Amgen And Neuroscience

Amgen has exited the neuroscience area, with a good-sized round of layoffs at their research site Cambridge.

Alzheimer\'s has been and remains a brutal field to make any progress in.

Unless you have a really terrific idea, it\'s easy to make the case that you should throw some money at the people doing basic research in this area and go spend the rest on something else.

So, Amgen (NASDAQ:AMGN) has exited the neuroscience area, with a good-sized round of layoffs at their research site Cambridge. The company has a migraine drug (Aimovig) that they'll continue to support, and they'll stick with their existing clinical programs, but it looks like all the early-stage stuff is gone. What does this mean?

Not as much as you might think. Neuroscience is indeed hard, and Amgen's not the only company to rethink its commitment to it (Eli Lilly (NYSE:LLY) did something similar last month with their neuro efforts in the UK). But there are still plenty of participants, large and small - it's not that the field is being totally abandoned by pharma. It's just being abandoned by Amgen because they have other areas that look a lot more promising for them. And let's face it, Amgen is a bit of an oddity, anyway - it's not for nothing that they get referred to as a law firm with fume hoods. Enbrel is what pays a lot of the bills over there, and Enbrel is (and has long been) a patent-court story, not a research one.

Inflammation, cardiovascular disease, and oncology are going to be the focus there, and given the company's portfolio, that makes a lot of sense. It looks like the only neuro programs going on will be the ones that intersect with the larger inflammation area. One interesting thing that came out of the company's statements was that management felt that a lot of the neuroscience landscape is focused on what their CFO David Meline called "orphan or niche diseases", and that the company wants to work on things that will have a broader impact. Now, it's not like there isn't a neuroscience disease with a huge health impact, and it's one that even has some inflammation and cardiovascular connections. So, one of the things that Amgen is saying is "No Alzheimer's research for us, thanks".

Unfortunately, that's a pretty defensible stance, too, at least as portfolio management goes. Alzheimer's has been and remains a brutal field to make any progress in. We don't know the molecular basis of the disease, the most well-founded hypothesis has wiped out over and over again in the clinic, the trials are large, long, and expensive, and the companies that have nonetheless kept at it have thus far been feeding their time and money into a giant shredding machine. Unless you have a really terrific idea, it's easy to make the case that you should throw some money at the people doing basic research in this area and go spend the rest on something else - and frankly, there aren't any really terrific ideas in the field right now. Even the Gates Foundation is having trouble finding places to put investments.

So, I see Amgen's move as just an attempt to become even more Amgen-like than before. They've been fighting to keep Enbrel going for as long as possible, while at the same time trying to erode competitors by coming up with their own biosimilars, and they have a lot going on in oncology and CV. All that looks to be the Amgen story for a long time to come.

Original Post