VentureBeat

(UPDATED: See below.)

The biotech colossus Amgen, stung by safety and regulatory issues that hit hard at sales of its core anemia drugs, announced today that it will cut its headcount between 12 percent and 14 percent, ratchet back on new plant construction, close production operations and prioritize its research spending. The giant biotech said these measures will yield savings of up to $1.3 billion by next year.

The restructuring is the first in Amgen’s history, and virtually unprecedented within the biotech industry. For the last six years, the company has been on a serious roll, largely thanks to its second-generation anemia drug called Aranesp, which allowed Amgen to sidestep a restrictive marketing agreement with Johnson & Johnson and to vastly expand its sales efforts. The company has more than doubled in overall revenues and employment since Aranesp’s approval in 2001. Last year, Aranesp accounted for almost 30 percent of the company’s $14.3 billion in revenue.

Last October, however, studies began to raise questions about the way Aranesp and its older cousins, all of which stimulate the production of red-blood cells, were used to treat anemia in kidney-disease and cancer patients. One study showed that higher doses of the drugs were associated with higher risks of heart attacks, strokes and death in kidney patients. In another, Aranesp used to treat anemia caused by cancer itself led to a greater number of deaths than no treatment. Regulators were soon involved, and recently the federal Medicare program decided to limit the degree to which these anemia drugs can be used to boost blood-oxygen levels in cancer patients. Next month, an FDA panel will meet to consider similar restrictions for kidney patients.

Until last week, Amgen had denied that it would need cost-cutting measures. But the company couldn’t ignore the pain from a 19 percent second-quarter drop in Aranesp sales. The job cuts will reduce employment at the company by 2,200 to 2,600 people, returning it to 2006 levels.

CEO Kevin Sharer sounded philosophical in an interview with the WSJ:

“It’s the first time in our 27-year history we’ve had to restructure,” Kevin Sharer, Amgen’s chief executive officer, said in a telephone interview, sighing audibly. But, he added, “These kinds of things happen cyclically. Genentech Inc. in 1995 went through their own discontinuity with Roche buying [a majority share]. Virtually any company with any scale has gone through this kind of event. It’s our turn.”

It’s hard to know if, or whether, this sort of bad news will impact biotech startups further down the food chain, but it’s unlikely to help. For instance, Amgen may reconsider the amount of funding it devotes to venture-capital investments. And general biotech-stock turmoil — Amgen shares are down 26 percent this year — is never good for entrepreneurs and VCs looking to take their startups public. This week, for instance, will bring the first test in that regard: Cumberland Pharmaceuticals, which we noted briefly here, is due to launch its IPO sometime between now and Friday.

The WSJ story is here; the LA Times and the WSJ Health Blog have more. If you’d like to look at the Amgen slides for its conference call earlier today, click here (PDF).

UPDATE: The NYT has more, including a more coherent explanation of the likely effects of the Medicare restrictions on anemia-drug sales than I’ve seen elsewhere, here. You can also read the transcript of Amgen’s conference call here (PDF), courtesy of the WSJ and Thomson StreetEvents.

UPDATE REDUX: Aha, it also turns out that Amgen has pulled the plug on a planned expansion in South San Francisco, where the former Tularik serves as its local base of operations.

More genetic links for breast cancer – Whole-genome association studies that tease out links between minute genetic variations and the likelihood of disease are definitely building momentum. Over the last several days, researchers reported six new variations that increase the risk of breast cancer for women who have inherited them. (For background, see this Boston Globe piece or my recent take on the subject.) It’s now conceivable that scientists may soon have an excellent handle on the genetic contributions to this particular disease.

As with any much-hyped medical discovery, however, the caveats here are almost as important as the headlines. These findings aren’t going to be translated into new diagnostic tests, much less treatments, any time soon. That’s largely because no one has yet figured out why these particular genetic changes should affect a woman’s cancer risk. And that, in part, stems from the fact that these variations aren’t mutations in identifiable genes, just alterations in stretches of DNA — regions sometimes unkindly called “junk DNA” — whose function is unknown.

In fact, these findings are purely statistical conclusions drawn from analyses of large groups of people and their genomes. While it seems unlikely that they’re simply spurious correlations — among other things, the number of research teams confirming each others’ findings argues against that — odder things have happened on the frontiers of science. Nick Wade of the NYT has more.

