Biotech giant Amgen (AMGN -0.28%) treated investors to a nice surprise today as the company announced that they received approval to market their new cholesterol-lowering medication evolocumab, better known as Repatha, for sale in Europe. Repatha represents the first of a new class of cholesterol lowering medicines called PCSK9 inhibitors to receive approval anywhere in the word, and the drug could offer huge revenue potential for Amgen.
A sticky and expensive situation
Repatha is used to treat patients who have high levels of low-density lipoprotein cholesterol, or LDL-C, which is more commonly known as a the "bad" cholesterol. LDL-C carries fat around the body, which is sticky and can get stuck in the walls of the arteries. This narrows the arteries and greatly increases the chances of forming a blood clot, which can result in a heart attack or stroke, the two most-common causes of death.
Although LDL is made naturally by the body, many people simply produce too much of it. In Europe alone an estimated 54% of the population has elevated total cholesterol levels, which is a major risk factor for coronary heart disease. The costs of treating cardiovascular disease is huge, as in the European Union alone the price tag runs around a total of $115 billion per year.
Out with the bad
PCSK9 is a protein in the body that reduces the liver's ability to remove LDL from the blood. Repatha works by inhibiting PCSK9 from binding to LDL receptors on the liver surface. With less PCSK9 there are more receptors available to remove LDL-C from the blood, leading to a significant reduction in cholesterol levels. In clinical studies, Repatha was shown to reduce LDL-C levels by 55% to 75% when compared with a placebo.
The European approval gives Repatha clearance to be used for patients who are genetically predisposed to having high cholesterol, those who are intolerant to statins, and those who cannot experience enough benefit from using statins. Statins have been widely used to lower cholesterol for years, but they alone haven't been able to solve the cholesterol problem. In Europe more than 60 percent of high-risk patients were still unable to adequately lower their LDL-C levels with statins or other currently-approved lipid-lowering agents alone. The problem was even worse for high-risk patients, of whom more than 80 percent still can't control their levels.
Around 73 million adults in the United States have high LD-C levels, and yet fewer than 1 out of every 3 adults has the condition under control. PCSK9 inhibitors offer real hope to millions of patients as a new tool to help solve the cholesterol problem.
Americans will still have to wait before they can potentially gain access to this type of medicine, but perhaps not for too long. An FDA advisory committee has already recommended that Repatha gain approval, and today's announcement of a European approval certainly creates hope for a yes stateside. The FDA is scheduled to make an official decision by August 27th.
Analyst believe that Repatha offers a tremendous revenue opportunity for investors, as peak sales of the drug are estimated to be north of $5 billion. If the opportunity proves to be anywhere near that range, Repatha could go a long way toward growing Amgen's top line. Amgen racked up more than $19 billion in sales in 2014, so Repatha certainly has the potential to move the needle and help fund Amgen's capital return programs.
Competition looms large
This approval probably stings a little for investors in Regeneron Pharmaceuticals, as the company has its own PCSK9 inhibitor called Praluent that is currently pending approval. Amgen has managed to win the race to gain the first approval, but Regeneron and its partner Sanofi should hear any day now about an approval of their own.
While seeing competition for Amgen's potential blockbuster come so soon is a bit of a bummer, the market for PCSK9 appears to be huge enough for both drugs to grow nicely. If PCSK9 inhibitors can live up to the hope that they promise to the millions of patients around the world who struggle to control their cholesterol levels, then investors in both companies should be poised to profit in the years ahead.