Swiss drugmaker Novartis's (NVS -1.02%) $9.7 billion takeover of The Medicines Company (MDCO) gives the former ownership of an investigational cardiovascular drug called inclisiran. And that may mean trouble for Amgen (AMGN 0.10%) and its heart drug Repatha, which hasn't lived up to blockbuster hopes.

Scientists doing research.


The Medicines Company plans to apply for FDA approval of inclisiran in the fourth quarter. If the drug is approved, powerhouse Novartis will be in the driver's seat, ready to market the treatment. Amgen's Repatha already competes with Praluent, sold by Sanofi (SNY 0.52%) and Regeneron (REGN -0.34%), but this possible new addition to the market offers a greater threat because of Novartis' size and global reach. Management at Novartis, which has $51.9 billion in annual sales, said the product could become one of its largest sellers. The drugmaker was willing to pay a 41% premium over The Medicines Company's share price to gain access to it.

Repatha and Praluent are known as PCSK9 inhibitors. They work by blocking the action of PCSK9, a protease enzyme, and as a result help remove bad cholesterol from the blood. Inclisiran works a bit differently, blocking the production of PCSK9.

Falling short of blockbuster hopes

On the surface, Amgen's Repatha might appear to be in a solid position. The drug saw a 40% increase in year-over-year third-quarter sales, bringing in $168 million. But Repatha, along with its Sanofi-Regeneron competitor, has fallen short of blockbuster status, meaning it hasn't generated more than $1 billion in annual sales. Repatha's sales, though up 72% year over year and higher than those of Praluent, only totaled $550 million for 2018.

The initial trouble was the price tag, with some doctors turning their backs on the $14,520 annual bill and choosing to prescribe other treatments for their patients. Amgen later cut the cost, recently announcing that the new $5,850 price would be permanent. Sanofi and Regeneron also lowered the price of Praluent to match that of Repatha. Now the concern is whether an increase in prescriptions can make up for the drop in price. Amgen introduced the lower price about a year ago, and although sales have increased, the gains still haven't lifted the drug close to the $1 billion mark.

Though it isn't clear how much the soon-to-be Novartis drug inclisiran would cost, The Medicines Company's board of directors chair, Alexander J. Denner, said in a news release about the takeover that The Medicines Company's goal has always been to make inclisiran "an affordable, widely available treatment."

Treatment twice a year

Beyond the pricing, another issue that may work against Amgen is the fact that inclisiran offers an easier treatment regimen. Repatha requires injections every two weeks or once monthly. In inclisiran Phase 3 trials, dosage was on day one, with another dose after three months, then doses every six months thereafter. The twice-a-year regimen will allow for treatment during routine medical visits and will result in higher patient compliance, Novartis said in a news release.

A possible inclisiran approval won't make things easier for Repatha -- and that means more headwinds for Amgen, which is already suffering from declining sales as generics eat away at the market share of its older drugs. Total revenue fell 3% to $5.7 billion in the third quarter, and total product sales slipped 1% compared with the same period a year ago, Amgen reported. The company's annual sales increased 4% in 2018 to $24 billion.

That said, Amgen is being proactive in its approach to the challenges of thriving as a biotech company that's already been around for nearly 40 years. It recently struck a deal with BeiGene that will expand its presence in oncology in China, and it has about 30 drugs in the pipeline with work also under way on biosimilars, or less expensive versions of biological drugs. The shares are up 17% this year, with much of the gain coming after the BeiGene announcement. And with a valuation of 18 times earnings,  compared with 18 for Novartis,  24 for Sanofi,  and 20 for Regeneron,  the stock isn't expensive. 

That said, for investors looking for growth, now might not be the time to bet on Amgen. Sadly, there's no quick and efficacious remedy for slowing growth, especially with new drugs like inclisiran waiting in the wings.