Amgen's DMab scores in trials

NEW YORK (Fortune) -- An Amgen trial drug -- called denosumab -- reached a new milestone on July 7 when the biotechnology company announced results from the latest clinical trial of the drug for bone cancer. The trial of more than 2,000 patients showed DMab -- which works to slow bone destruction, a primary concern for people with advanced cancer and the cause of a myriad of complications, including fractures -- delayed the time it took for damage to occur when compared to rival drug Zometa, which is made by Novartis. Amgen has already submitted DMab to the Food and Drug Administration as a treatment for osteoporosis.

"We're very, very excited about it," Amgen CEO Kevin Sharer told Fortune. "This has been a drug we've worked on for 15 years. We did the fundamental biology and invested over $1 billion. I bet my job on it."

Yesterday, the day after the announcement, Amgen's stock surged 14% -- the most in four years. Analysts had a field day in their notes, with some increasing Amgen's share price expectations to more than $70 and others upping annual revenue estimates for DMab to as high as $3 billion.

Steve Yoo, an analyst at health care investment bank Leerink Swann, estimated in a note that U.S. sales of DMab as a treatment for bone cancer could hit $558 million by 2012. And U.S. sales of the drug as an osteoporosis therapy could total more than $2 billion in the same period, for an overall DMab revenue of more than $3 billion by Yoo's calculations.

By comparison, Zometa brought in $1.4 billion in sales last year. Yoo noted that the cost of DMab will likely be higher than Zometa, but warned that pricing it too high could limit prescriptions of the drug as an osteoporosis treatment.

DMab is a biologic -- a medicine made from living organisms -- and works by blocking the activity of the protein that regulates the cells responsible for breaking down bone, making it valuable as an osteoporosis therapy. When used as a bone cancer treatment, it targets metastases that are extremely prevalent with certain types of advanced cancer, reaching incident rates of nearly 75% in breast and prostate cancer patients, according to Amgen (AMGN, Fortune 500).

The biotech expects an FDA decision on DMab as an osteoporosis therapy by Oct. 19. Yoo says there's no timeline yet on when the drug will be submitted to the agency for approval as a bone cancer treatment. But whenever the decisions arrive, approval of DMab for both uses would mean a big boost for Amgen. "I think it'll really be important for patients," Sharer told Fortune. "So it's very, very important to us."