Amgen to pay $315 million for KAI Pharmaceuticals

THOUSAND OAKS, Calif.—Amgen and KAIPharmaceuticals have announced an agreement under which Amgen will acquire KAI,a privately held pharmaceutical company based in South San Francisco, Calif.,for $315 million in cash.

In connection with the two companies entering intothis agreement, Amgen has provided a loan to enable Phase III clinicaldevelopment planning for KAI-4169, which is KAI Pharmaceuticals' lead productcandidate, prior to closing. The acquisition will give Amgen worldwide rights,excluding Japan, to KAI-4169, which is a novel agent being studied initiallyfor the treatment of secondary hyperparathyroidism (SHPT) in patients withchronic kidney disease (CKD) who are on dialysis. SHPT, a component of CKDmineral and bone disorder (MBD), is a common and serious complication forpatients with CKD who are on dialysis.

Among patients in the population of CKD sufferedon dialysis, at least in developed countries where data such patients isavailable, some 1.6 million people exist in this patient population, according toAmgen. SHPT and CKD-MBD often develop early in CKD and worsen as renal functiondeclines and the diseases progress. Most CKD patients on dialysis are affectedby CKD-MBD, Amgen notes, which can lead to significant mortality and morbidity.Despite several currently approved therapies for the treatment of SHPT, thecompany says, significant unmet medical need remains. KAI-4169 is administeredintravenously at the same time as the patient is undergoing dialysis.

The transaction has been approved by thestockholders of KAI and has been approved by the board of directors of eachcompany. Completion of the transaction is subject to customary closingconditions, including regulatory approvals. Following the completion of thetransaction, KAI will become a wholly owned subsidiary of Amgen.

"KAI has demonstrated encouraging results in theclinic," said Dr. Sean E. Harper, executive vice president of research and developmentat Amgen. "We are excited about acquiring KAI, as well as the opportunity topotentially deliver a novel therapy for chronic kidney disease patients ondialysis suffering from secondary hyperparathyroidism."

"KAI and the nephrology community are excited bythe additional clinical data we've generated for KAI-4169, and we are thrilledthat Amgen shares our perspective on the differentiated profile and potentialof this product candidate," added Steve James, president and CEO of KAI. "Amgenis ideally positioned to bring KAI-4169 to market and to patients, given thecompany's decades of experience in developing and delivering therapies forpatients with chronic kidney disease."

Amgen already markets the successful anti-anemia drugsAranesp and Epogen, which are used by patients with CKD, but although they haveenjoyed blockbuster status for some time, sales have slowed in recent years aftersafety concerns emerged around some uses of the drugs.

More pertinent to the KAI acquisition, however, isthe fact that Amgen also markets a drug for secondary hyperparathyroidism,Sensipar, which is an oral drug as opposed to KAI-4169 being IV in nature. Amgen recorded global sales of more than $800 million in 2011 for Sensipar, whichis marketed as Mimpara in Europe.

But Amgen's U.S. patent for Sensipar's will expirein 2018, and the company is anticipating pressure from less expensive generic versionsof Sensipar. That pressure could also hamper demand for the KAI drug, UBS analyst MatthewRoden said in a research note, but he noted that the intravenous nature of theKAI drug might offer an advantage that offsets the competitive risk.

Expressing similar sentiments, J.P Morgan noted inits own report that despite Amgen's success, KAI is a potentially valuableprospect. "KAI's lead candidate, KAI-4169, is a long-acting, peptide agonist ofthe calcium sensing receptor (CaSR) and is being developed for the treatment ofSHPT in hemodialysis (HD) patients (phase 3 planning under way)," the firmexplains. "We note that Phase II data were encouraging, with statisticallysignificant reductions in parathyroid hormone (PTH) relative to placebo.Recall, currently, Amgen has Sensipar for the same indication with the primarydifference being Sensipar is a capsule whereas KAI-4169 is an IV."