Strongly recommend you go to investorvillage CELG board to read this with bold/higlights/tables - much easier to read.
REVLIMID IN MYELOMA – THE PRIME MOVER FOR CELG
Revlimid, an oral immunomodulatory agent, was originally approved in the U.S. for MDS del 5q in late 2005 and shortly thereafter the label was expanded to include MM patients whose disease failed at least one prior therapy. In this setting, Revlimid plus dexamethasone showed dramatic improvement in response rates and time to progression, leading one of the two pivotal studies to be halted and all patients switched to the combination. However, the key event for Revlimid (and CELG’s fundamental business) occurred on July 23, 2009 when the company announced that, in conjunction with its 2Q09 earnings, the Phase III MM-015 study had crossed the statistical threshold for efficacy (by PFS) at the study’s first interim analysis.
Heretofore, patients with MM who were not eligible for a bone marrow transplant (commonly referred to as an autologous stem cell transplant, or ASCT) were treated with a chemotherapy regimen containing Revlimid and one or more additional agents until a patient reached his best response (partial or complete). The MM-015 study was the first study to validate the concept of the use of Revlimid as maintenance therapy in the setting of newly diagnosed multiple myeloma (NDMM). This same maintenance strategy (i.e., continuing therapy after disease response in order to delay the time it takes for the disease to return) had also been utilized by Genentech with Rituxan as a maintenance therapy in non-Hodgkins lymphoma (NHL), helping to propel that drug to more than $6bn in annual sales.
The remarkable results from the interim analysis of the MM-015 study, which were subsequently presented at the ASH 2009 meeting, indicated an almost unheard-of reduction in risk of progression in 50% of patients who received Revlimid maintenance following nine cycles of Revlimid plus prednisone for the treatment of NDMM. This result virtually assured oncologists, as well as investors, that the outcomes of CALGB 10014 and IFM 2005-02 (two cooperative group-led studies being conducted in similar settings) would also be positive. Indeed, those studies read-out positively in December 2009 and January 2010, and fundamentally shifted the Revlimid business model to one increasingly benefitting from recurring revenue.
These findings, as well as other data supporting the drug, in combination with other agents and in earlier lines of therapy, have propelled Revlimid to an almost $3.8bn brand in 2012. While the company’s other assets and franchises should increasingly contribute more in the future; we still expect Revlimid to grow strongly, reaching more than $6.4bn in sales by 2017, on the back of approval in the NDMM setting, continued gains in market share and duration of therapy in MM, and label expansion into mantle cell lymphoma, CLL, and other forms of NHL.
Newly Diagnosed Multiple Myeloma and Maintenance Treatment
By now most investors are familiar with the sequence of events regarding CELG’s attempt to obtain an additional indication in the EMEA for Revlimid in the NDMM and maintenance settings. The company,in conjunction with international cooperative groups, ran three studies: MM-015 in the transplant ineligible population, as well as IFM-2005-02 and CALGB 100104 in the transplant eligible segment (Figures 39-44). For each study, treatment with Revlimid led to a highly statistically significant improvement in progression-free survival, the primary endpoint of each trial, versus comparator arm(s). In terms of overall survival, however, only one trial (MM-015) demonstrated a survival benefit. For the other two trials (IFM and CALGB), the overall survival data remains inconclusive, but may improve as the data reaches maturity.
Despite the profound benefit in OS, European regulators were concerned that secondary primary malignancies (SPM) may have had a negative impact on survival trends for each study. While the inconclusive survival benefit of these studies could be confounded by follow-up therapies or other factors, regulators were clearly focused on the potential risks related to SPMs. In advance of what likely would have been a negative ruling from the EMEA, CELG withdrew its application for approval in these settings. Based on the European Public Assessment Report (EPAR) document published by the CHMP, there appeared to be consensus around the drug’s efficacy and clinical benefit. The three studies have yet to read-out with mature OS data (i.e., more than 50% of deaths having occurred). Mature data from MM-015 is expected in 1H13, while the other two studies are not expected to have mature data until the latter half of 2014.
Given the above, there remains uncertainty surrounding when, and on what terms, CELG will reengage in discussions with the EMEA. Another layer of complexity is added from the upcoming read-out of results from the MM-020 trial (Figure 45), a Phase III trial of Revlimid plus low-dose dexamethasone (Rd) versus melphalan, prednisone, and thalidomide (MPT) in the NDMM setting for transplant ineligiblepatients. CELG views this trial as the primary basis for approval in the U.S. for this patient population.
Results from this trial are expected in 2Q13.
