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Source: Amgen via Flickr.

Whether you realize it or not, biotech blue-chip stock Amgen (NASDAQ:AMGN) has had a stellar year. You may not see that reflected in its share price considering the magnitude of the recent stock market correction, but over the past year Amgen has witnessed five of its 10 key late-stage therapies receive approval from the Food and Drug Administration.

Amgen lands a big label expansion with Kyprolis
One of those approvals was a supplemental new drug application for Kyprolis, Amgen's drug to treat multiple myeloma, which is a type of cancer that usually grows in a patient's bone marrow.

Kyprolis was initially approved by the FDA in June 2012 as a third-line (or greater) therapy after demonstrating a 23% overall response rate and leading to a median duration of response of 7.8 months. While that may not sound like a high response rate or long duration, keep in mind that the clinical study which led to its approval featured patients who had tried and progressed on an average of five multiple myeloma therapies. A median duration of response of close to eight months in close to a quarter of patients receiving the drug is pretty remarkable given those circumstances.

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Source: Amgen.

But Amgen, which purchased Onyx Pharmaceuticals (the developer of Kyprolis) for $10.4 billion in 2013, needs a lot more from Kyprolis than just a third-line indication. The plan all along had been to move Kyprolis into a second-line indication for multiple myeloma since the number of second-line patients is more than double the number of potential patients in the third-line indication. An approval for second-line usage was needed to justify the $10 billion-plus price tag for Onyx, and to give Kyprolis an opportunity to reach in excess of $2 billion in annual sales.

In July Amgen received this approval, although it was not a slam dunk. In terms of progression-free survival Kyprolis dominated the placebo in the ASPIRE trial, improving PFS by a statistically significant 8.7 months (26.3 months versus 17.6 months), and it trounced Velcade in a head-to-head in the ENDEAVOR study, essentially doubling its median PFS (18.7 months versus 9.4 months). However, in the FOCUS study that examined median overall survival, Kyprolis failed to produce a statistically significant improvement in overall survival over the placebo. Kyprolis was nonetheless approved, but it's left the door wide open for a potential competitor to swoop in.

I suspect that if Amgen looks closely enough in the rearview mirror, though, it'll see Johnson & Johnson (NYSE:JNJ) and its multiple myeloma therapy daratumumab coming up quicker than it realizes.

Johnson & Johnson's daratumumab is coming on strong
In July, Janssen Pharmaceuticals, the pharmaceutical subsidiary of Johnson & Johnson, submitted its biologic license application for daratumumab as a third-line therapy in multiple myeloma.

The primary support or this indication comes from a phase 2 study known as SIRIUS. At the American Society of Clinical Oncology's annual meeting just three months prior, J&J announced its findings from the study, which included an overall response rate of 29% and a median duration of response of 7.4 months.

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Source: Multiple Myeloma Research Foundation.

But SIRIUS is just one of many crucial data points that J&J is using in the hopes of getting daratumumab approved by the FDA. Earlier this week Johnson & Johnson published the findings from its GEN501 open label phase 1/2 study involving daratumumab. The study itself was primarily focused on safety and dose-finding, but a number of key secondary data on efficacy lent to daratumumab's potential in later-stage multiple myeloma.

As published in The New England Journal of Medicine, daratumumab led to a 36% overall response rate in the 16 mg/kg cohort, the chosen dose after escalation trials were run. Of the responders, 11 exhibited partial responses, two had very good partial responses, and two showed complete responses. Additionally, patients in the study had a median of four previous lines of therapy, with 79% of patients refractory (i.e., resistant) to their prior treatments. Finally, median PFS clocked in at 5.6 months, with 65% of responders remaining in remission at the 12-month mark.

The point worth noting here is that daratumumab's overall response rate in two studies now looks bigger than that of Kyprolis in late-line indications (although, of course, it's always difficult to compare between studies, so it's important to take that with a grain of salt). The two therapies also share similar safety profiles.

Could daratumumab push Kyprolis for multiple myeloma patients?
First things first for J&J: it needs to get daratumumab approved by the FDA before it can think about marketing its next potential cancer product. However, based on the aforementioned data, an approval seems to me to be more likely than not.

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Source: National Cancer Institute.

The real question is whether daratumumab could displace Kyprolis for patients in the third- and fourth-line indications. Kyprolis is pretty well entrenched in these indications, and while estimates vary wildly, Kyprolis could generate in the neighborhood of three-quarters of a billion dollars in peak annual sales just from treating third-line and higher multiple myeloma patients. It's quite possible that daratumumab could begin eating into Kyprolis' market share, and it may even come after Kyprolis in a second-line setting.

There are also a couple of finer points that investors are going to want to keep an eye on as we move forward. First, we still don't have median overall survival data on daratumumab, as it's still maturing. This critical data is really where it could separate itself from Kyprolis, even more so than the overall response rate figures mentioned earlier. Obviously a statistically significant improvement in survival over the placebo, or even a strong trend relative to the placebo in overall survival, could sway physicians and consumers toward daratumumab and away from Kyprolis in late-stage multiple myeloma.

Secondly, we can't forget that pricing could come into play. As it stands now Kyprolis runs $10,000 per 28-day treatment cycle, making it the most expensive drug to treat multiple myeloma. If daratumumab is around the same price point or lower it could instantly become the therapy of choice. Of course, a lot will depend on its maturing survival data.

If there's a key takeaway here it's that Kyprolis may not be as safe as Wall Street and investors think. That's certainly not the end of the world for Amgen with its growing product portfolio and pipeline, nor will it be a dramatic boost for Johnson & Johnson, which has delivered seven new molecular entities since 2009 that are generating $1 billion-plus in annual sales. But daratumumab's march toward approval continues to look more and more like a positive for J&J and potentially bad news for Amgen and Kyprolis.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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