Amgen: Late-stage focus
2011: $3.1 billion
2010: $2.78 billion
As a percentage of revenue: 20%
R&D chief: Sean Harper
As the world's biggest biotech company, Amgen ($AMGN) has reached the point at which it is expected to deliver numbers like a pharma company while driving new products down the pipeline like a biotech. It's an uneasy place to be. For most publicly traded biotechs, an R&D budget that gobbled up only 20% of revenue would be considered normal, if not low. For Amgen, it sparked such enormous unrest among profit-hungry investors that it forced a restructuring of R&D. Soon after the shake-up, both the CEO and research chief ended up exiting the company.
Ironically, Amgen's immediate future--and the reputations of its new top executive team--now rests almost entirely on the strategic bets laid by its former R&D chief, Roger Perlmutter. Drawn by Micromet's technology to kill tumor cells, Perlmutter helped arrange a $1.16 billion cash buyout. That came a year after a billion-dollar deal to acquire BioVex's late-stage OncoVex cancer vaccine. And in another recent cash deal, Amgen snagged KAI Pharma's late-stage KAI-4169, an experimental therapy for secondary hyperparathyroidism in patients with chronic kidney disease, for $315 million in April.
In the third quarter of last year, Amgen's research costs surged 11%, with big bets on later stage programs for AMG 386, ganitumab (AMG 479), talimogene laherparepvec (OncoVex) and AMG 145 driving its expenses northward. Executive Editor Ryan McBride selected OncoVex as one of this year's Top 10 Late Stage Cancer Drugs. Like many Big Pharma companies have been doing, Amgen moved to fix the math, axing 380 R&D workers and clustering its resources more closely around those late-stage efforts.
Despite its vow to rein in research spending, Amgen started the year with a hefty $20 billion cash cache, which it has been using to diversify the business as well as add new programs to the pipeline. That kind of cash reserve makes Amgen a frequent subject of market gossip, as speculators play their fantasy M&A games. Amgen has the cash necessary to buy some sizable bolt-on biotechs. And it has plenty of crucial late-stage data in the offing.