CELG designed MM-020 with the goal of demonstrating a 25% risk reduction of progression. Built into these projections were assumptions that the MPT arm would generate a median PFS of 24 months, while the Rd arm would do no worse than a median PFS of 30 months. To assess these assumptions, we evaluated the six completed Phase III studies (Figure 6) of MPT vs. MP, as well as two smaller Phase II studies of Rd in a similar patient population. MPT generated a mean median PFS of 20.7 months, with the outliers being the Facon study which led to a PFS of 27.5 months and the HOVON study, which used a different duration of melphalan. Focusing on the Facon study (IFM-99), the PFS result was called into question in the Thalomid Assessment Report (EPAR) completed by the European Medicines Agency (EMEA). That report noted that asymmetrical visit schedules, specifically infrequent monitoring of disease progression, inflated the median PFS results for the MPT arm. When actual censoring and event times were re-assigned to the earlier scheduled assessment, the median PFS was 24 months for the MPT arm, rather than 27.5. This issue did not affect the statistics for the MP arm.
Based on this, we view the results of IFM-99 study, as in line with the IFM-01 study, and view 24 months as a conservative benchmark, given that four other studies have meaningfully shorter PFS durations.
Further, to evaluate the assumption for the Rd arm, we looked at the two Phase II studies of Revlimid plus dexamethasone in the transplant-ineligible, newly diagnosed setting. In this patient population as part of the SWOG-0232 study, Revlimid plus high-dose dexamethasone (RD) led to a three-year survival of 79% and a median PFS of 39 months. This is encouraging given results from ECOG E4A03, a study that was halted early due to the significant advantage in survival (96% vs. 87%) at one-year with Revlimid plus low-dose dexamethasone vs. RD. Extrapolating from the fact that, at one year Rd beat RD, a regimen that appears to have a median progression survival beyond three years, bodes well for the results of MM-020, even allowing for some reversion to the mean in the study. As such, we view CELG’s 30-month assumption as conservative and well within reach for Rd. Further, we expect MM-020 to show a clear benefit in the rate of SPMs with Rd. vs. MPT, hopefully putting the SPM issue to rest.
Though a range of regulatory options likely exist, we anticipate that CELG will await the read-out of both MM-015 and MM-020 before pursuing approval in the transplant ineligible setting in the U.S. and Europe. Though the company could wait for the full data set from all of the trials, we anticipate CELG will move forward in advance of such data given that the larger commercial opportunity resides in the transplant ineligible setting (~65% of patients are transplant-ineligible at the time treatment begins).
REVLIMID – CONQUERING THE REST OF HEMATOLOGY
In addition to the development efforts in myeloma and MDS, CELG has a comprehensive and aggressive clinical development plan for Revlimid in NHL, specifically mantle cell lymphoma (MCL), follicular lymphoma (FL), and diffuse large B-cell lymphoma (DLBCL), as well as in chronic lymphocytic leukemia (CLL) (Figure 6). While acknowledging the data generated in these indications with Revlimid, either as a monotherapy or in combination, has not appeared to be as transformative as that generated in myeloma, we view these indications as meaningful sources of incremental revenue for Revlimid that CELG, with its commercial and clinical heft, can access over the near- to mid-term.
FIGURE 7: Late-Stage Pivotal CLL / Lymphoma Trials
Indication Trial / Setting Primary Endpoint Status
MCL EMERGE in R/R. Single-arm trial with Rev mono ORR/DoR Completed
SPRINT in R/R; Rev mono vs. investigator’s choice PFS Enrolling
CLL ORIGIN in Elderly 1L; Rev vs. chlorambucil PFS Enrolling
CONTINUUM in 2L; Rev maintenance vs. placebo OS/PFS Enrolling
FL RELEVANCE in 1L; R2 vs. Rituxan plus chemo CR/CRu; PFS Enrolling
DLBCL DCL-001 in R/R; Rev mono vs. investigator’s choice PFS Enrolling
REMARC in Elderly 1L; maintenance Rev vs. placebo PFS Enrolling
First Up - Mantle Cell Lymphoma
In two Phase II studies (NHL-002 and NHL-003), Revlimid demonstrated single-agent activity in a broad population of R/R aggressive NHL,including MCL. Based on this result, CELG negotiated a special protocol assessment (SPA) with the FDA for a pivotal trial in the R/R MCL population. At ASH 2012, CELG presented mature data from the EMERGE study (MCL-001), which evaluated Revlimid monotherapy in a single-arm study (Figure 6). The EMERGE study enrolled 134 patients. The primary endpoint for the study was overall response rate, while duration of response, % CR, PFS, TTP, and OS were secondary endpoints. All patients enrolled had failed prior treatment with an anthracycline, cyclophosphamide, Rituxan, and Velcade. Specifically, patients had either relapsed within 12 months of the last dose of Velcade following a response, or had been refractory after more than two cycles of Velcade. Patients had been exposed to a median number of four prior therapies, and 60% were refractory to Velcade.
