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Thursday, May 30, 2024

Amgen May Give Area Booster Shot

When Amgen Inc. rose to prominence in the 1980s, it seemed as though Thousand Oaks was on its way to being the next hub of biotechnology companies. It hasn’t exactly worked out that way, and some have pointed the finger at Amgen itself, saying the company didn’t do enough to foster the local industry’s growth. Now, that may be changing. The biotech giant recently announced it is spinning off a company called Atara Biotherapeutics that will be headquartered in Westlake Village and take over the development of six pipeline drugs. That’s a first for Amgen, which rarely licenses its products to other domestic companies. And similar deals are in the works under the leadership of Chief Executive Robert Bradway, who took over in May from longtime CEO Kevin Sharer. “I have a client now who is currently negotiating a deal with Amgen to license an intellectual property. It’s really exciting because apparently one of the conditions is that the company has to stay nearby,” said attorney Brent Reinke, partner at Westlake Village firm Musick, Peeler & Garrett LLP, where he works in acquisitions and venture funding for startups. “Amgen hasn’t really encouraged the same sort of industry growth in the area in the way that, say, Genentech Inc. has done in the Bay Area,” he added. Atara is working on drugs primarily focused on kidney and cancer treatments, and also is getting an undisclosed dose of capital backing from prominent Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers. In announcing the deal, Amgen noted that the spinoff would boost the local biotech community. But the investment by Kleiner Perkins may point to a more fundamental reason behind the strategy – Amgen’s willingness to accept lower future long-term revenue from its pipeline of drugs, in exchange for sharing development costs with other parties. Sharer was criticized prior to his departure for allowing research and development costs to bite into profits, a factor in driving down Amgen’s stock, though shares have recovered over the past 18 months. “This would be a way for things to move through development faster and cheaper,” said Bruce Blomstrom, a retired biopharmaceutical company executive who heads the Pasadena BioScience Collaborative, a nonprofit supporting the local biotech industry. Keeping Close Ties Amgen does not frequently license out its drugs to other companies, not even overseas, where it can rely on its international operations to do so. Amgen has instead preferred to branch out by acquiring companies outright or investing money into startup biotech firms through its corporate venture capital arm, Amgen Ventures. Through that program, it has invested in at least 11 companies in the last 10 years, some in conjunction with Kleiner Perkins. Among them are Epizyme Inc. in Cambridge, Mass., with a cancer focus; and Synovex Corp., in Medford, Mass., a developer of arthritis drugs. The Atara initiative is starkly different, with the deal not being done through the company’s venture fund, though it does have close ties to Kleiner Perkins. Not only is the Sand Hill Road VC firm investing in the spinoff, but a former Kleiner Perkins partner, Dr. Isaac Ciechanover, is chief executive. In 2010, Amgen spent $2.9 billion in research and development, and investors and Wall Street analysts both voiced concern that there was room to cut some of that cost. By investing in other companies and backing spin-offs to advance concepts that may be languishing in development, the idea is it can both trim costs and speed the drugs to market. “It’s less bureaucratic to move ahead at the small companies. They’re more focused on one thing,” Blomstrom noted. In the case of Atara, Amgen has not named the specific drugs the spinoff is taking, though it noted in a statement that the company will primarily focus on kidney and cancer treatments, and they range from those in the preclinical stage to those in early clinical trials. That implies the drugs are years from market, which means Atara is just one avenue the company is pursuing to bring new products to market, including its internal pipeline. The company is under pressure because its two blockbuster anemia drugs, Epogen and Neupogen, are soon to be challenged by generic versions as patent exclusivity expires in the next few years. The drugs, along with Neupogen’s longer-lasting version Neulasta, accounted for $7.4 billion, or about half, of the company’s 2010 revenue. Among the company’s most promising in-house pipeline drugs is AMG-145, a cholesterol drug entering its final human trials, intended to challenge Pfizer Inc.’s marketing leading Lipitor. “We really think this drug has great potential, but it’s too early to tell right now when it will be on the market,” said Amgen spokeswoman Ashleigh Koss. “We do think we’ll be in Phase III trials by early next year.” Happy to stay Just as uncertain as the market potential of Atara’s drugs is the actual effect the company will have on the local industry. The company will do some drug development at Amgen’s Bay Area facilities, but will have its headquarters in a Westlake Village office park, said Atara spokeswoman Aman Battish, “They’re very happy to stay in that Ventura County area,” Battish said. “It’s too early to say where they’ll be long term, but that’s how it’s going to stay for now.” Biotech experts say staying nearby the lead company’s base is a traditional requirement for tech companies looking to spin-off some of their assets. Staying near home is also important to employees who may want a new career. “What’s also encouraging here is that a lot of people who have been at Amgen don’t want to move,” Blomstrom said. “And that is encouraging because they want to stay put.” But while supporters of bioscience companies in the area are excited by the deal, they warn that the enthusiasm needs to be tempered. Attorney Reinke, who also co-founded the BioScience Alliance, a Westlake Village industry networking group, recalled that when Amgen laid off workers a few years ago, many thought it would translate into a host of local startups, which didn’t happen. Others note that, ultimately, Amgen will do what’s best for Amgen, and that means finding profit wherever it may be. “Obviously Amgen did the deal because it made some economic sense for them, not just because it’s good for the Thousand Oaks area,” said Ahmed Enany, president of the Southern California Biomedical Council trade group. “We need to see how this will translate. It’s a good sign, but it’s just one company. If I start seeing 10 or 15 (startups), that would be a significant trend,” he added.

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