Regulatory Roadblocks Ahead for Celgene
Scott Gottlieb, M.D., 03.08.05, 6:10 PM ET
NEW YORK -
In the last issue of the Forbes/Gottlieb Medical Technology Investor, I wrote that Celgene's drug, Revlimid, is a long term "winner" that will provide substantial benefit in the treatment of the blood cancer, multiple myeloma.
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That prediction was confirmed yesterday, with news that Revlimid had performed better than expected in two clinical trials--so effective that the studies were stopped early so that all patients could be offered the drug.
In the two trials, involving a total of 705 patients with multiple myeloma, a medical regimen that combined Revlimid with a steroid delayed the worsening of the disease, compared with a sugar pill and the steroid. The difference was so great that the committee overseeing patient safety decided to stop the trials. The company said the data from the trials would be released at medical conferences this spring.
I think the early timing of this new data could mean Celgene will win approval in multiple myeloma by the end of 2005 or in early 2006. Sales of the drug should eventually top $500 million, and Celgene's multiple myeloma franchise, which includes Thalomid, could earn revenue of more than $1 billion. Assuming Revlimid will be priced similarly to competing drugs, such as Pharmion's (nasdaq: PHRM - news - people ) Vidaza and Millennium's (nasdaq: MLNM - news - people ) Velcade, at a market multiple, Celgene stock is worth close to $40.
The only question that remains is whether Celgene will continue its strategy of trying to get Revlimid on the market first for another kind of cancer called myelodysplastic syndrome (MDS), which affects bone marrow. While Celgene can file first in multiple myeloma (which would be a slam dunk), getting the application together will take more time. The MDS application, on the other hand, is ready to go, giving Celgene a potentially faster route to the market.
As I discussed in the last issue of the Forbes/Gottlieb Medical Technology Investor, I believe the FDA's decision on Revlimid for MDS, based on the data Celgene has right now, is going to be a close call. But ultimately I believe that the FDA will vote it down for MDS, and will wait for Celgene to file for approval for multiple myeloma. This will delay the drug's launch by perhaps as much as six months.
Revlimid clearly works in treating different cancers, including MDS, but I believe that problems with the way the trial in MDS was conducted, as well as subtle safety questions about the drug itself, will prompt a risk-adverse FDA to play it safe and hold out for the more rigorous data from the multiple myeloma trial.
The outlook for Revlimid in MDS is further clouded by the alternatives: Patients can be treated with blood transfusions or with Vidaza, a drug marketed by Pharmion that was approved earlier this year for all forms of MDS. Another promising drug for MDS, Dacogen, developed by biotech company Supergen (nasdaq: SUPG - news - people ), is currently under review by the FDA. Other drugs in development for multiple myeloma include one by Genta (nasdaq: GNTA - news - people ) (Genasense) that is in phase III trials and another by ImmunoGen (nasdaq: IMGN - news - people ), in phase II testing.
Finally, there is also a dosing problem with Revlimid. About 75% of the patients in the phase II trials got their dose reduced from 10mg to 5mg. Yet there is no set dose-reduction schedule. This means Celgene may not have even found the right dose for Revlimid. (The company is filing on the 10mg dose.)
Ultimately, Celgene may be convinced to forgo the MDS application and file first in multiple myeloma. So far the company has resisted that strategy, since it seems to have little to lose rolling the dice on the early application for MDS.
I am in the camp that believes Revlimid is going to be a great cancer drug. For investors, it's become clear that the best time to buy the stock is right now, or on any dip after the FDA rejects the drug for the treatment of MDS.
For all of us, the bigger question should be how many cancer patients will need to wait while the drug agency comes to the same conclusion.
Scott Gottlieb is a physician and editor of the Forbes/Gottlieb Medical Technology Investor. He is a fellow at the American Enterprise Institute and is a former senior official at the Food and Drug Administration and Medicare program. Dr. Gottlieb may own stock or consult with firms that advise the companies mentioned in this article.
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