Celgene Vs. Amgen In Multiple Myeloma Battle

Dec. 2.13 | About: Celgene Corporation (CELG)

Celgene's (NASDAQ:CELG) drug Pomalyst has been approved later and is selling better than Amgen's (NASDAQ:AMGN) Kyprolis.

Pomalyst, approved this past February, with the European approval added in August, generated $90 million in the third-quarter. This was Pomalyst's second full quarter on the market, with sales up 35 percent from the prior quarter. $77 million of the total came from U.S. sales.

Celgene officials told analysts on an earnings call in October that Pomalyst was gaining market share in the U.S. Kyprolis, which received FDA approval in July 2012, had sales of $65 million in the third quarter, up 6 percent from the previous quarter. Kyprolis was acquired by Amgen as part of the $10.4 billion purchase of Onyx Pharmaceuticals, which Amgen closed on October 1.

The two drugs compete basically for the same multiple myeloma patients. Pomalyst is approved in the U.S. and Europe while Kyprolis is sold only in the U.S., for now.

Competition

Pomalyst and Kyprolis do not really represent new classes of drugs. Kyprolis works like Johnson & Johnson (NYSE:JNJ) and Takeda's Velcade, and Pomalyst works like thalidomide/Revlimid, also marketed by Celgene.

Pomalyst is prescribed for patients who are unable to take thalidomide and/or Revlimid because of toxicities of these drugs, while Kyprolis is mainly used by patients who have pronounced neuropathy due to Velcade. Pomalyst is an immunomodulator that has a similar labeling and neurotoxic profile as Kyprolis. The main difference between the two drugs is the method of delivery: Pomalyst is a pill and Kyprolis is injected.

All else being equal, Pomalyst may be favored for convenience: a choice between taking an oral drug or making office visits two days a week for Kyprolis infusions.

Kyprolis inhibits the action of the proteasome, which is a sort of a garbage disposal system for cells. For some reason the inhibition hurts cancerous cells more than healthy ones, and this is the same mechanism of action of Velcade too.

Both Pomalyst and Kyprolis are approved for similar indications, but physicians may not consider them as competitors. Patients need both options, and the use of one does not preclude the use of the other. Both Celgene and Amgen have the ambition to move their drug for earlier use in the disease cycle so they can reach a broader market.

Combinations also could work. The response rate to Kyprolis when used by itself, is about 20 percent, but higher when combined with Revlimid and dexamethasone. Pomalyst appears to be more effective when combined with dexamethasone, and the expectation is that it will have more activity when combined with a proteasome inhibitor such as Velcade or Kyprolis.

One issue with combinations is cost. For example if Kyprolis is approved for earlier use, it is likely to be combined with another drug like Revlimid. The combined cost of the two drugs could create resistance in reimbursement, particularly in Europe. Kyprolis costs about $10,000 for a 28-day cycle at the recommended dose for a patient of average size and Revlimid costs $7,900 per 28-day period at the FDA-approved 21-out-of-28-day dosing.

Pomalyst

Pomalyst is a multiple myeloma drug for patients who have received treatment with at least two prior therapies.

Celgene's total hematology franchise sales has benefited from the rapid uptake of Pomalyst in the U.S. in the second full quarter on the market and from the launch in Europe under the trade name of Imnovid in August.

In Europe, sales in Germany and France are encouraging, and even difficult to please NICE, the U.K. drug agency has approved it for reimbursement. Celgene's staff people are busy negotiating reimbursement in every European market. The company expects to achieve broad patient access to the drug throughout Europe by the second half of 2014. Pomalyst/Imnovid is on track to become a blockbuster in hematology.

Celgene's thalidomide and Revlimid are now generally used for newly diagnosed and relapsed myeloma patients as well as for maintenance therapy. Pomalyst at this point is approved as third line treatment for patients who are resistant to both Revlimid and Velcade.

All three drugs are so-called immunomodulatory drugs that work by inducing a patient's immune system to attack and destroy myeloma cells.

Krypolis

Kyprolis improves upon Velcade by irreversibly inhibiting the proteasome and by causing less peripheral neuropathy, a side effect of Velcade which causes pain, tingling, or loss of sensation in the extremities. Proteasome inhibitors are a class of drugs that work by preventing the breakdown of protein in cancer cells, thereby triggering their death.

Velcade has been beneficial for newly diagnosed as well as relapsed and refractory myeloma patients, but not all patients respond to it and those who do eventually relapse.

Trials are under way to extend Kyprolis' indications and to support the European application. Two trials, Clarion and Endeavor, will evaluate the combination of Kyprolis and Velcade. Clarion will test the pair, along with chemotherapy and prednisone, in newly diagnosed patients who are ineligible for transplant.

Endeavor will assess survival in relapsed patients with the Kyprolis-Velcade duo paired with dexamethasone. Both trials are currently enrolling patients. Clarion is expected to be completed in 2016 and Endeavor in 2015. The two other late-stage trials, Focus and Aspire, seek to support Kyprolis's bid for approval in Europe in 2014.

