FDA Approves Amgen Cancer Drug

The Food and Drug Administration approved Amgen Inc.'s new colon-cancer drug Vectibix, giving the biotechnology giant its first cancer treatment and setting the stage for an unusual and aggressive price war with Erbitux, a rival drug from ImClone Systems Inc. Recent drug approvals and submissions at Drug Pipeline

Amgen said the FDA approved Vectibix, which also goes by the generic name panitumumab, for use in colon-cancer patients who have failed all forms of traditional chemotherapy. The drug has demonstrated the ability to slow the growth of cancer but hasn't yet been proven to help cancer patients live longer. Amgen, based in Thousand Oaks, Calif., said it will launch Vectibix in early-to-mid-October.

The company, whose main products to date include drugs that treat arthritis and that help support chemotherapy and kidney-disease patients, has big plans for Vectibix. Last year, Amgen Chief Executive Kevin Sharer said the drug should generate as much as $2 billion in annual sales, an estimate that some analysts say is plausible and others consider aggressive. Amgen obtained Vectibix in April when it acquired its maker, small biotech Abgenix Inc., for $2.2 billion.

Many analysts expect much of Vectibix's growth to come at the expense of Erbitux. Both drugs are antibodies genetically engineered to attack cancer cells by latching onto a growth-related protein called epidermal growth-factor receptor, or EGFR.

Erbitux, which was approved for use against colon cancer more than two years ago, racked up U.S. sales of $413 million in 2005. It is sold by Bristol-Myers Squibb Co. in the U.S. and by Merck KGaA outside the U.S.

To jump-start competition with Erbitux, Amgen said it will price Vectibix approximately 20% lower than its rival, at roughly $8,000 a month. Such price-cutting is rare in the market for biotechnology drugs, even if it leaves the treatments extremely expensive by conventional measures. A year of Vectibix treatment could run almost $100,000.

"They're taking an aggressive stance from the pricing perspective," said Joel Sendek, an analyst with Lazard Capital Markets LLC. Biotechnology companies often price new drugs the same as or higher than rival drugs, typically to justify their claims that the new treatments are superior to the old. Because the move is unusual, it isn't clear to analysts how the discount will affect Vectibix sales.

That discount may also reflect a growing resistance among some insurers to the sky-high prices of biotechnology drugs. In addition to the lower Vectibix price, Amgen said it will also cap out-of-pocket costs for the drug at a level equal to 5% of patients' adjusted gross incomes. Amgen said that program is the first of its kind in the industry.