Based upon central review, CELG presented data at ASH that Revlimid demonstrated an ORR of 28% with 8% CR (Figure 8) (32% ORR with 16% CR by investigator review). The median DOR was 16.6 months (central review). The results by investigator review were somewhat better, with a median DOR of 18.5 months across the ITT population, and 26.7 months among complete responders. For the sake of comparison, in R/R MCL Velcade was approved based on an ORR of 31% with 8% CR in a Phase II study. The duration of response for Velcade in that study was 9.3 months. We view the response rates as similar between Revlimid and Velcade, but note that Revlimid appears to lead to significantly more durable responses. Based on these findings, CELG submitted an sNDA for Revlimid in MCL during 1Q13. We expect the drug to be approved by the FDA in this setting in 2H13. The final PDUFA date will be dependent upon whether the FDA assigns standard or priority review to the drug. Assuming that the NDA was filed in mid-November 2012 (CELG announced that it had filed by the time of ASH 2012), we arrive at a PDUFA date of September 15 under the priority review scenario and November 15 under 11 standard review. Also, CELG continues to enroll patients to a Phase II study, called SPRINT MCL-002), comparing single-agent Revlimid to investigator’s choice. The primary endpoint of this study is PFS. This trial could potentially be the basis for an application for approval in Europe. Given the slow enrollment and uncertainty over how EU regulators may address a rapidly evolving therapeutic paradigm in MCL, we do not model any revenues for Revlimid in MCL outside the U.S. Any revenues or value assigned to this use should be viewed as upside to our estimates.
While the results of single-agent Revlimid look particularly modest in comparison to those demonstrated by ibrutinib (Pharmacyclics, PCYC, MO, $104 PT) in a similar setting (75% ORR with 38% CR rate), we believe Revlimid can find a home in R/R MCL, providing incremental revenue, beginning relatively soon. We forecast minimal revenue from Revlimid in the U.S. for MCL in 2013, rising to $53MM in the U.S. in 2015, $105MM by 2017, and $170MM in 2020. Ibrutinib is an inhibitor of Bruton’s tyrosine kinase (BTK), a critical kinase in B-cell driven diseases, including various lymphomas and chronic lymphocytic leukemia (CLL). PCYC, and its partner, Johnson & Johnson’s Janssen division (JNJ, NC), are currently evaluating ibrutinib in two later-line MCL studies, SPARK and RAY, for registration in the U.S. and Europe, respectively. Both studies have already begun enrolling patients. We expect the Phase II SPARK trial to read-out in the 2H13/1H14 timeframe, supporting potential approval in 2H14 in the U.S.
Additionally, PCYC and JNJ also intend to initiate a Phase III study of ibrutinib plus Treanda (bendamustine; TEVA, NC) and Rituxan in the front-line setting during 1H13. For the purposes of our models, we assume a product launch of ibrutinib in CLL in late 2014, and in MCL shortly thereafter.
CLL – Increasingly Crowded Neighborhood, But Revlimid Will Find a Home
CELG’s clinical development strategy for Revlimid in CLL comprises two clinical studies: CONTINUUM (CLL-002) and ORIGIN (CLL-008). The CONTINUUM study is structured as a maintenance trial in CLL patients who have received prior Fludara (fludarabine), a foundation chemotherapy, for their disease.The study will enroll 400 patients to Revlimid maintenance or placebo. The primary outcome for this trial is overall survival. Historically, maintenance therapy has not been a part of the therapeutic paradigm in CLL. Revlimid maintenance offers an alternative to the traditional paradigm offering a new mechanism of action in a convenient once-daily dosing formulation.
The ORIGIN study is a head-to-head of Revlimid against chlorambucil, another chemotherapy agent commonly used amongst older patients who cannot tolerate the traditional FCR regimen. The trial began in May 2009, enrolled approximately 430 patients and is also expected to read out in 2013. The primary outcome of the ORIGIN study is PFS. In addition to the above trials, the CLL CRC (CLL Research Consortium) is evaluating the combination of Revlimid and Rituxan in previously untreated CLL. The study will compare outcomes in patients under age 65 vs. over age 65.
To reiterate, it is our view that the Revlimid CLL program has a high probability of both clinical and commercial success. While CLL will undoubtedly be a more competitive space in the future than it is today,
Revlimid should benefit from:
1) already being commercially available,
2) being a once-daily pill that is well-tolerated and highly effective, and
3) offering a non-chemotherapeutic option for combinations with novel targeted agents.
