Investors warm to Amgen following bone drug data

* Amgen shares jump nearly 16 pct on bone drug data

* Investors see drug winning large cancer market share

By Toni Clarke

BOSTON, July 8 (Reuters) - Market sentiment towards beaten-down biotechnology company Amgen Inc (AMGN.O) perked up markedly on Wednesday after the company reported better-than-expected results from a trial of its experimental bone-protecting drug in patients with advanced breast cancer.

The results galvanized investors who have weathered a steady drum-beat of bad news related to the safety of its flagship anemia drugs. Amgen's shares jumped nearly 15 percent on the Nasdaq stock exchange.

Data from a late-stage trial showed the drug, denosumab, was more effective than Novartis AG's (NOVN.VX) Zometa at reducing and delaying bone damage caused after the cancer had metastasized.

"The results were better than anticipated and support higher revenue potential than previously expected," said Geoffrey Porges, an analyst at Sanford Bernstein. "Since Zometa is the most powerful agent in the existing bisphosphonate class, this represents a real breakthrough and sets a high bar for future competitors from other classes."

Other drugs in the bisphosphonate class include Merck & Co Inc's (MRK.N) Fosamax; Boniva, from Roche Holding AG (ROG.VX) and GlaxoSmithKline Plc (GSK.L) and Actonel from Sanofi-Aventis SA (SASY.PA) and Procter & Gamble Co (PG.N).

Zometa is also used to treat osteoporosis, but is sold separately for that condition under the brand name Reclast.

Denosumab is the first in a new class of drugs that inhibit proteins that activate bone-destroying cells.

The drug has shown it can reduce the risk of spine fracture by 68 percent among post-menopausal women, placing it among the most effective on the market. A panel of advisers to the U.S. Food and Drug Administration will meet to review the drug later this year.

In addition to breast cancer and osteoporosis, denosumab is being tested for skeletal-related events in a late-stage clinical trial containing patients with other solid tumors and multiple myeloma. And it is being tested separately in patients with prostate cancer.

If successful in all three cancer trials, as well post-menopausal osteoporosis, the drug could generate sales of $3 billion by 2012, according to Aaron Reames, an analyst at Wells Fargo Securities.

"Amgen's future growth hinges on denosumab, given its multi-billion dollar potential as a treatment for osteoporosis and cancer treatment-induced bone loss," he said. "We believe that positive results in the treatment of skeletal-related events will result in denosumab oncology revenues exceeding those in osteoporosis."

Separately, Amgen is testing denosumab against placebo in prostate cancer patients to see if the drug can delay the time before the disease spreads or the patient dies.

The denosumab data led Steve Yoo, an analyst at Leerink Swann, to declare in a research note that "the age of denosumab may be dawning at Amgen."