How well Kyprolis will advance commercially under Amgen's management is an open question. Amgen is relatively new to cancer drug marketing and its oncology sales force has mixed record: sales of the bone cancer drug Xgeva rose by 85 percent last year according Amgen's 2012 10-K, but sales of older prostate-cancer drug Vectibix were largely flat year-over-year.

Success depends on a successful launch in Europe and on the expansion of Kyprolis into a broader market. Right now, Kyprolis is approved for a third-line treatment, a sort of last-ditch effort for myeloma patients who have failed on two previous regimens.

Against Velcade, a $2 billion a year drug, Kyprolis is favorably positioned.

Peripheral neuropathy, a bad side effect, generally affects about 16 percent of resistant multiple myeloma patients on an IV version of Velcade and 6 percent in patients on injections of the drug, versus 1 percent treated with Kyprolis, in a single-arm study with 266 patients. The prescribing information of Kyprolis does not, in contrast to Velcade, contains a warning about the risk of peripheral neuropathy.

Progress

50 years ago, the introduction of the chemotherapy Alkeran and the steroid prednisone improved the survival of myeloma patients to a median of two to three years. Following that, the use of high-dose chemotherapy and stem cell transplantation further improved survival to a median of four to five years.

The novel agents thalidomide from Celgene, Velcade from Johnson & Johnson and Takeda and Revlimid from Celgene have made big improvements in the myeloma outlook: the median survival has increased to over seven years.

Despite these advances and the recent approvals of Kyprolis and Pomalyst, myeloma remains incurable for most patients. New therapies and combinations are needed.

According to the National Cancer Institute, approximately 21,700 Americans are diagnosed with multiple myeloma and 10,710 die yearly from the disease. Advance is likely to come from the numerous novel approaches.

Daratumumab, a joint development by Johnson & Johnson and Danish company Genmab, is a monoclonal antibody directed against a surface protein, CD38, which can be found virtually on all myeloma cells. Daratumumab, once bound to the CD38 molecule on cancer cells, signals for the immune system to kill the cells.

Daratumumab shows activity as a single agent in early studies, which is unique among monoclonal antibodies. This would allow for its use alone, with no requirement for combination with other agents. This feature makes it ideal for maintenance therapy after induction treatment or transplant.

It also work well in combinations. Daratumumab is currently in Phase 1 & 2 trials. In one of the trials it is tested in combination with Velcade and dexamethasone and in the other in combination with Revlimid and dexamethasone in patients with relapsed or refractory multiple myeloma. Dexamethasone is a corticosteroid.

Elotuzumab, jointly developed by AbbVie (NYSE:ABBV) and Bristol-Myers Squibb (NYSE:BMY), is effective only in combination, it has minimal effect as a single-agent.

Elotuzumab is a humanized monoclonal antibody that targets a cell-surface protein called CS1 that is highly expressed on multiple myeloma cells. The drug is able to induce cell breakdown and death in certain cancerous cells.

Oprozomib, an oral drug, came with the Onyx purchase and is being developed by Amgen. Oprozomib is a proteasome inhibitor like Velcade and Kyprolis. These drugs work by preventing the breakdown of protein in cancer cells, triggering their death. Oprozomib, unlike Kyprolis and Velcade, can be taken in a pill form.

In the Phase 1b/2 clinical trial out of 42 relapsed patients about one quarter (23 percent) responded to treatment, with 8 percent achieving a very good partial response and 15 percent achieving a partial response.

Several other combinations are being tested and the future pipeline for myeloma is promising. Although myeloma is only 1 percent of all cancers, six of the 21 new drugs approved over the past 12 years to treat cancer have been for myeloma, and more are coming. Soon, this former death sentence will be turned into a chronic disease with multiple options available to control the disease for years.

Investors' summary

Celgene reported total revenue for the third quarter $1.67 billion, up from $1.4 billion achieved in the third quarter in 2012. Net income increased 19 percent to $669 million compared to $561 million in the same quarter of the previous year. Adjusted diluted earnings per share increased 21 percent to $1.56.

For the full year of 2013 total sales are now forecast to exceed $6.2 billion, including Revlimid sales in the $4.2 to 4.3 billion range. EPS guidance is raised to a range of $5.90 to $5.95 from the previous $5.80 to $5.90. Operating cash flow was $571.1 million in the third quarter. Celgene repurchased approximately 1.5 million of its own shares during the quarter at a total cost of $211 million. Year-to-date, the company repurchased approximately $2.05 billion worth of its common stock.

The company ended the quarter with $5.84 billion in cash and marketable securities. During the third quarter, Celgene issued an aggregate of $1.5 billion in senior notes in tranches of five-, ten- and thirty-years.

The multiple myeloma market is highly competitive, and it is led by Celgene, which sells the blockbuster Revlimid. Revlimid together with thalidomide and Pomalyst serve the patient population at every stage of the disease.

Celgene is an amazing company, moving from success to success. Any company that is trying to challenge it in the blood cancer field better be prepared for a major battle.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.