In what analysts called a smart and thorough housecleaning, biotech giant Amgen Inc. said Wednesday that it has severed partnerships to develop two drugs, one of which received an initial thumbs down from regulators earlier this year.
Neither drug was expected to yield big cash for Amgen, unlike the anemia drug Aranesp, approved Tuesday by the Food and Drug Administration. Analysts expect Aranesp to earn Amgen $2 billion in the next four years.
The Thousand Oaks-based company said it has ended a 2-year-old partnership with Praecis Pharmaceuticals Inc. of Waltham, Mass., to develop and market the prostate cancer drug Plenaxis, also known as Abarelix.
Amgen officials would not say how much the partnership had cost the company, but analysts said the two had a 50-50 revenue-sharing agreement that has cost Amgen at least $100 million. The FDA said in June it would need more information before it would approve Plenaxis, including data from at least one more clinical trial.
"The commercial opportunities no longer justified our continuing," Amgen spokesman Jeff Richardson said.
Praecis officials said they remain committed to bringing Plenaxis to market, with or without a new partner, and will keep current trial participants on the drug.
Praecis shares toppled $1.02, or 21%, to close at $3.95 on Nasdaq.
Analysts expressed little surprise over the news.
"Given that they obviously took some setbacks, I am not surprised that Amgen would reconsider," said analyst Elise Wang of investment firm Salomon Smith Barney.
Meanwhile, Guilford Pharmaceuticals Inc. of Baltimore said Amgen has ended a 4-year-old agreement to co-develop a nerve growth drug known as NIL-A.
Guilford also said it would retain intellectual rights to their drug and would continue development efforts.
That partnership also was considered minor for Amgen, said analysts, many of whom had not incorporated NIL-A into future earnings models.
"Amgen has really taken the opportunity to reorganize and re-prioritize," said Jennifer Chao, senior biotech analyst at Leerink Swann & Co. in Boston. "Now the company is well positioned to go forward and dedicate their efforts to other products."
Amgen shares fell $1.43 to close at $57.95, and Guilford rose 94 cents to $9.09. Both trade on Nasdaq.