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Celgene Blood Cancer Treatment: Just The Tip Of Its Disruptive Science?

Celgene (CELG), a pioneer and leading player in blood cancer treatment, has become a biotech juggernaut thanks largely to a drug that proved key in fighting the tricky disease multiple myeloma.

X In multiple myeloma, cancerous plasma cells in bone marrow elude immune-system fighters with a one-two punch: By changing the way they look and act while producing immune-suppressing molecules. Enter Celgene's Revlimid.

This so-called immune-modulating drug helps immune cells attack cancer cells and starve myeloma cells in bone marrow by preventing new blood vessels from forming. The drug might also become a big weapon against an equally dreaded disease, lymphoma.

Drugs battling diseases such as lupus, multiple sclerosis and ulcerative colitis also are on Celgene's potential hit list — an arsenal that earned the company recognition by Investor's Business Daily in the inaugural IBD Innovator Awards for biotech.


How IBD Chose The Biotech Innovator Award Winners: IBD asked equity analysts, ETF and mutual fund managers, and university professors to identify the top biotech companies based on their innovative research. We asked them to focus on companies with pioneering drugs likely to launch in the next several years and reach blockbuster, or near-blockbuster, sales of $1 billion or more a year. The award winners selected by IBD editors are the six most-cited companies. To find profiles of all the award winners and details of their work, go to our full Biotech Innovators special report.)


Revlimid will continue to dominate the company's revenue for now. Though multiple myeloma remains an incurable cancer, Revlimid has proved to extend survival rates.

"That drug is going to do around $9 billion in sales next year, which makes it one of the biggest drugs in all of biotech," said analyst Michael Yee, managing director at investment house Jefferies. He has a buy rating on Celgene, with a price target of 160.

Celgene estimates that its sales, led by Revlimid, could exceed more than $21 billion by 2020, up nearly 40% from its expected revenue this year of roughly $13 billion. Celgene notched sales of $11.2 billion last year.

The company's stock soared from about 40 in 2013, the year Revlimid won FDA approval to treat relapsed mantle-cell lymphoma, to a then-record 140 in mid-2015, the year Revlimid gained approval for patients newly diagnosed with multiple myeloma. That high held until early September, and in early October Celgene stock touched a record high near 147.

Early this year, the FDA approved Revlimid as a maintenance treatment for a subset of patients with multiple myeloma, those needing maintenance after a stem-cell transplant.

With a market cap near $107 billion, Celgene ranks No. 2 among the 453 companies in IBD's biotech industry group, trailing only Amgen (AMGN).

Controversial Thalidomide Led Way

Celgene's growth started with its 1992 licensing of a controversial drug with a bad reputation: thalidomide, which two decades earlier had been linked to birth defects.

In 1999, thalidomide was approved as an anti-infective to treat lesions in patients with leprosy. Scientists also started to look at the drug as a possible therapy for multiple myeloma.

Meanwhile, Celgene's scientists worked to improve the efficacy and side effects of thalidomide for treating multiple myeloma.

The result: Thalidomide was approved for patients with newly diagnosed myeloma in 2006, followed shortly by the approval of lenalidomide — an orally administered thalidomide analogue — under the trade name Revlimid, for patients with relapsed/refractory multiple myeloma who received at least one prior therapy.


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Revlimid was first approved in late 2005 for a subset of patients with the rare blood cancer known as MDS.

Celgene didn't stop innovating. Many of its drug candidates are small-molecule compounds also meant to modulate the immune system. These drugs target the sources of the disease rather than the symptoms.

"They aren't just doing me-too drugs," Yee said.

Celgene CEO Eyes Unique Scientific Insights

Celgene's executives like to say the company favors "disruptive science."

As CEO Mark Alles explained to IBD: "Celgene's core purpose is to apply unique scientific insights into the underlying source and mechanism of disease to provide new treatments for patients with significant medical needs."

Celgene spends nearly $3 billion annually in research and development. Drugs in its pipeline especially target blood cancers, solid tumors, and inflammatory and immune diseases.

Its research portfolio includes 50 molecules supported by 100 different clinical programs, Alles pointed out at an investor conference this spring. Of those 50, 14 could be approved before 2021, with nine or 10 having multibillion-dollar blockbuster potential, he says.

