Celgene (CELG) CEO Mark Alles Presents at Jefferies 2016 Healthcare Broker Conference (Transcript)

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Celgene Corporation (NASDAQ:CELG) Jefferies 2016 Healthcare Conference June 9, 2016 2:00 PM ET


Mark Alles - CEO


Brian Abrahams - Jefferies

Brian Abrahams

Good afternoon everyone. I'm Brian Abrahams one of the Senior Biotech Analyst here at Jefferies, really pleased to have our next company here Celgene represented by their CEO Mark Alles; and Head of Investor Relations, Patrick Flanigan. Thanks so much for joining us.

Mark Alles

Great to see you Brian. Thanks for inviting us.

Question-and-Answer Session

Q - Brian Abrahams

So I guess kicking off with maybe one of the most topical things. We are just coming out of the ASCO meeting where in multiple myeloma we’ve seen some interesting data from Anti-CD38 antibodies in the disease and lot of those the trials there tested those drugs on top of REVLIMID healy product of course. Can you talk a little bit about you sort of coming out of ASCO what dynamics you’re seeing or expecting to see within the multiple myeloma market and how the emergence of new therapies like these antibodies could affect either positively or negative the dynamics for both REVLIMID and POMALYST.

Mark Alles

Thanks a lot. It’s an important question. First I think it is important for investors to recognize along with what Celgene sees. Myeloma is almost a prototype for what medical innovation can be and is, with the inclusion of daratumumab, the CD38 from Genmab and J&J added to myeloma something like eight or nine new drugs have been available or will be available for the treatment of myeloma in just about a five-six year window. What that has equated to is almost a quadrupling of survival and progression free survival using Celgene’s drugs as the backbone. So REVLIMID and POMALYST.

What we saw at ASCO from the CD38 daratumumab is a significant improvement in progression free survival versus REVLIMID dexamethasone alone. And I think what that also highlights is the synergy between immunotherapeutic agents. So you have a CD38 monoclonal antibody with an IMiD and all of a sudden we’re talking about combined immunotherapy for hematology much the way investors have been looking at combined immunotherapy for solid tumors, used Bristol-Myers-Squibb as an example with YERVOY and OPDIVO.

So I think it’s a very, very powerful thing in terms of the impact for Celgene, our drugs REVLIMID, POMALYST which outside of the U.S. is called IMNOVID. We are the backbone drugs, there is no question, the data prove that, the multiple clinical trials and regulatory approvals that have happened in the last six months to two years prove that. And I think from a fundamental point of view it means market share for REVLIMID in nearly diagnosed myeloma in the major countries of the world will continue to grow. Duration will grow as a consequence, because all of these trials also use the feature of treat to progression.

As you know Brian well there was a time where there was a question about do you treat the progression for diseases like Myeloma, Lymphoma or not. And these studies all really are built on that backbone of continuous treatment. One of the biggest variables that has advantage Celgene over the last several years with respect to treatment [ph] is the durability and duration of treatment using REVLIMID and then increasing POMALYST and IMNOVID.

So there is a lot of features about the value of innovation, the value of our portfolio, and in fact for patient benefit, ASCO once again really showed that. The last thing that’s very important is we did a very long follow-up as you know on three studies of REVLIMID in a setting of post-transplant maintenance. And this follow-up had three trials, one from France, one from Italy and the other from the U.S. the CLGB [ph] study, where REVLIMID was used as monotherapy to maintain the benefit following autologous transplantation for myeloma. The meta-analysis that was presented demonstrate the benefit risk from survival after follow-up in some cases of 80 months.

So we now have evidence that chronic treatment leads to overall survival and a change in the natural history of the disease for patients who get a transplant and then get continuous treatment of REVLIMID.

So that’s an important study, because it also put to bed this question of the risk of SPMs. You remember not that long ago, the question of cumulative toxicity or cumulative effect of the drug in the form of potentially second primary malignancies. Well that was captured in this meta-analysis as well and the survival advantage overwhelmed any concerns about toxicity. So very important meeting for us.

Brian Abrahams

And as we think about that dynamic shifting towards multiple branded therapies being used over longer and longer periods in patients. What has the reaction been amongst the payers? And sort of bigger picture longer term, how do you think about defining and conveying the value of proposition of your therapies.

Mark Alles

Yeah. I think that once again it’s almost a prototype for the industry. These myeloma therapies of daratumumab, REVLIMID, POMALYST, IMNOVID, Kyprolis go down the list of new drugs. They represent these medical miracles, medical innovations that come at a high price there are no drugs in Kansas for example that are more expensive. They might be as expensive, but we’re in that expense category of most costly, but we also come with a value proposition that is quite robust and I think that payers around the world look at what our drugs have done in myeloma and want to see that kind of long-term outcomes driven value so that when the cost of a therapeutic is part of the equation, they have an objective view of value versus cost as oppose to simply the price of a drug without the kind of change in the natural history of the disease.

