

2009

Revenue (in millions)

$14,268

$14,771

$15,003

$14,642

Year-over-year increase (decrease)

14.8%

3.5%

1.6%

(2.4%)

Source: Capital IQ, a division of Standard & Poor's.

But selling Prolia isn't going to be a cake walk for Amgen. The company is entering a very crowded osteoporosis market with many established players: Glaxo and Roche's Boniva, Warner Chilcott (Nasdaq: WCRX  ) and sanofi-aventis' (NYSE: SNY  ) Actonel, Eli Lilly's (NYSE: LLY  ) Forteo and Evista, generic drugs such as copy-cat versions of Merck's (NYSE: MRK  ) Fosamax, and the list goes on. Getting traction isn't going to be easy.

Amgen will probably have an easier time selling the drug as a treatment for bone metastasis in cancer patients, where its main competition will be Novartis' (NYSE: NVS  ) Zometa, which it beat in two head-to-head clinical trials. Amgen has asked the FDA for permission to market the drug for the cancer indication, as well. If that's given a priority review by the FDA, Amgen could have a second indication for the drug by the end of the year.

That is, assuming the FDA continues to meet or exceed its PDUFA goals.

Let us know what you think in Motley Fool CAPS. Post a pitch about whether you think Prolia is Amgen's saving grace or a red herring. It's free. It's fun. And, it's Foolish.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Novartis is a Global Gains pick. The Fool owns shares of GlaxoSmithKline.The Fool has a disclosure policy.


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