Peter:
Indeed, this finance is with good therms, if one have in mind that last was at 11 and stock price have appreciation of ~120% in last few weeks.
Now, we will see is JJ as good in partnering CELG programs as he is good in finance world!
:)
BTW, Red Chip has very objective (OK, in some points they didn't done completely research, but it is of no significance and to blame them) write up on CELG.
Miljenko
THE RED CHIP REVIEW January 19, 1999
From Curse to Cure
Once-Banned Thalidomide Earns Second Chance
by Marcus W. Robins, CFA
The drug thalidomide was stigmatized four decades ago when it caused thousands of birth deformities. In the late 1950s and early 1960s, thalidomide was widely prescribed in Europe and Canada as a sedative, and for the relief of morning sickness in pregnant women. But the births of children missing the long bones in their arms and legs and sporting flipper-type feet and hands prompted withdrawal of the drug, which eventually was banned around the world. That was then.
Researchers and doctors today have determined that the drug, when used properly, is one of the only, and by far one of the most effective, treatments for a wide array of grave diseases. Thalidomide's anti-angiogenic properties (angiogenesis a common feature of cancerous tissue) and it's remarkable capacity to reduce tumors render the compound a much sought-after ingredient in many therapies.
Thalidomide, which is responsible for giving the FDA many of the watchdog powers it has today over new drug introductions, is still extremely harmful for pregnant women. But for certain ailing segments of the population (AIDS and leprosy patients, for example), it's a near miracle.
Last year, New Jersey-based Celgene Corp. (CELG) won the FDA's blessing for offering its own thalidomide formulation, brand-named Thalomid, in the treatment of erythema nodosum leprosum (ENL), an inflammatory complication of leprosy. Thalomid is also in trials for treatment of a wide variety of other diseases.
Promising Results
Indeed, after years of vilification, thalidomide is showing indications of being an almost miraculous cure-all for maladies ranging from cancerous tumors and wasting, or cachexia, related to AIDS, to rheumatoid arthritis and graft-vs.-host disease for which there are currently no adequate approved therapies.
Clinical research in recent years has shown thalidomide's efficacy in treating tumors and skin lesions from a variety of diseases. It has proven remarkably potent in inhibiting new blood vessel development (anti-angiogenesis), thus slowing tumor growth essentially by starvation.
The principal mechanism that gives Thalomid its power is its capacity to inhibit tumor necrosis factor alpha, or TNF-alpha, a protein whose overproduction has been linked to many chronic inflammatory and immunological diseases.
The FDA's approval of Thalomid in the treatment of ENL gives Celgene a built-in, albeit achingly small, revenue base. But the rising tide of off-label demand for the treatment of a wide variety of other indications should spur revenue growth to the point where Celgene could achieve profitability by fourth quarter 1999. The stock's price, however, does not yet reflect either that prospect or the progress the company is making in developing chirally, or structurally, pure versions of already approved compounds.
Purely Scientific
Thalomid is the lead compound in Celgene's small molecule immuno-therapeutic compound development program, one of its two broad technology platforms. The other platform is its distinctive biocatalytic chiral chemistry process for producing structurally pure drug compounds. This represents another significant avenue for growth entirely apart from the development of Thalomid.
Chirally pure pharmaceuticals and agrochemicals are more selective in their impact, more potent and less likely to produce undesired side effects. This technology opens the possibility of developing "new compounds" from off-patent drugs. One of the compounds is a chirally pure version of Ritalin for ADHD (attention deficit hyperactive disorder), a condition for which more than a million American children are treated.
The expectation is that Celgene's chirally pure version of Ritalin will be available to the market by the end of 2000 or early 2001. Currently, the market is approximately $400 million, but could increase to twice that size by the time the drug becomes available.
Although thalidomide has been available to lepers through the U.S. Public Health Service for the past 25 years under the Compassionate Availability guidelines, AIDS patients began using black market sources not only for related conditions like apthous ulcers but also for cachexia, prompting the FDA to establish tighter monitoring and control over the drug, and to seek an approved domestic supplier. Celgene won the nod.
We at The Red Chip Review believe approximately 20% of Celgene's future revenue will come from treatments for AIDS-related conditions. This includes treatment of severe diarrhea, for which Thalomid is proven effective. The greatest beneficiaries, however, are people suffering from various forms of cancer, a market expected to generate nearly 60% of the company's projected revenues.
Building Support
Understanding the potential of Thalomid's immuno-therapeutic properties in reducing excess TNF-alpha, Celgene started research and development on thalidomide analogs and SelCID (selective cytokine inhibitory drugs) derivatives. The company's objective was to create molecular changes that would enhance thalidomide's healing capacity and lessen its harmful side effects.
Such analogs expand the range of indications to include inflammatory bowel disease (IBD), psoriasis, rheumatoid arthritis and many other maladies, increasing by a factor of 10 the potential cases that might be addressed. Of these, IBD is generating the most development activity. Although this is not an area of research ignored by other pharmaceutical companies, Celgene's SelCID efforts are entering Phase II trials.
Because of thalidomide's scary history, Celgene has developed its STEPS (System for Thalidomide Education and Prescription Safety) program to control the use of Thalomid. And the company has, in fact, patented the unique program. Prescribing doctors and pharmacy staffs are required to attend training programs and to certify that they understand the drug's regimen and usage requirements. Patients are counseled on the use of birth control and also are required to sign consent forms.
Because the catalog of conditions Thalomid can potentially treat has grown so long, it has produced understandable skepticism in the press, and Celgene's stock has drawn challenges from short-sellers. But support from the medical profession is gaining momentum as research results are compiled, verified and disseminated. Celgene's shares already have jumped into the high teens and, assuming our income projections are accurate, they could hit $30 by 2000.
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