Amgen-Astellas Collaborate

Zacks

Amgen (AMGN) recently announced a strategic alliance with Japanese company, Astellas Pharma Inc. (ALPMY), for the development and commercialization of new drugs for a wide range of diseases in Japan.

The pipeline candidates covered under the alliance include four biologics and a small molecule targeting the cardiovascular, bone disease and cancer markets.

The companies will focus on the joint development and commercialization of five Amgen candidates - AMG 145 (cholesterol management), romosozumab (osteoporosis), rilotumumab (gastric cancer), AMG 337 (gastric cancer) and blinatumomab (acute lymphoblastic leukemia and non-Hodgkin's lymphoma).

While AMG145 is in phase II development in Japan, romosozumab is in phase II/III development. Rilotumumab is in phase I development in Japan.  Amgen and Astellas expect the first product launch in Japan in 2016.

In addition to jointly developing and commercializing the above-mentioned candidates, the companies intend to set up a joint venture in Tokyo. Through this joint venture, Amgen Astellas BioPharma KK, Amgen will look to establish and strengthen on-the-ground capabilities in Japan. Amgen Astellas BioPharma is scheduled to commence operations from Oct 2013 and is expected to become a wholly-owned subsidiary of Amgen in 2020.

Our Take

This deal is in-line with Amgen’s strategy of expanding its presence across the world. Earlier this year, Amgen had announced its intention to build a new manufacturing facility in the Tuas Biomedical Park area of Singapore. The company expects to manufacture both clinical as well as commercial products in this facility.

More recently, Amgen announced its intention to set up a joint venture in China with Zhejiang Beta Pharma Co., Ltd. The joint venture will focus on the commercialization of Amgen’s colorectal cancer drug, Vectibix, in China.

The Astellas deal makes sense as it will bring together Amgen’s development capabilities and Astellas’ experience and strong presence in the Japanese market.

While Amgen is a Zacks Rank #3 (Hold) stock, Astellas is a Zacks Rank #4 (Sell) stock. Biopharma companies that currently look well-positioned include Alkermes plc (ALKS) and Alexion Pharmaceuticals, Inc. (ALXN). Both are Zacks Rank #2 (Buy) stocks.

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