Amgen's Bone-Building Boost

While one of Amgen's (NYSE: AMGN  ) drug candidates suffered a letdown last week, another compound delivered some welcome good news.

After the markets closed on Friday, Amgen announced that its potential postmenopausal osteoporosis treatment, denosumab, produced positive results in a crucial phase 3 study.

Amgen is waiting until a scientific conference in September to release the detailed data, but did state that the study produced statistically significant results for its primary endpoint in reducing bone fractures, along with two of its secondary endpoints.

This isn't denosumab's first positive study, but it could seal the deal for its eventual marketing approval, provided no safety issues pop up to spook the FDA. Denosumab is also in a number of other phase 2 and 3 studies for other bone-related conditions, including bone loss caused by cancer treatments.

A drug named Nplate is the most likely Amgen drug to get near-term approval, if the FDA ever gets around to completing its review. But among Amgen's late-stage candidates, denosumab has the best shot at becoming a blockbuster billion-dollar compound. Rival osteoporosis treatments from drugmakers like GlaxoSmithKline (NYSE: GSK  ) , Merck (NYSE: MRK  ) , and Eli Lilly (NYSE: LLY  ) have proved to be good sellers in recent years

Most of these treatments have very different product profiles; some need to be dosed much less often than others, while others are delivered in more convenient oral forms. In short, there's room in the osteoporosis drug market for a compound like denosumab, if its efficacy and safety profile is up to snuff.

Amgen picked up the full rights to denosumab in 2005, in its $2.2 billion-plus acquisition of development-stage drugmaker Abgenix. Aside from denosumab, the biggest jewel of that buyout was cancer therapy Vectibix.

Vectibix gained FDA marketing approval in late 2006, but its sales have failed to take off as competitors like ImClone Systems' (Nasdaq: IMCL  ) and Bristol-Myers Squibb's (NYSE: BMY  ) Erbitux best its data in clinical trials. Given that letdown, only denosumab's success can validate Abgenix's hefty purchase price. These latest study results are a good step in that direction.