For the purposes of our model, we derive the vast majority of revenues in CLL for Revlimid from potential maintenance use following first relapse, as well as later-line use. We forecast WW sales of~$90MM in 2015 for Revlimid in CLL, growing to ~$740MM in 2020
Follicular Lymphoma – Moving to a Chemo-Free World
The combination of Revlimid and Rituxan (R 2) originally demonstrated efficacy in R/R CLL. However, there has been growing evidence of the combination’s efficacy in indolent lymphomas, specifically in follicular lymphoma (FL). At ASCO 2012, Nathan Fowler of the MD Anderson Cancer Center highlighted the combination’s efficacy in the R/R FL setting, demonstrating an ORR of 73% and CR rate of 36%. Most notable at that time was the durability of those responses, with a median event-free survival of two years. At ASH 2012, Dr. Fowler presented new data on R2 in the front-line indolent setting. This study enrolled patients with various forms of indolent disease, including FL, marginal zone lymphoma (MZL), and smalllymphocytic leukemia (SLL). Amongst the 50 patients enrolled with FL, R2 demonstrated an ORR of 98% and a CR rate of 87%. The clinical benefit rate was 100%.
For the sake of comparison, R-CHOP or R-CVP is commonly associated with an ORR of 98-100% with CR rates of 87% (Czuckman MS et al., J Clin Oncol 2004, 22:4711-4716). Further, the R2 combination had a 36-month PFS of 78%, with progression rates relatively stable for the last 12 months of that data.
Again, we believe these results support the view that R2 is potentially comparable to R-CHOP in terms of efficacy. However, we believe the key differentiation will come in terms of tolerability relative to RCHOP or R-CVP. While the rates of neutropenia for R2 may be similar to that seen with the chemoimmunotherapy combination, we believe the R2 combination could result in significantly fewer +Grade 3 and 4 cytopenias and anemia, which were essentially non-existent in the study of R2.
Based on these results, CELG has initiated a Phase III trial, called RELEVANCE, in untreated FL. The study is expected to enroll approximately 1,000 patients to two arms: Revlimid plus Rituxan for six cycles followed by R2-maintenance vs. traditional R-CHOP or R-CVP followed by Rituxan maintenance.
We anticipate that this trial would be the basis for any application for approval in FL or broader indolent lymphoma for Revlimid. We applaud CELG for taking the fight to R-CHOP/R-CVP in the front-line setting. While the bar is undoubtedly set very high by these well-established and efficacious chemoimmunotherapy combinations, we believe CELG likewise has an efficacious combination with a superior adverse event profile and the convenience of a once-daily oral therapy. For the purposes modeling, we limit our forecast to revenues for Revlimid in this frontline setting in the U.S. alone. We conservatively forecast modest penetration of ~5% by 2020 and equally conservative 18 months duration of therapy with R2 in this setting. Based on these assumptions, we arrive at sales of approximately ~$50MM by 2015, growing to ~$175MM in 2020. It is important to note that despite comparable efficacy and improved safety and tolerability, that R2 an expensive cocktail relative to the cost CHOP chemotherapy for little to no improvement in efficacy. It is because of this that we limit our estimates to the U.S. and assume conservative penetration. However, we recognize the incremental opportunity for Celgene in this space could be significantly higher than our estimates, if the combination provides a survival benefit and the superior safety profile holds up, as we expect.
DLBCL – Offering Options for Transplant Ineligible
CELG’s strategy in DLBCL is twofold: address the unmet need in R/R disease and offer a maintenance option to elderly patients who respond to front-line chemoimmunotherapy. The company’s strategy comprises two trials: a Phase II/III (DCL-001) in R/R patients who are transplant ineligible and a maintenance Phase III trial, called REMARC, for patients following transplant.
The Phase II portion of DCL-001 will enroll 100 patients to Revlimid monotherapy vs. investigator’s choice of therapy. The primary outcome for this portion is PFS. If positive, the study will then transition to a Phase III portion which will enroll an additional ~150 patients. The primary endpoint for the Phase III portion is PFS. For REMARC, the study will enroll a total of 620 elderly patients who responded to 14 front-line therapy. Patients will be randomized to Revlimid or placebo and treated until relapse. The primary outcome of the study is PFS.
For our models, we forecast revenues in the front-line setting as well as the R/R setting. We forecast DLBCL revenues for Revlimid of ~$110MM by 2015, growing to $320MM in 2017, and $600MM in 2020.
Commercial Potential in Lymphomas
These indications in CLL/NHL represented fertile new ground for CELG to expand the Revlimid franchise. In total, we forecast that CELG will generate sales of ~$175MM in NHL by 2015, growing to ~$930MM by 2020. We believe our estimates are conservative despite intense competitive pressures, particularly in MCL, and feel there is significant upside to these forecasts in greater market penetration, label extensions, and longer duration of therapy.