Dire straits for diabetes drug – A little more than a week ago, the New England Journal of Medicine published cardiologist Steve Nissen’s analysis suggesting that the heavily prescribed diabetes drug Avandia may boost the risk of heart attacks by roughy 40 percent. Nissen himself acknowledged that his paper — a “meta-analysis” that drew conclusions by pooling data from several dozen different clinical trials, a frequently used but often controversial technique — wasn’t conclusive, and a variety of his critics ranging from Avandia’s maker, GlaxoSmithKline, former FDA official Scott Gottlieb and the editors of the U.K. medical journal the Lancet (PDF) have argued that the medical community should wait for the results of a large clinical trial that won’t produce data for another year or two.

Since then, however, Republican Sen. Charles Grassley has accused the FDA of reaching the same conclusion internally but without taking any action; GSK warned that the large Avandia trial everyone is waiting for may be jeopardized because patients concerned about the drug’s safety are bailing out; and early indications suggest that ordinary patients may be doing likewise. It’s a huge disaster for what had been a $3 billion-a-year drug, and one that could have been mitigated if GSK and the FDA had been more open about potential safety problems early on. Because there’s no question that an important cost-benefit question — that is, whether diabetics benefit more from the blood-sugar control Avandia makes possible than they put at risk with the potential higher risk of heart attacks — has been lost in the furor.

Chinese drug official sentenced to death – Think FDA officials have it tough these days? Yesterday, the Chinese government sentenced its former top food and drug official, Zheng Xiaoyu, to death for taking $850,000 in drug-company bribes to overlook fake or defective medicines and food products.

Man Bites Dog Watch: Biotech CEO says drug prices are too high – Elan Pharmaceuticals CEO Kelly Martin appears to have broken one of the industry’s taboos by arguing that the common practice of charging all the market will bear for new biotech drugs — the very reasoning that has led to drugs for rare genetic diseases that cost $200,000 a year — is “unsustainable.” While there’s not enough detail in this interview snippet from the Financial Times (via Forbes) to know exactly what Martin means by this, it certainly sounds as if Elan might be edging toward some kind of slightly more rational pricing policy — or at least acknowledging that Medicare and private insurers aren’t likely to continue paying through the nose forever. Too bad some people seem to think that Elan might make a tasty takeover target for Big Pharma, whose own addiction to high prices hasn’t shown much evidence of waning.

Amgen’s woes continue to mount – From bad to worse to… even worse, I guess. Last week, experts at the European Union’s drug regulator recommended against approval of Amgen’s colon-cancer drug Vectibix, saying its benefits didn’t outweigh its disadvantages. Vectibix has hit a number of snags recently, including a halted clinical trial in which a combination of Vectibix and Genentech’s Avastin appeared to worsen patients’ odds of survival. The London-based European Medicines Agency was also concerned that evidence suggesting that Vectibix slows the progression of cancer was weak.

Separately, the EU gave preliminary approval to Roche’s Mircera, a potential competitor to Amgen’s best-selling anemia drugs Epogen and Aranesp. Mircera’s U.S. approval has been delayed and Amgen has sued Roche for patent infringement in any case, but seeing a competitor edge closer to the starting line can’t be good news for the beleaguered biotech. The LAT has more; so does Pharmalot.

Odds and ends from around the Web – A collection of quick takes on interesting items that might warrant a deeper look down the line:

• Ten years after Bill Clinton launched a drive to find an AIDS vaccine within a decade, the goal is nowhere in sight (Scientific American)
• Dendreon, still reeling from the FDA’s decision to postpone approval of its prostate-cancer vaccine, cuts staff by 18 percent (AP via Forbes)
• Medicare announced it won’t reimburse for artificial disks used as alternatives to spinal fusion, at least in patients 60 and older, dashing the hopes of medical-device makers (NYT)
• A California doctor’s group has begun posting its prices for straightforward procedures in an attempt to ward off competition from inexpensive walk-in medical clinics (LAT via the Merc)
• Medical researchers have teamed up with hedge-fund managers to offer a $1 million prize for the best new ideas in cancer research (Reuters)