The other thing to remember is internationally government use models of cost effectiveness and comparisons of what it substitutes for, so it’s not like we’ve not been in this space for a very long time demonstrating value. So for us it’s more about the value, less about the price and then for Celgene our business model is built on volume and demand for our products, price is a very tiny contributor to our overall business. So I think more and more industry is going to have to look at these measurements of value embrace those measurements of value be constructive about it.

And then recognize that incremental benefit in the form of cancer is probably not a sustainable value proposition because payers will look at that in the context of what else they can do. And so we’re in this window of opportunity to stay virtuous about it, to be positive and constructive, but to remember that the development of a drug today in any highly specialized area for sure has to come along with it and coming along with a development clinically a value proposition that payers will recognize and support.

So I think in myeloma that’s happening and it’s one of the reasons why I think we’re very successful and we don’t come under let’s say more pressure than we otherwise would.

Brian Abrahams

What are the data points that we’re going to be looking for in the relative near-term, is there REMARC data for REVLIMID and Non-Hodgkin’s Lymphoma you spoke a little bit on your first quarter earnings call about what we should be looking for I was wondering if you could expand a bit on that in terms of what we might expect to report what are the key things to look for in that data and maybe speak to some of the precedence versus potential limitations in that trial design as the treatment paradigm in that disease is evolved?

Mark Alles

Sure so for investors Non-Hodgkin's Lymphoma is a very large heterogeneous group of patients with a blood cancer, by last count there were some 50 or 60 histologic subsets in lymphoma that largely are underserved with some exceptions and the exception using the REMARC trial we attempted and are attempting to take a define group of patients at higher risk of progression they have a profile that is objectively defined, they are given Rituxan CHOP as the classical treatment to put them into a response. And then following Rituxan CHOP the design of our trial is to randomize those patients to receive REVLIMID maintenance therapy, which is continuous treatment versus the control arm of a placebo.

And so the hypothesis is that these responding patients to R-CHOP if they continue to get REVLIMID they would have an intensified response, they would go into a deep remission and that the clinical effect would be tantamount to curing them. So we have conducted the trial it’s fully enrolled, it’s event driven the primary endpoint is progression free survival with a very important secondary endpoint of overall survival back to value and we should have the top-line results of the data sometimes soon. We’ve been advising investors to look for top-line data over the summer and we’re still thinking that that’s the case.

The study is looking for a difference in absolute months of progression free survival of 15 months there is a hazard ratio that goes with that and then what investors have been very interested in is do we need or will it be required that from a reimbursement regulatory point of view that the study generated overall survival advantage. And so the study will un-blind for progression free survival and we’ll look very carefully at the trend in overall survival because of course if there is a strong trend, it makes the case for treating these patients versus not much stronger. So it’s a near-term event it’s one of five lymphoma trials that will lifecycle REVLIMID as a major drug in the treatment of a variety of different lymphomas.

Brian you know that it’s already approved for Mantle Cell Lymphoma a subset of Mantle Cell Lymphoma and so we have a combination data studies with Rituxan in the mix. So follicular lymphoma, aggressive lymphoma and of course the maintenance study. So we are excited about it and it’s an important contributor as we look at our future next three to five years. REMARC is part of the sweet of trials that would read out.

Brian Abrahams

Shifting gears wanted to get your take on your latest views on business development. You guys have always been relatively proactive in seeking out external opportunities. You’ve recently done some large deals the latest being Receptos. What’s your latest thinking with respect to additional business developments and where are you inclined potentially in terms of the size are there particular therapeutic areas that you believe you need to further develop within Celgene or potentially diversify into?

Mark Alles

Thanks for the question Brian. I think investor all us should understand we are living in a time where the convergence of a lot of big data, a lot of scientific biological exploration has led to tremendous opportunity. And so Celgene is a very curious company. We are science focused; we follow the science in many ways where it takes us. But we are also a focused company. So we are a world leader in hematology in a variety of blood cancers particularly myeloma, lymphoma and leukemia in solid tumor oncology because of our drug ABRAXANE, we have a unique position in pancreatic cancer and an emerging position in lung cancer and breast cancer particularly in the IO combination space.

With our drug OTEZLA we have an increasingly important presence in the world for soriatic disease whether it’s dermatologic and psoriasis or the arthritis and of course with GED-0301 and ozanimod. We are in inflammatory bowel diseases as well. So this platform of cancer and immune-inflammatory diseases lets us participate in a lot of what’s happening in scientific biological evolution and in some cases revolution.

