Cowen-- 2nd inning of Abraxane PC uptake....Expect EU RLI front line app w MM-020...Otezla required before bioloics some day?
Must read Cowen report - Updates From Meeting With Celgene Management - 2nd inning of Abraxane PC uptake....Expect EU RLI front line app w MM-020...Otezla required before bioloics some day?
Must read Cowen report - Updates From Meeting With Celgene Management
Equity Research Company Quick Take
CELGENE March 4, 2014 OUTPERFORM (1)
Updates From Meeting With Management
The Cowen Insight
Last night's dinner at our Health Care Conference focused on launch plans for Otezla in psoriatic arthritis (PDUFA March 21), Revlimid's pending filings for label expansion to newly diagnosed myeloma, Abraxane's uptake in pancreatic cancer, and pipeline highlights. We believe CELG is on a solid long-term growth trajectory, and that continued strong financial performance will drive shares higher.
In conjunction with Cowen’s 34th Annual Health Care conference, we hosted a dinner with Celgene’s COO, Perry Karsen, and VP of IR, Patrick Flanigan. Investor focus remains heavily on Otezla’s pending launch in psoriatic arthritis; Celgene believes it can eventually secure payor step edits requiring failure on Otezla before patients can get biologics. Revlimid’s refiling for label expansion to newly diagnosed myeloma is an important driver of future growth; less well appreciated is the potential for the non-del(5q) MDS Phase III (data H2:14) to increase Revlimid’s opportunity by nearly $1B, not reflected in current guidance. Additionally,management believes Abraxane still has much room to grow in pancreatic cancer, and highlighted several pipeline programs.
■ Assuming approval (PDUFA for psoratic arthritis March 21), the company intends to target Otezla at patients failing methotrexate, ahead of biologics. Celgene will price Otezla at a discount to biologics (which run about $25K net of payer discounts, according to management). The company initially expects Tier 3 formulary positioning, the same as biologics. However, over time and as volume grows,Celgene expects
I listened to the webcast. The short version of what you copied is that there is so much going on here that it is almost impossible to follow. Bottom line is buy and hold. This is truely a company that can be held onto for 5 years. Think about this. They have so much cash flow that they can fund growth and buy back stock. At some point they may actually start paying a dividend. That is the trinity of an investment. cash flow for growth, buy back and dividend.
■ Assuming approval (PDUFA for psoratic arthritis March 21), the company intends to target Otezla at patients failing methotrexate, ahead of biologics. Celgene will price Otezla at a discount to biologics (which run about $25K net of payer discounts, according to management). The company initially expects Tier 3 formulary positioning, the same as biologics. However, over time and as volume grows,Celgene expects to negotiate Tier 2 positioning (in exchange for a discounted price), which would imply a step edit whereby patients would be required to fail Otezla before they could get biologics. We note this would require a change in physicians’ common treatment paradigm of adding a biologic to methotrexate upon failure, which seems to us to be a challenge, though management asserted this change in the paradigm would be achievable with the availability of a new treatment option.
■ Management noted that only one-third of 11-12K prescribing physicians currently prescribe systemic therapies, and sees the non-prescribing docs as a major opportunity for Otezla.
■ The company submitted a combined MAA for PsA and Psor against placebo comparator, which it expects to be adequate for regulatory approval. Management does anticipate active comparator data will be needed for certain pricing negotiations in Europe, however, and expects to get results from a Phase III trial of Otezla vs. Enbrel in psoriasis by YE:14 to aid in these discussions. Otezla will be priced significantly lower in the EU vs. the US.
■ Investor interest continues to be high in the Revlimid IP challenge by Natco, though Celgene remains confident in its many patents. A Markman hearing will be no sooner than H2:14.
■ The company remains on track to file for a Revlimid label expansion for newly diagnosed myeloma by the end of Q1. The company is confident in EMA approval based on the strength of Revlimid’s data in MM-020 with the Rd regimen, where SPMs are not an issue.
■ As the first non-melphalan based front-line regimen approved in Europe, Celgene expects Rd to become the standard of care over time. While the long-term incremental revenue opportunity is significant in the EU, Celgene cautioned that time required for regulatory review and country-by-country price renegotiation means that revenue contribution from newly diagnosed myeloma in Europe will likely be modest even as late as 2017.
■ In the U.S, Celgene continues to see increasing average treatment duration for Revlimid in the wake of (1) Pomalyst approval (because physicians now have an option for patients progressing on Revlimid) and (2) the MM-020 data (supporting treatment to progression).
■ Revlimid’s Phase III non-del(5q) MDS data are expected in H2:14. With Revlimid currently selling about $250-300MM per year in the small del(5q) MDS subpopulation, success in non-del(5q) MDS could expand the MDS opportunity to $1.2B, upside that is not in CELG’s guidance. A 200-patient Phase II trial suggested activity, with a 26% rate of transfusion independence.
■ Celgene believes it is only in the “second inning” of Abraxane’s uptake in pancreatic cancer. The company divides the market approximately into thirds: (1) patients receiving gemcitabine combinations; (2) patients receiving gemcitabine monotherapy (frailer patients); and (3) patients receiving experimental regimens. Abraxane is being taken up most rapidly in the first segment, though the company expects eventually to take some share in the second, as physicians learn how to best give the drug. There is some hint that Abraxane may even be taking share from FOLFIRINOX, though this trend is quite early and uncertain as yet.
■ Management continues to highlight its Acceleron partnership as a key pipeline program, with potential in beta-thalassemia, MDS, and CKD-mineral bone disorder. Data for sotatercept (ACE-011) in CKD are expected at the NKF meeting in April.
■ Management noted the treatment of ibrutinib-failure CLL as a possible path to market for its Btk inhibitor, CC-292. At this year’s ASH meeting, data from three early trials in rrCLL are expected: (1) CC-292 + Revlimid, (2) CC-292 + Rituxan, and (3) Revlimid + ibrutinib.