Celgene has been hit again with issues of secondary malignancies arising from prolonged treatment with its key drug, Revlimid. Shares have crumbled in the past month from $60/sh early this year to as low as $49 on February 4. It has now bounced back above $50.
News of secondary malignancies has bedeviled the company since data from two key trials was release at ASH in early December 2010. Data from two clinical trials showed that, while helping stave off multiple myeloma, the treatment regimens that included Revlimid were associated with a numerical increase in the number of secondary malignancies in patients who previously received a stem cell
In a trial known as CALGB, patients were either given high dose melphalan followed by stem cell transplant, then Revlimid, or were given melphalan, stem cell transplant and placebo. Patients in the Revlimid group had a 60 percent reduction in the risk of their disease progressing after four years. However, about 15 patients in the Revlimid arm developed a secondary cancer compared to 10 patients in the placebo group.
Patients in a second trial, IFM, received consolidation therapy with Revlimid, and then were randomized to receive long-term Revlimid maintenance therapy or a placebo. Patients in the Revlimid arm had a 50 percent reduction in the risk of their disease progressing after four years. Seven patients in the Revlimid arm developed a non-blood cancer secondary malignancy compared with one in the placebo group. Ten patients in the Revlimid arm developed a secondary blood cancer, compared with two in the placebo group.
These were critical trials for Celgene; much of Revlimid’s future growth depended on increasing the duration of treatment, approval for maintenance therapy would go far in accomplishing that goal. Management reassured investors that the observed increase in secondary malignancies was not unusual, but caused by the uneven follow-up of Revlimid treated patients compared to placebo.
The hammer fell last week when Celgene said it had suspended dosing in one of its three pivotal maintenance therapy trials, known as IFM 2005-02, due to a higher rate of secondary malignancies. There were suggestions by investigators that that the duration of Revlimid maintenance should be limited to 12, 18 or 24 months.
This was a hit not only to potential drug sales but management’s credibility; the company had assured analysts of Revlimid’s safety only days ago during its quarterly earnings call.
Over time, I believe this will all blow over. The overwhelming efficacy and tolerability of Revlimid will likely garner it approval in the maintenance setting. Even if limited to 24 months of use, there is plenty of growth left considering the average duration of treatment is approximately 12 months in the US and around 8 months in Europe. Along with increasing time on treatment is geographic expansion. Only now is Revlimid becoming available in Japan and Russia. It will soon be launched in China. Pivotal trials are also ongoing in additional cancer indications including CLL, NHL, and even a couple solid tumors.
Celgene has been slow to develop its own pipeline, but has done well with acquisitions. It has picked up companies with approved, complimentary products for decent prices, and ramped up their sales with an enviable sales force. If this can be repeated with breast cancer drug Abraxane, from its most recent purchase of Abraxis, it may well have a blockbuster.
The company’s pipeline is finally beginning to bare fruit. Several compounds are in Phase III trials: Pomalidomide in Myelofibrois, Apremilast in Psoriatic Arthritis and Psoriasis, and Amrubicin in SCLC. Sales potential for these three if successful could be quite significant.
Disclosure: I am long CELG.