So our curiosity is as high it’s ever been. We are in the market, we are aggressively pursuing partnerships that we think are complementary first. But always disruptive, back to value. We understand that if you are not really changing outcomes for patients when you look at you partnerships. So for example our Juno partnership with CAR-T therapy. At ASCO, J-CAR 15 and 17 respectively presented data in B Cell malignancies with high response rates and in some cases complete responses that are unique in the space. It’s competitive for sure, but a year ago we did the big Juno deal and already we have data from that partnership where we’ve opted in, highlighted at ASCO.

So only that’s a good example. So we’re going to be curious and by the way valuation comes after the evaluation of whether or not the science and the drug will make differences for patients in the end. The most expensive deals the one you do where a drug doesn’t work.

Brian Abrahams

And then you mentioned GED-0301, can you remind us where you stand with respect to the ongoing Phase III program there? In particular curious if you can maybe give us an update on the timelines. And expectations for when we might see data from the ongoing endoscopy study and the fact that - it's a fact that we haven’t seen anything emerge from that yet, how should we interpret that?

Mark Alles

Sure Brian, thanks. So GED-0301 is a very important product. It’s a small molecule nucleotide that has a unique mechanism of action that we thing works quite well in the treatment of Crohn’s disease. So this is a pill you take this medicine orally, but it’s absorbed only in the mucosal lining of the colon. So you end with a topical effect from the drive. That means that systemic toxicity is limited because the drug isn’t absobed systematically only at the sight of inflomation caused by the disease.

So it’s very unique in that patient, compliance should be very high and we think the therapeutic profile so far looks like it could replace a lot of exisiting therapy. The first burden that we put on ourselves is to conduct a trial called CD-001 and this a trial that looks at a baseline group of patients who get an imaging study to determine that they indeed do have active Crohn’s disease. They also will get the symptomatic score CDAI to determine that they have Crohn’s.

And then after 12 weeks, so they are treated and after 12 weeks, there is second endoscopic procedure imaging study that seeks to compare the two, baseline versus the week 12 imaging study. So we’ve completed the approval of the trial. And now we are waiting for that last patient in the study to go through that 12 week observation window to do the treatment and then second scope and scan. And then we will compare the two and investors are curious as we are, would we report out that data. Because the study is actually a 52 week trial, it has an observation period from baseline all the way through one year. And that is because we want to determine the duration, the durability of any effect that would happen in the - if it got.

So the timeline is still the same time that we’ve been talking about. That we would data sometime later in the summer, this August-September timeframe maybe a little bit later depends on any things we need to do be sure of the dataset, maybe communicate with regulators. There is a few things that we might consider doing that could delay that timeline. But we see this as an increasingly likely dataset that would be top-lined through a press release. But this is information that would go by our protocol and our process to a major medical meeting.

So the full dataset to the extent that the imaging study the old one study would be presented, that would happen at a major medical meeting. We wouldn’t put that into the media or to investors, but top lining it is very likely.

Brian Abrahams

Can you talk a little bit about one of the recent announcements you made which was the restructuring of the Agios collaboration. And what it means for that partnership?

Mark Alles

So Agios is I think is another great example of Celgene’s desire to partner with scientists who are world-class, who have a platform approach. So Agios we were early investors before their IPO on a platform of cancer metabolism. If you think about cancer, and I hope people understand this one of the reasons that human beings die from cancer is because their disease overtakes their body through a metabolic process largely known as cachexia.

And then if you can get a response that’s great, but your body is simply absorbed by tumors. So the cancer metabolism approach seeks to interact with that process and really slowdown progression and death. We’ve been very fortunate because the initial collaboration with Agios has led to three molecules that are in the clinic. These are unique molecules in our space AML, Acute Myelo Leukemia with very specific molecular target drivers of AML.

The restructuring as you call it is really an extension of our existing collaboration. So we have an Agios partnership now that has move the cancer metabolism discussion that has been so profoundly positive over a very short window to an observation and not yet molecules where cancer metabolism maybe an area platform to combine with checkpoint inhibitors.

So there can be an immunologic approach to combine the so called T-Cell checkpoint inhibitors with molecules that could be developed. And we’re excited to begin that process and try to figure out if we can add on to the success of checkpoint inhibitors. And with David [indiscernible] and his team, I think our chances are pretty high we’ll have some success.

Brian Abrahams

This week we’re sandwich right in between ASCO and EHA. I was wondering if you clearly…

Mark Alles

How smart you are to have the conference today.

