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: Amgen’s new cancer drug faces questions about competition

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Amgen Inc.’s
AMGN,
-0.20%

Lumakras, which already has a type of conditional approval to treat lung cancer, produced mixed results in a closely watched clinical trial comparing the drug to docetaxel, a commonly used chemotherapy.

The news, announced in a news release on Sunday and in a presentation at the European Society for Medical Oncology meeting in Paris on Monday, hit Amgen’s stock, which closed Monday at $237.62, a 10% drop over Friday’s closing price of $247.69. The stock trended further down this week, closing at $228.12 on Wednesday.

A series of analyst notes that followed the clinical data underscore Wall Street’s questions about the potential blockbuster status of the oral pill.

“Not only was the [overall survival] endpoint not achieved, median survival was actually three weeks worse in the Lumakras arm compared to docetaxel, although the difference was not statistically significant,” Baird analyst Brian Skorney wrote in an investor note. “This is a pretty shocking fall from grace for one of the more exciting innovations in targeted oncology this decade and a key part of Amgen’s long-term growth strategy.”

The Food and Drug Administration first approved Lumakras last year using an accelerated pathway as a treatment for KRAS G12C mutated non-small cell lung cancer that has advanced or is metastatic. The drug generated $90 million in sales for Amgen in 2021. It’s expected to bring in $347 million in sales this year and $1.3 billion in 2026, according to a FactSet consensus.

The confirmatory CodeBreak 200 trial showed that Lumakras generated 5.6 months of progression-free survival, against the 4.5 months of progression-free survival for docetaxel. Overall survival was 10.6 months for Lumakra and 11.3 months for docetaxel.

“Clearly the relevance of the KRAS G12C inhibitor drug class will be defined by success or failure within front-line NSCLC studies,” Raymond James analyst Dana Leone told investors. “Overall survival will be a necessary outcome to demonstrate superiority within a front-line study for any regimen containing [Lumakras] relative to standard of care.”

Analysts agreed that the new data won’t stand in the way of Lumakras getting full approval as a second-line treatment, though it does raise further questions about Lumakras’ position in the market.

“While we believe the totality of the data supports full approval, the update further raises our index of concern around competition,” UBS analysts told investors, citing the entry of products from companies like Mirati Therapeutics Inc.
MRTX,
+0.77%
,
which is expecting an FDA decision on its competing therapy, adagrasib, in December.   

“These results help de-risk MRTX’s confirmatory trial against docetaxel,” SVB Securities’ Andrew Berens wrote in an investor note. “Additionally, we think that the decreased efficacy provides an opportunity for MRTX to show differentiated efficacy in its confirmatory trial.”

Amgen’s stock is up 0.9% this year, while the broader S&P 500
SPX,
-1.13%

has declined 13.7%.

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