Authored by Karl Simpson
Celgene is hot. It has been ever present in the news over the past few months following a succession of positive news stories, all of which seem to have helped propel the share price towards the $100 per share mark, breaking through previous resistance levels.
This positive sentiment surrounding the company led Bob Hugin, the current CEO, to take the floor at the J.P. Morgan Healthcare Conference in San Francisco in early January to predict the company will succeed in bringing several new big-selling drugs to market in the coming years and help drive revenues to double their current level of $6bn in 2013 to $12bn by 2017. Although he chose not to give any specifics about the profit this top-line growth might generate, it certainly outlines a very good trajectory for the company.
There are some immediate product opportunities that seem to give Celgene this boost. Firstly, Celgene mapped out the data from the Mpact Abraxane plus gemcitabine trial to the ASCO-Gastro conference. The trial was very positive and it gives Celgene a very strong opportunity to seek regulatory approval for Abraxane in the pancreatic cancer indication. This would bring a new and much needed therapy to pancreatic cancer patients, this adding to the earlier FDA approval for non-small-cell lung cancer in 2012, leading to some considerable upside for Abraxane, a product Celgene acquired through its $2.9bn acquisition of Abraxis Bioscience. Abraxane drew $427m in revenues for Celgene in 2012 and the asset they acquired from Patrick Soon-Shiong’s Abraxis Bioscience could provide the company an estimated $1.7bn in peak sales, according to analyst Robyn Karnauskas from Deutsche Bank.
Celgene has built a reputation for their prevalence in the blood cancers market and they have a very strong portfolio of products addressing these cancers. The acquisition of Abraxis Bioscience catapulted them into the solid tumour oncology market and as covered earlier, they are set to continue their development of Abraxane and other assets in solid tumour cancers. Yet, every drug development company needs to balance the importance of strategic focus with diversification. Celgene’s latest burst of positive news around Apremilast, the company’s oral small-molecule inhibitor of phosphodiesterase 4, looks to have finally given the Celgene an opportunity to build a franchise in the autoimmune-inflammatory diseases market. Apremilast has recently got an Orphan Drug Designation in the indication of Bechet’s disease. In the more substantial indications of Psoriasis and Psoriatic Arthritis, for which Celgene has now reported Phase III data from the ESTEEM and PALACE-1 programmes, telegramming to the market the likelihood of the FDA and EMA regulatory submissions in 2013/14 for Psoriasis and also Psoriatic Arthritis. It is expected that these approvals could lead the sales for Apremilast to somewhere around $500m annually, adding a third strategically important franchise to Celgene’s portfolio.
For Celgene, haematology has always been the front runner. Revlimid has annually delivered impressive growth and has proven to be an incredibly successful product that will generate in excess of $4bn is 2013 but Vidaza has also been a profitable product. Revlimid only this week gained approval from Chinese regulators for relapsed multiple myeloma and the US FDA grated a priority review status for Revlimid in the rare blood cancer, mantle-cell lymphoma. Celgene expects the FDA to give a decision on June 5th 2013. As with every pharmaceutical company with a blockbuster in its’ ranks though, the question turns to what is lining up behind this in the drug pipeline.
In Celgene’s case, the question seems to have been answered, Pomalyst. Pomalyst received approval from the FDA on 8th February and EMA decision is expected later in the year. Pomalyst is used in treating multiple myeloma, after patients have received other therapies such as the market leading multiple myeloma treatment, Velcade, which came out of the Millennium stable (now Takeda). If Pomalyst gets through the regulatory gates, as expected, it is projected it can become a $1bn+ product for Celgene, helping to advance the haematology franchise and create revenue diversity beyond Revlimid.
With a positive wave of news coming from products, CEO Hugin seemed confident to get the multi-year headline growth figures out to the crowds circling JP Morgan Healthcare conference in January. These headline figures look set to continue to swell the cash available to the company to do deals and Celgene have been flexing their muscles here too. In late 2012, Celgene announced they managed to do a deal with antibody company, Sutro BioPharma Inc. This company in the ADC (antibody drug conjugates) and bispecific market means that Celgene have a play in the increasingly hot-market of ADCs and bispecifics, which allow for far more targeted antibody therapeutic agents which deliver chemotherapy to tumour cells. The ADC space has a few players and who knows who has the best technology as yet, however, Celgene have a stake in the game and they are hoping that their possible $500m investment will help bring this targeted therapeutic approach to their drugs.
Celgene have really been the company to watch in early 2013, bouncing on the back of good news in late 2012. This has caused a pop in the share price and the company has hovered around the $100 per share mark, closing at $99.94 USD 12/02.13, valuing the company at just short of $43bn. They look set to have a good year ahead and the long-range outlook is positive, so the good news tsunami of late certainly points to a longer-term growth curve.
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