Brian Abrahams

I was wondering as a leader in the hematologic and malignancy and solid tumor space. Curious to hear your perspectives on what were maybe some of the most interesting takeaways on a macro level in oncology from ASCO? And what you’re looking towards at EHA both Celgene’s data as well as data from others that might shape the space over the next 5 to 10 years.

Mark Alles

Appreciate that. I think we’ve touched on one already. ASCO, EHA the world continues to say how do we wrestle with paying for innovation, incentivizing inventors and at the same time dealing with the global economic malaise that exists in most countries in the world. So I think it used to be the scientific meetings would avoid these discussions about the macro economies of the world and how to pay for innovation. But I think that’s here to stay. And I know that that will happen at EHA. One of the primary discussions at ASCO was on this very topic of cost versus value.

So that to me gives innovator companies like Celgene a pause reinforcement to remember that drug development isn’t just about the innovation itself, it’s about a collaboration with policy makers and payers around the world. If we’re going to continue to incentivize this great industry that Celgene is part of. And I’m very, very positive and constructive on that despite the political narrative.

I think the second thing is that immunotherapy for cancer is here to stay. This is a - what I call a fourth leg of a table. For the last 100 years cancers has been treated really with three legs of a stool, surgery, radiation and chemotherapy. Those three legs exist, but in the last two years and ASCO really brought this on this year, immunotherapy for solid tumor cancers and we already talked about hematology is the way to treat many, many patients in a durable, safe effective way that now the world can benefit from. So there are four ways to treat cancer and that just means a lot more people are going to benefit from what we’ve done.

I think then at a practical level from a Celgene point of view, our strategy to combine and to build a portfolio of best-in-class, first-in-class drugs that build on the immune oncology theory that build on our own legacy of success in hematology is front and center. I think we are positioned as a company better than ever. And I think our pipeline will be advantage two ways. One we’re going to identify more in new opportunities, but ASCO and EHA define better, how we want to do our initial drug development. So cell module like CC122, 220 that could combine with checkpoint inhibitors were on their own be immunologically driven driving different outcomes and on and on and on. So that sort of my takeaway.

I think the last thing is that we treat patients until they progress. We don’t stop early because the outcome then is very much faded complete. When patients were benefitting from therapy stop prematurely their disease becomes resistant, they progress faster and there is only one guarantee. And that the vast majority will die sooner. And I think science understands that very well.

Brian Abrahams

With just the last minute that we have I’m just curious if there are maybe one or two early state programs that might not be on investor - behind investors' radar that you’re most excited about?

Mark Alles

Yeah you know so well I’m struggling with what's not…

Brian Abrahams

You mentioned 122, 220 maybe not as much a focus for people.

Mark Alles

Well so 122 and 220 just start there and then I will mention one product that is interesting in the IO space that is probably not on anyone’s rate are really. So 122, 220 our next generation we call them cell module, they bind uniquely to a target called [indiscernible]. And as a consequence the approach that we’re taking with them is quite unique. They synergize with checkpoint inhibitors. They are much more potent in certain settings than let’s say Lenalidomide, REVLIMID or Pomalidomide. So we're developing them rapidly as next generation molecules in lymphoma, leukemia and recently we move them into Phase I for myeloma.

So that’s kind of the next generation blood cancer franchise home grown and the intellectual property on those two molecules goes out into the 2030s. So we have a very next window to develop them and we certainly know how to develop that class of drugs.

I think the other thing that might be interesting and we’re being careful about how we talk about it, but it’s our CD47 our anti-CD47 antibody, which interacts and takes the breaks off of or another way to say it allows macrofisers [ph] in a human being to identify solid tumor much the way the checkpoint inhibitors did this with respect to the PD-1, PDL-1 access.

And so if we were able to move this through the clinic we would be able to interact and trigger a completely different side of immunology and we think it’s going to be quite effective, the big question someday is could we combine a CD47 antibody with a T-cell checkpoint inhibitor and now you have a T-cell activated immune system with macrofisers coming in as well and holy grail there would be that it would be safe and effective I think that would be a very powerful in the future to try to treat cancer.

That said, we’re still in Phase 1, we’re being cautious because we know it’s going to be highly effective, we’ve got to be careful about the toxicity profile. So CD47 I think is something that is probably not on the radar, but it is our disruptive differentiated way to come in and really add to the space.

Brian Abrahams

And of course we’ve seen the first clinical data from that class just last week at ASCO.

Mark Alles


Brian Abrahams

Great well with that…

Mark Alles

Thanks, Mike.

Brian Abrahams

Thanks so much Mark, thanks Patrick. Appreciate everyone.

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