It's the End of Days for Celgene's Multiple-Myeloma Drug Franchise

Last Updated Feb 16, 2010 2:20 PM EST

Celgene (CELG) is counting on its blood-cancer drug Revlimid (lenalidomide)to support ambitious growth plans beyond its hematology-oncology franchise. However, the gravy train may be grinding to a halt much sooner than than most people think.

Chief executive officer Sol Barer predicts Revlimid win win regulatory approval as front-line treatment for newly diagnosed multiple myeloma (MM) patients in both U.S. and European markets. However, to win broader labeling and expand its European footprint, Celgene's best-selling product will need to show a six to eight month difference in progression-free survival to be considered significant, said oncologists surveyed by Pharmawire.

In addition, the drug remains -- semingly in perpetuity -- the catalyst for revenue growth. Of forecast sales this year of $3.3 billion, the company is depending on (at least) a 67 percent contribution from Revlimid.

Revlimid is a next-generation, more potent and safer compound to the infamous sedative thalidomide, withdrawn from global markets back in the early 1960s due to horrific side effects, like birth defects. Celgene won approval to reintroduce thalidomide, brand name Thalomid, as a blood cancer treatment in 2003.

Interim findings from the pivotal late-stage trial, known as MM-015, presented in December 2009, suggested that Revlimid works effectively as a maintenance therapy and not as well in early treatment of myeloma. Observers blamed the "incomplete nature of the data" for comparatively longer progression-free survival times in MM patients receiving maintenance treatment of Revlimid, plus unexpected similarities in disease relapse times in patients receiving nine cycles of drug induction and placebo-treated patients. In addition, only 50 percent of data in was available for first-peak evaluation.

Consensus among opinion leaders is that evaluation of the final results will reveal significant differences between induction with Revlimid and without it. Company spokesman Gregg Geissman could not confirm for me when the final MM-015 study results will be disclosed, but my bet is either at the American Society of Clinical Oncology (ASCO) or the 15th Congress of the European Hematology Association (EHA) -- both meetings will be held in June.

Celgene doesn't expect submission filings with the FDA and European regulators for initial treatment in newly diagnosed patients until late 2010. Nonetheless, the good news keeps coming: Prolonged maintenance therapy with Revlimid starting at 100 days post stem cell transplant -- when compared to placebo -- delays disease progression, according to the Cancer and Leukemia Group B (CALGB) investigators. It is worth noting, too, the trial has to yet show evidence of an overall survival benefit.

Multiple myeloma is the second most prevalent blood cancer after non-Hodgkin's lymphoma, with an estimated 20,580 new cases being diagnosed in the U.S. last year, according to the American Cancer Society.

Revlimid in combination with the steriod dexamethasone is currently indicated for the treatment of relapsed multiple myeloma in patients who have received at least one prior therapy. The company anticipates it can achieve incremental product sales growth of 25 percent to about $2.2 billion this year, driven by:
  • International expansion -- momentum from year-ending 2009 regulatory approvals in Asia, Latin America, and Canada could galvanize new prescription growth. Global sales are expected to come in at about 45 percent of total sales, up from 39 percent in 2009.
  • Increasing adoption of maintenance therapy -- the hyped catalyst igniting prescriber uptake could be supportive clinical data demonstrating significant reduction in risk of disease progression in first-line treatment until relapse (rather than for a defined period). At year-ending 2009, duration stood at 11.8 months in the U.S. and 7.5 months in the European Union, which suggests that U.S. physicians have already embraced Revlimid for upfront therapy (although off-label); and, reimbursement formularies in Europe do a better job in policing prescription behavior.
"Think three times before taking action," say Confucius. "Twice would have been quite enough."

Wall Street analysts are falling all over each other to trumpet the growth prospects for the drug with approved maintenance dose settings:
Broadened use of Revlimid may push annual sales to $4.4 billion by 2016, heralds Mike King, a Merriman Curhan Ford analyst in New York, in a telephone interview with Bloomberg.
Why stop at $4 billion? Do I hear peak sales of $6 billion? How about $8 billion?

"It ain't what you don't know that gets you into trouble," said 19th Century humorist and author Mark Twain. "It's what you know for sure that just ain't so."

Thalomid is already approved as front-line treatment in Europe. Celgene is looking to supplant Thalomid with Revlimid as preferred treatment for maintenance therapy. Without survival data Revlimid's forward sales could stall.

Teva Pharmaceuticals (TEVA) filed an Abbreviated New Drug Application (ANDA) with the FDA back in December 2006 to manufacture generic versions of Celgene's thalidomide. Notwithstanding the difficulty in setting up drug monitoring programs (to assure pregnant women do not take the drug) a huge MM market awaits a cheaper Revlimid analog (ask elderly MM patients trying to scrape together the $4,000 in out-of-pocket annual expense needed for Medicare D coverage gap which drug they would prefer). Teva's cheaper copycat drug could hit pharmacy shelves by 2011.

Celgene needs good news with the MM-015 study on survival data, as there is limited near-term visibility emerging from its drug pipeline. In addition, global markets are tiring of the company fueling past growth with price hikes: The price of Thalomid soared more than 800 percent in seven years and annual MM treatment costs with Revlimid can top $75,000. National health services of debt-plagued European countries, like Greece, with free health care (including drug prescriptions) for the elderly, the indigent, and government workers ("social pensions") might just stick with generic thalidomide for all stages of multiple myeloma.

Come 2012, Celgene's oncology franchise could face its own 2012 Mayan "End Times" apocalypse.
  • David Phillips

    David Phillips has more than 25 years' experience on Wall Street, first as a financial consultant and then as an equity analyst for several investment banking firms. He sifts through SEC filings for his blog The 10Q Detective, looking for financial statement soft spots, such as depreciation policies, warranty reserves and restructuring charges. He has been widely quoted in outlets such as BusinessWeek, The International Herald Tribune, Investor's Business Daily, Kiplinger's Personal Finance, and The Wall Street Journal.

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