Beyond Revlimid: Celgene's 2015 Plan Targets New Business Areas

Celgene is on a course to transition from a company centered mainly on the multiple myeloma blockbuster Revlimid to a diversified biotech over the next five years. That's the strategy management laid out for investors during an R&D day in New York April 8.

In the first research overview Celgene has provided investors since 2005, the company presented its business plan for the next five years, a strategy that includes expanding the core hematology business beyond Revlimid, launching new oncology drugs targeting solid tumors and establishing a new inflammation and immunology franchise. By 2015, Celgene expects to secure regulatory approval for five to 10 new indications in the oncology/hematology space, while potentially launching four new drugs in inflammation and immunology.

"The hematology/oncology franchise is a very exciting one. We obviously expect it to continue to grow very, very nicely, and it has been a mainstay of Celgene," CEO Sol Barer said. "But as we look to the future growth, our inflammation and immunology franchise is equally exciting."

No Surprises, But A Hefty Mid-Stage Pipeline

The company currently has 12 compounds in clinical development and more than 20 Phase III clinical trials ongoing, the firm reported. Wall Street analysts largely applauded the long-term strategy, although the firm didn't unveil any near-term surprises and much of the pipeline is only in the mid stages of development.

"We view these R&D goals as encouraging evidence of confidence in the company's opportunities, and a clear signal that they will not simply exploit the multiple opportunities in Revlimid without building other near- and long-term growth drivers," Bernstein Research analyst Geoff Porges said in an April 9 research note. "This diversification, the extent it reflects intent, strategy and substance, is encouraging in a world of increasingly barren large cap portfolios."

JP Morgan analyst Geoff Meacham concurred, stating in an April 8 note, "Overall, we thought Celgene's R&D day was a positive event, albeit incremental."

The last time Celgene held an R&D day, the company's only marketed drug was Thalomid (thalidomide) for multiple myeloma, and its next generation treatment Revlimid(lenalidomide), hadn't yet been approved. Today, Revlimid is a blockbuster drug, and the main growth driver of the company, although Celgene has extended its oncology portfolio to include two other marketed drugs: Vidaza for myelodysplastic syndromes and Istodax for cutaneous T-cell lymphoma.

By 2015, the portfolio will be expanded even further, management said, with new drugs like pomalidomide for myelofibrosis and multiple myeloma and apremilast for psoriasis and psoriatic arthritis.

Apremilast Key To Unlocking I&I Opportunity

Apremilast is the cornerstone of Celgene's push into a new therapeutic area: inflammation and immunology. It's the company's most advanced opportunity in the area and a drug Celgene is pushing aggressively into Phase III clinical trials this year in two indications in psoriasis and psoriatic arthritis.

"We believe the I&I b23 usiness is going to be a great growth driver for Celgene," I&I CEO Francis Brown said. "If you look at the I&I market, and the opportunity it presents, it is a vast area with hundreds of diseases affecting hundreds of millions of patients around the world."

The expectation for apremilast is that it could offer equal or better efficacy to the biologic drugs currently used to treat psoriasis and psoriatic arthritis like Amgen/Pfizer's Enbrel (etancercept) and Abbott's Humira (adalimumab) with the benefit of oral administration and the potential for lower cost. Apremilast could potentially be priced at about half the cost of current biologics, the company estimated.

"We could be talking about a drug in the $2 billion to $3 billion range just in psoriasis and psoriatic arthritis," said Scott Smith, VP-Global Marketing for the inflammation and immunology franchise, discussing the market opportunity for apremilast. The drug is also being studied in earlier proof of concept trials in rheumatoid arthritis, ankylosing spondylitis and behcet disease, a rare disease that causes inflammation of the blood vessels.

But the market for such autoimmune disease drugs is increasingly competitive, with seven biologics already on the market, ranging from J&J's new plaque psoriasis drug Stelara (ustekinumab), an IL-12/IL-23 inhibitor, to a broad class of tumor necrosis factor inhibitors, all administered by injection or infusion.

Despite the oral dosing benefit, apremilast will need to have a compelling efficacy, safety and tolerability story to compete effectively, and Celgene will need to ramp up its commercial efforts to give the drug the support it needs. Management noted that Celgene has "every intention" of developing and marketing apremilast on its own. Given the competitive environment, and the fact that only early data has thus far been released on the drug, investors remain cautious on the opportunity.