Alles also told IBD that Celgene partners with "other promising innovators to enhance and accelerate the discovery of new medicines."

Many of its more than 30 partnerships are with small biotechs, including Juno Therapeutics (JUNO), Bluebird Bio (BLUE) and Acceleron Pharma (XLRN).

In July, Celgene said it would collaborate with China-based BeiGene (BGNE) to develop and market an investigational protein inhibitor for patients with solid-tumor cancers.

"Their business model is driven by internal R&D as well as 'distributed' research," Yee said, "whereby they seek to license and acquire complementary products that are focused on novel mechanisms of action that try to treat the underlying cause of the disease."

4 Blockbusters Power Celgene

Analysts say one of the most notable drugs in Celgene's internally developed war chest is the fast-growing Otezla, an autoimmune treatment for psoriasis and psoriatic arthritis. It is one of the company's four current blockbusters — drugs with annual sales of $1 billion-plus.

Besides leader Revlimid, the other blockbusters are: Pomalyst, a second-generation version of Revlimid approved in 2013 for patients who didn't respond to other therapies; and Abraxane, used to treat breast cancer, lung cancer and pancreatic cancer.

Celgene is also studying Otezla for potential use in ulcerative colitis and Behcet's disease.

Among other new indications, Celgene hopes that Revlimid will prove effective in treating Non-Hodgkin lymphoma. Lymphoma is of "equal or greater size" than myeloma, Leerink analyst Geoffrey Porges wrote in a recent research report.

Following Celgene's better-than-expected second-quarter results, Porges raised his price target to 160 from 150. He rates the stock outperform, citing "a number of pivotal trial results emerging this year and next."

Needs To Diversify Beyond Revlimid

New drugs are crucial. Celgene loses patent protection on Revlimid in 2027. Not a worry, says analyst Yee: "They are finding new blockbuster drugs that will diversify the revenue base."

One potential blockbuster is ozanimod, which came by way of Celgene's $7.2 billion acquisition of Receptos in 2015. The oral drug showed positive results in late-stage trials for relapsed multiple sclerosis.

Celgene estimates that ozanimod could generate $2 billion to $3 billion in annual sales for treating MS and an equal amount for treating ulcerative colitis. Crohn's disease could provide further revenue if clinical trials prove positive.

Based on emerging data, ozanimod also has the potential to serve as "an anchor for our neuro franchise in the future," Celgene President Scott Smith told analysts in the company's Q2 earnings call.

Another closely watched potential blockbuster in late-stage trials is the oral compound GED-0301, for treatment of Crohn's disease and ulcerative colitis. The development drug was licensed from privately held Nogra Pharma in 2014.

A small-molecule drug known as AG-221, or Idhifa, which was licensed from Agios Pharmaceuticals (AGIO), is the first approved product from Celgene's collaborations.

In August, the Food and Drug Administration approved AG-221 for a subset of adult patients with relapsed acute myeloid leukemia. Most patients with AML eventually relapse and, of those, up to an estimated 20% have a mutation that AG-221 targets.

Analyst Leah Cann of Oppenheimer estimates that drug, which she expects will hit the market in the fourth quarter, could garner $1.4 billion in annual sales in 2021.

Meanwhile, the compound CC-220 is showing "encouraging clinical data in lupus," Alles told analysts in July, noting that the autoimmune disease has a "large and dramatically underserved patient population. … (W)e have some pretty exciting initial data."

And positive late-stage results for new indications in several immunology/oncology combination trials could breathe new life into one of Celgene's top-four drugs, Abraxane.

Sales have been growing slowly of late, up just 2% in the second quarter, to $254 million. In contrast, Otezla's Q2 sales jumped 49% to $358 million.

Celgene boasts many other drugs at early stages. One potential blockbuster, for example, could treat the aggressive cancerous brain tumor glioblastoma, recently diagnosed in Sen. John McCain. Celgene expects to start a pivotal trial this year with proteasome inhibitor marizomib, in combination with standard therapy.

Celgene bought marizomib last year from privately held Triphase Accelerator.

Whether internally developed or by way of partners, Celgene's therapies, said analyst Yee, "are some of the most novel and innovative in biotech."

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