|Amgen R&D chief Sean Harper|
Amgen ($AMGN), long criticized over its appetite for moonshot R&D projects, scaled back its research budget by about 6% in the second quarter, part of a companywide effort to cut costs while advancing a make-or-break pipeline.
The Big Biotech spent $964 million on R&D last quarter, down from about $1.02 billion in the same period in 2014. Through the first half of 2015, Amgen's R&D spend was down roughly 10% year over year, amounting to $1.9 billion. The ongoing austerity push is part of a 2014 plan to slash spending and improve the company's operating margin, an effort that called for nearly 4,000 job cuts--about 20% of Amgen's payroll--and the closure of a big research site in Washington.
Along the way, analysts have homed in on Amgen's R&D philosophy, anchored by big bets on breakthrough treatments, as out of step with any long-term financial success. Bernstein's Geoffrey Porges, who has called for the company to split up, pointed out that Amgen has spent more than $30 billion on research over the last decade but has only $15 billion in resulting product sales to show for it.
But Amgen's research budget is not about to rival that of Valeant Pharmaceuticals ($VRX). And, despite the cuts, the company has rallied its efforts around a handful of late-stage projects management believes can hit the market in the next year or so.
Leading the way is the cholesterol treatment Repatha (evolocumab), approved in Europe last week and slated for an FDA decision next month, after which it would compete for blockbuster sales with a rival treatment from Sanofi ($SNY) and Regeneron ($REGN). The company is up for another approval in October with talimogene laherparepvec--T-Vec, for short--which is an oncolytic vaccine targeting metastatic melanoma.
Further down in the pipeline, Amgen is planning to submit the hyperthyroidism treatment AMG 416 in the U.S. and Europe this quarter, and the company has just launched a Phase III program for AMG 334, a migraine-treating antibody in a race with candidates from Teva Pharmaceutical ($TEVA), Alder Biopharmaceuticals ($ALDR), Allergan ($AGN) and Eli Lilly ($LLY).
- read the release
Editor's note: An earlier version of this story misstated Amgen's 2014 R&D spend. We regret the error.