"For the past few years, Celgene has largely been a Revlimid story, and more specifically, a Revlimid multiple myeloma story. However, we think the Street underestimates the opportunity for apremilast," JP Morgan's Meacham said. "Yes, the data needs to be strong and the commercial effort (if approved) could be challenging, but we see this as an opportunity that could approach $1 billion."

The Apremilast Development Plan

Apremilast offers a new mechanism of action in the space as a novel, oral pluripotent immunomodulator that demonstrates anti-inflammatory activity through the modulation of multiple pro-inflammatory mediators through phosphodiesterase type-4 inhibition, including TNF-alpha, IL-12 and IL-23.

The Phase III program in psoriasis includes two studies enrolling 1,200 patients, and the psoriatic arthritis program will include three studies, each enrolling 500 patients. Data is expected in the 2012/2013 timeframe.

In a Phase IIb study in patients with moderate-to-severe plaque psoriasis, 41 percent of those treated with a 30 mg dose of apremilast twice a day achieved a Psoriasis Area and Severity Index-75 (PASI-75) score after 16 weeks of treatment, compared to 6 percent on placebo. It is hard to compare data from a small Phase II study to larger Phase III programs for competitors, but labeling for Humira and Enbrel show 71 percent of patients on a 40 mg dose of Humira achieved a PASI-75 score at week 16, while 47 percent of patients achieved a PASI-75 score on Enbrel at six months following treatment with the highest 50 mg dose.

In a Phase II study evaluating apremilast in psoriatic arthritis patients, 44 percent of those treated with 20 mg of apremilast twice a day achieved an ACR 20 score after 12 weeks of treatment, compared to 12 percent on placebo. In comparison, labeling for Humira shows 58 percent of patients achieved an ACR 20 score at week 12, while labeling for Enbrel shows 50 percent of patients achieved an ACR 20 score at six months. The Phase II study for apremilast, however, studied a lower 20 mg dose, rather than the 30 mg dose used in the psoriasis studies, and management said it intends to study the higher 30 mg dose in Phase III in the hopes of achieving greater efficacy.

No serious side effects were seen in the clinical trials for apremilast; the most common adverse events were gastrointestinal in nature, including nausea and diarrhea.

Key opinion leader Kim Papp, the founder of Probity Medical Research, has treated patients with apremilast, and told investors it's not just about the efficacy scores. Given the time constraints in clinical practice, he said, "We need a small molecule that is safe, that is effective, and that's going to be a lot easier to introduce that will have greater access to give our patients."

Celgene's efforts in inflammation and immunology extend beyond apremilast, however. The company has several other drugs in earlier stages of clinical development, including CC-11050, a follow-on pluripotent immunomodulator in development for cutaneous lupus; an oral JNK inhibitor in development for idiopathic pulmonary fibrosis; pomalidomide for systemic sclerosis; and ACE-011, a human fusion protein, for renal anemia in patients with concomitant bone disease. All five drugs are ones Celgene aims to have on the market by 2015.

Revlimid Expansion, New Oncologics In The Plan

Celgene is also looking to expand Revlimid use to the front-line multiple myeloma setting; the drug is currently approved for multiple myeloma in patients who have received at least one prior therapy. The plans for the drug include filing for approval in the front-line setting by the end of the year in the U.S. and Europe. The company is also looking to extend labeling to patients with smoldering meyloma, those who do not yet have multiple myeloma but are at high risk of the disease. Celgene has also started a clinical program for Revlimid in lymphoma, with four studies underway.

Beyond Revlimid, Celgene is developing a next-generation drug, pomalidomide, which it is moving into Phase III clinical trials for refractory resistant myeloma and myelofibrosis. In early clinical studies, pomalidomide has led to a 50 percent overall response rate in heavily pre-treated patients, who have taken Velcade , Revlimid and Thalomid.

Celgene further shored up its early oncology pipeline in a deal with the startup Agios Pharmaceuticals, announced April 15, in which Celgene gained access to Agios' early-stage opportunities in cancer metabolism.

- Jessica Merrill ( ¹ [email protected] )