Repatha OK looming, analysts wait to see if Amgen will start PCSK9 price war

Amgen R&D Chief Sean Harper

Amgen ($AMGN) is likely to start today off with a case of bubbly chilling in the company cafeteria. The FDA has reached its deadline on a marketing decision for the cholesterol drug Repatha (evolocumab), which most likely is on the verge of becoming a major rival to the newly approved Praluent (alirocumab), from Regeneron ($REGN) and Sanofi ($SNY).

The signs are all positive. Amgen completed a battery of late-stage studies to deliver a compelling case for Repatha, a PCSK9 drug that was once tapped as the leader in the development race--only to be leapfrogged by an aggressive Sanofi/Regeneron team, which bought out a priority review voucher in order to steal a regulatory march for a pioneering first at the FDA. Amgen, though, has already scored an OK in Europe, and it's had plenty of time to gear up for the market competition ahead.

Both drugs have a remarkable impact in lowering levels of bad cholesterol, which could have a significant impact on the longterm health of patients who don't respond to the cheap statins now on the market. But payers were hit with a $14,600 annual wholesale price on a drug aimed at a very big market when Praluent was green-lighted. You can expect all of them to run right past the approval line and hunt immediately on how Repatha will fare against a $40-a-day sticker as insurers look to line up formulary discounts by playing one side against the other.

Nomura's analysts recently echoed another theme around today's decision, wondering how the breadth of the label will compare to Praluent's. Skipping the frontline market and moving into second-line therapy for statin intolerance, though, was worth a $2.5 billion peak sales estimate--and that includes the hefty discounts that will like play out as the rivals compete for market share in much the same way that companies have been competing in hep C recently.

Look for Express Scripts to set the tone early in its aggressive hunt for lower prices.

The horse race to the finish line by these three companies had had major implications for each. Amgen has had a few successes, buying Kyprolis and recently expanding the market range for a combo approach against multiple myeloma, for example. There was an approval for the heart drug ivabradine (Corlanor), which many analysts just shrugged off as a marginal new player unlikely to get close to blockbuster status.

Repatha, though, could help add some badly needed luster to the company's R&D group, which has been restructured as Amgen sought to lower the percentage of cash that is committed to drug development. The changing fortunes have already inspired CEO Robert Bradway to anticipate better numbers for Wall Street, with lower costs and new revenue rewriting the story line at Amgen.

Regeneron, meanwhile, has been adding to its operations in a big way, building on its success with Eylea. And Sanofi, which paid heavily for a seat at Regeneron's table, got a blockbuster contender after a series of internal setbacks and reorganizations of its own.