Apremilast, Celgene's (CELG) experimental drug for psoriasis, in a Phase 3 trial showed good safety profile, but its efficacy was similar to Amgen's (AMGN) Enbrel, and inferior to AbbVie's (ABBV) Humira and Johnson & Johnson's (JNJ) Stelara.
Analysts on Wall Street were disappointed and their consensus estimates are running only at about half of Celgene's own guidance of $1.5 billion in sales in 2017.
The singular optimist among the analysts is Deutsche Bank's Robyn Karnauskas who predicts that Apremilast will be a blockbuster.
Deutsche Bank forecasts that 10 percent of the doctors will use the drug. A 10 percent share of the psoriasis market equals $3.5 billion.
These are the assumptions: a slow launch taking 5-6 years and about 10% of market share taken mainly from the old drug methotrexate and from failures of the newer biologic drugs. Also assumed that Celgene will give a price break of about 40 percent or $13,000 off the yearly cost of the biologics.
Psoriasis is an illness in which, for some unknown reasons, the immune system attacks the body's own skin cells as if they were foreign objects.
The most common form causes scaly plaques on the skin, usually associated with itching and pain.
About 6 million Americans suffering plaque psoriasis and most have the mild form which is plaques on less than 3 percent of their bodies. About 15 percent have a moderate or severe form, covering up to 10 percent of the body.
It is a chronic condition for most patients, even though a treatment helps in about 25 percent of the cases.
Psoriasis often becomes resistant and the treatment needs to be rotated. Also it can cause inflammation of the joints, known as psoriatic arthritis, which ten to fifteen percent of people with psoriasis have.
Doctors generally start out the treatment with topical products like corticosteroid creams and use ultraviolet lamps to imitate exposure to sunlight.
If these efforts don't work, the patient moves on to methotrexate, a generic immunosuppressant. After that come the more effective but more expensive biologics, which are injected. Four biologic drugs dominate: Amgen's Enbrel, Johnson & Johnson's Stelara and Remicade, and AbbVie's Humira.
The efficacy of all these drugs is measured by the PASI score. PASI stands for Psoriasis Area and Severity Index. A 75 percent reduction in the PASI score is known as "PASI 75."
The score is made up of three features of a psoriatic plaque: redness, scaling and thickness. Each is assigned a number from 0 to 4, with 4 being worst. Then the extent of involvement of each region of the body is scored from 0 to 6. Adding up the scores gives a range of 0 to 72.
Methotrexate's PASI 75 rates ranges from 36 to 60 percent, depending on the study. Humira's and Remicade's PASI 75 rates run over 70 percent, while Stelara's is 67 percent. Enbrel's runs in the 40s, but still many patients try it because patients react differently to different treatments.
In the Phase 3 Esteem 1 trial, 562 patients received 30 mg of apremilast twice daily for 16 weeks. 33.1% achieved 75 percent improvement on the PASI-75 score, compared with only 5.3 percent of 282 patients who received a placebo.
Patients in the treatment group also showed improvement compared with the placebo group for secondary endpoints like change in body surface area affected and itching.
Improvements also were experienced in difficult to treat areas such as the scalp and nails. For example, about 50 percent of affected patients achieved a 50 percent reduction in nail psoriasis severity, said investigator Dr. Kristian Reich.
Safety is a major issue when it comes to systemic therapies for psoriasis.
Methotrexate carries a risk of liver damage and cancer, and the biologics have also been tied to cancer and to serious infections. Regarding Apremilast, "what stands out so far is an extremely good safety profile," Dr. Reich said.
"Dermatologists want safety. They don't want long-term monitoring of serious side effects for their patients," Celgene spokesman Brian Gill told The Wall Street Journal.
Celgene is planning to submit apremilast to the FDA soon and is confident of approval.
Amgen's brodalumab, developed in partnership with AstraZeneca (AZN), achieved a 100 percent PASI 75 response in a 48-week study reported last fall. By the more customary measure, after 12 weeks, the response run 67-82 percent.
Brodalumab is a monoclonal antibody that targets the interleukin-17 receptor, the same basic mechanism of action used by Lilly's drug ixekizumab and Novartis' secukinumab. Both of those also reported PASI 75 scores upward of 80 percent in Phase 2 trials.
Pfizer is also testing Xeljanz, the recently approved oral rheumatoid-arthritis (RA) drug, for an added indication since psoriasis and RA are both immunological problems. Xeljanz' PASI 75 score hasn't been running as high as its biologic competitors, but it does have the advantage of being a pill as opposed to injections.
The main question hanging over all these drugs is safety.
It is hard to overestimate the importance of apremilast to Celgene.
The company sees it as one of three likely new blockbusters to bring billions of dollars for the company. And it represents a key effort to diversify its product base. But the drug will have to compete against Amgen's Enbrel and AbbVie's megablockbuster Humira, biologics with a powerful impact and against some of the newer drugs coming up through trials.
"Overall, the efficacy was a bit below what was seen in the Phase 2 trial and appear to place apremilast below the injectable biologics," said ISI's analyst Mark Schoenebaum. "However, we believe the drug is clearly approvable and could be adopted by a meaningful number of dermatologists as a 'bridge' between methotrexate (generic pill) and biologics. Recall that the majority of dermatologists do NOT use biologics -- thus, even though apremilast's efficacy is below biologics, we believe its good safety profile and the ease of oral administration could drive significant use."
So it appears that the key to make apremilast a blockbuster is superior marketing: for Celgene needs to establish it as a new class of treatment for psoriasis. Celgene certainly has the marketing muscle and tenacity to succeed in that.
The company has achieved a lot in the past two years. From a one drug company, it has become a global powerhouse with its own sales operations in over 70 countries.
It all started with Thalomid, a drug for multiple myeloma. It added Revlimid, its lead product in hematology, Abraxane for solid tumors, Vidaza, Istodax and the recent approval for Pomalyst which provides a therapeutic option for patients who previously had no therapeutic alternative in multiple myeloma. It now has a portfolio of successful drugs and the ambition to have more.
The company's share price ranged from $58.53 - $118.78 and it is lately near the high end of the range, which tells an important part of the story.