Daiichi Sankyo has bought Japanese rights to an experimental Amgen drug to protect the bones of cancer patients, as the company seeks to expand in the $35 billion global market for oncology-related treatments.
Daiichi, Japan's second-largest drugmaker, said Thursday that it would pay Amgen, based in California, $20 million upfront for rights to sell the drug, denosumab, in its home market and about $150 million for its worldwide development through 2009.
Daiichi joins Japanese rivals like Takeda Pharmaceutical and Eisai in acquiring new biotechnology to develop therapies that rely on the immune system to fight cancer.
Such treatments helped drive a 21 percent jump in global sales of oncology drugs last year, according to IMS Health, a Connecticut-based drug industry research company.
"Denosumab's potential applicability in oncology makes it an important part of the foundation for our growing oncology business," said Daiichi's president, Takashi Shoda. "Denosumab has the potential to be a first-in-class" product.
Daiichi sells Topotecin for tumors of the colon and rectum. The Tokyo-based company has two other antibody-based cancer drugs in the first of three stages of tests generally required for regulatory review.
It needs new products to maintain sales as older treatments face competition from generic drugs.
The company's Mevalotin cholesterol reducer lost patent protection in the United States in 2003, a year after its expiry in Japan.
On Wednesday it lost an appeals court ruling and could face generic competition in the United States to its Floxin Otic, a medicine for treating ear infections, including swimmer's ear.
An appeals court in Washington sided with Apotex, a Canadian company, and invalidated a patent that Daiichi was relying on to prevent competition to the ear drops until March 2012.
Daiichi Sankyo shares fell as much as 1.5 percent to ¥3,260 on the Tokyo Stock Exchange. They traded 0.9 percent lower at ¥3,280 and have declined 12 percent this year.
Amgen, the world's largest biotechnology company, may have results of clinical trials on denosumab in 2008, analysts say. The experimental drug is in the last stage of development in the United States for cancer and osteoporosis and in the last phase for cancer treatment in Japan.
Takeda, Japan's largest drugmaker, and Eisai, ranked fourth, spent a combined $500 million in March on biotechnology acquisitions, raising the cost of takeovers and new products in the global pharmaceuticals industry.
The deal with Amgen is Daiichi's second biotechnology purchase since it was formed in September 2005 by Sankyo's purchase of Daiichi Pharmaceutical. Last year the company bought rights worth $14.5 million from a unit of YM BioSciences, a Canadian developer of cancer treatments.
"This represents reasonable shopping for Daiichi Sankyo when prices for the rights to drugs have gone up so much," said Ryoichi Urushihara, a drugs analyst at Nomura Securities in Tokyo, in a telephone interview Thursday.
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By Kanoko Matsuyama Bloomberg News