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Can Celgene's Ozanimod Survive After FDA Blowback?

Mar. 01, 2018 11:43 AM ETCelgene Corporation (CELG)24 Comments


  • Celgene's ozanimod receives setback from the FDA on the marketing approval front.
  • The refusal to file letter from the FDA may seem like a totally negative event at first, but it can be easily fixed within a year or two.
  • The market opportunity for RRMS is massive, and should Celgene be able to eventually receive FDA approval for ozanimod for this indication it will be a huge deal.
  • There is the risk that the FDA can still refuse to file the application even after issues have been fixed, but such a chance is very small.
  • Celgene can continue to press on to get FDA approval for ozanimod in RRMS so that it can obtain a new avenue of revenue for growth.

Recently, it was announced that the FDA refused to file the application for Celgene (NASDAQ:CELG) ozanimod to treat patients with relapse remitting multiple sclerosis (RRMS). This was a huge blow to Celgene, and its stock fell by 6% to around $90.40 per share. This was a huge setback, but I believe that there is still value left in Celgene. That's because I believe that the reason for the refusal to file letter by the FDA can be fixed. It will take longer than expected, but it can be fixed.

FDA Refusal To File

The FDA refused to file Celgene's application for ozanimod because of insufficient information in the application. More specifically, the FDA was not clear on both the non-clinical and clinical material in the application. The next step for Celgene is to meet with the FDA and determine what it needs to correct so that it can eventually refile its application for ozanimod for RRMS. When a refusal to file letter is sent from the FDA it can mean one of two things. Either the company has to correct some material in the application, or it may have to run additional trials. It is hard to say at this point what is needed, since Celgene has not yet met with the FDA. Celgene was expected to receive approval for ozanimod in RRMS by Q3 of 2018. What I would like to point out though is that Celgene will survive this FDA blow back. In addition, that's why I believe this is a buying opportunity. If it needs to tweak the application that can be done so very quickly with a short turnaround time. A clinical trial would be the worst possible outcome, but it won't be the end for the program as a whole. It may just take another year or so to gain approval. The point being that I think Celgene can eventually flesh out

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