Acceleron, Celgene Take Aim at Amgen’s Multibillion-Dollar Anemia Market

8/5/11Follow @xconomy

Amgen became the biotech industry’s biggest company largely because of a drug it developed in the 1980s for treating anemia. Plenty have tried, and failed, to knock Amgen off that pedestal ever since. But now a deepening alliance between Summit, NJ-based Celgene (NASDAQ: CELG) and Cambridge, MA-based Acceleron Pharma is taking one, and possibly two, more serious shots at the industry giant.

Celgene, the world’s third biggest biotech by market valuation, said earlier this week that it had agreed to expand its partnership with Acceleron to get the right to co-develop not just one, but also a second experimental drug the smaller company has designed against anemia. If the challengers are successful, they will prove to physicians that they can boost the body’s production of oxygen-carrying red blood cells to help patients fight anemia, without some of the safety concerns that have dogged Amgen’s products the past five years. And if that can be proven, the rivals will be in position to grab a piece of a market that, despite the safety worries, still generated $5 billion in worldwide sales for Amgen last year.

Celgene has had a remarkable growth run of its own the past decade with treatments for various blood cancers, but companies of that size need to aim high to sustain fast growth. That’s what has led it to zero in on a big new opportunity like anemia, says Acceleron CEO John Knopf. “When you’re a $25 billion company, you need a big hit,” Knopf said on a recent visit to his company’s offices.

How big is the anemia drug business exactly? Amgen lost $29 billion in stock market value in 2007 after its two anemia drugs were tied to higher risk of heart attack, stroke, and death when used at high doses, prompting the FDA to slap tight restrictions on their use. The worldwide market for anemia drugs generates more than $10 billion in sales each year, for patients with various states of kidney disease, and cancer patients who get anemic from chemotherapy that kills off otherwise healthy red blood cells just like tumors.

A little bit of science is required to understand how the new products are being made differently. Amgen’s drugs are genetically engineered forms of a hormone called erythropoietin that stimulates the production of red blood cells that carry oxygen through the blood, which people need to feel vigorous. One product is primarily designed for treating patients who are on kidney dialysis (Epogen), while the other (Aranesp) is a longer-lasting form that requires fewer injections, and is positioned for patients with less severe kidney disease and the chemotherapy-induced anemia.

Acceleron’s first alternative to this is called sotatercept, or ACE-011. This drug works on a different target known as activin receptor type IIa, which is involved at a different point in the biological process in which red blood cells are formed. If it were only about solving anemia, you can be sure that scientists and physicians would be yawning. But by blocking this pathway, Acceleron and Celgene are wagering that they can stimulate red blood cells while also blocking the growth and spread of tumors. And, of course, without that dangerous link to increased heart attack or stroke.

Back in June, the companies put this idea to a serious test. Celgene began enrolling the first cancer patients into a Phase 2b study that is designed to switch into a pivotal, 750-patient Phase 3 study if certain goals are met in the early going. The study is designed to show the new drug can raise patients’ hemoglobin scores to a range that’s acceptable to the FDA, while also looking to see if it does anything to the patients’ tumors, or offers any change to their overall survival time.

There have been conflicting studies on whether patients live longer or shorter lives after getting the current anemia drugs, and Amgen is currently trying to lay this concern to rest with its own controlled study designed to measure survival times. But if Celgene and Acceleron can generate convincing data that their drug has an anti-tumor benefit, and that it’s about equal to a placebo on survival time, it could have some strong ammunition for a marketing battle with Amgen. Despite vigorous protests from Amgen, some scientists still wonder whether drugs like the ones it markets actually help nourish tumors. And if Amgen comes out with a trial result that says its drug has no pro-tumor effect, many will be skeptical.

“People will ask, what kind of patients did they select? What kind of dose did they use?” says Acceleron’s chief medical officer, Matt Sherman. “One more study, whether it’s positive or not, will not sway everybody.”

The second drug Celgene and Acceleron are working on, ACE-536, is designed to work in yet a different way. That product, scheduled to enter its first clinical trial in September, is made to block a member of the TGF-beta superfamily of proteins that are involved in the late stages of red-blood cell formation. Animal studies have shown the drug can promote red blood cell growth when there’s no sign of the usual erythropoietin around. Celgene and Acceleron haven’t said much specifically about how this might useful, but Knopf said on my visit that the drug may find its niche in patients with different forms of anemia.

This last deal is particularly important for Acceleron as a company, given it has raised the steep sum of more than $140 million from venture investors, and has sought cash from partners to sustain operations as it moves through the costly stages of clinical development. The new Celgene deal provides a couple more years of cash to run its business, according to Steve Ertel, Acceleron’s senior vice president of corporate development.

It’s a big enough bet for Celgene that its investment bankers have been calling and asking questions of Acceleron to learn more about the strategy of the program, Knopf says.

Who knows how many of the bankers realize this, but Acceleron’s management team has been around the block in this field more times than they probably care to talk about. Knopf, along with several other key members of the Acceleron management team, cut his teeth earlier in his career at Cambridge, MA-based Genetics Institute in the 1980s. They earned some battle scars in a winner-take-all patent dispute with Amgen, which Amgen won in court.

When I joked to Knopf on my visit that the Celgene/Acceleron alliance is sort of like a rerun of the old GI-Amgen battles of the 1980s, he smiled and laughed. “We hope this one won’t be decided in court,” he said.

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