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Source: Amgen.

Following the approval of two new therapies for the treatment of heart disease, Amgen (NASDAQ:AMGN) management is riding high. But instead of taking a victory lap, its decision last week to acquire Dezima Pharma shows it's not about to rest on its laurels. With this deal, which could ultimately be valued at $1.5 billion plus royalties, Amgen is handing over $300 million in cash up front in order to add Dezima's TA-8995, a cholesterol-busting drug, to its research pipeline. 

Tapping a big market
The addition could prove to be savvy given that as many as 76 million Americans could conceivably benefit from some form of cholesterol-lowering medication, according to pharmacy benefit manager Express Scripts.

Today, less than half of that estimated patient population is receiving treatment for their elevated cholesterol levels, usually in the form of statins that reduce bad cholesterol production in the liver.

If even a fraction of that patient population eventually embraces a next-generation drug like TA-8995, then it could add billions of dollars to the top line every year.

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Source: Dezima Pharma.

Capitalizing on the opportunity
Amgen has already spent big money developing and now commercializing Repatha, a homegrown cholesterol battling medicine that won FDA approval for use in tough-to-treat patients in August.

Although Repatha's approval initially clears its use in rare forms of high cholesterol due to genetic mutations or in patients who have already suffered a cardiovascular event, such as stroke, most industry watchers believe that it will still be used on hundreds of thousands of patients or more. If so, then its $14,100 list price could translate into billions in additional sales per year for Amgen.

If that thinking is correct, then the amount Amgen paid to buy Dezima could be a bargain.

Unlike Repatha, which is taken via injection every two weeks or once monthly to clear additional bad cholesterol from a patient's bloodstream, TA-8995 is taken orally once a day to boost good cholesterol and lower bad cholesterol to reduce plaque buildup in the arteries.

TA-8995 attempts to do this by interrupting the activity of the cholesterol ester transfer protein, or CETP, which facilitates the transfer of cholesterol esters and triglycerides between good cholesterol and bad cholesterol and can contribute to the buildup of plaque.

In phase 2b studies, people taking TA-8995 either as monotherapy or alongside a statin saw a significant 45% to 48% decline in their bad cholesterol levels and a 161% improvement in good cholesterol.

Looking ahead
A larger and longer living population suggests that heart disease may claim the lives of far more people in the future than it does today and that's admittedly a scary thought given that heart disease is one of the most common causes of death worldwide, claiming the lives of more than 600,000 people in the U.S. or roughly one out of every four American deaths every year.

Because cholesterol-lowering statins have been proven to reduce the risk of cardiovascular events, many believe that PCSK9 drugs like Repatha and CETP inhibitors such as TA-8995 could offer patients a similar benefit; however, that hasn't been proven in clinical trials -- yet.

Amgen is conducting a cardiovascular outcomes study for Repatha that's expected to wrap up in 2017, and if that trial proves Repatha's ability to reduce the likelihood of cardiovascular death, Repatha could become used in a far bigger patient population than it will initially target.

It's unclear whether Amgen plans to conduct a similar outcomes trial for TA-8995; however, in Dezima's phase 2 data press release the company noted that TA-8995 can boost cholesterol efflux, which has an inverse relationship to cardiovascular events. As a result, Dezima wrote in its press release "adding to the potent LDL-C reduction, this is expected to have a large, additional effect on the relative risk reduction for cardiovascular events in the phase 3 program of TA-8995."

Obviously, investors will have to wait for phase 3 results, which could still be years away given that studies probably won't begin until next year, to find out if that's the case, but with Repatha's launch under way and the potential for TA-8995 down the road, Amgen's big bet on next-generation cholesterol treatments could be brilliant.

 

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.