Gugg "CELG attractive ahead of ASH raising target to $133 ($121). AG-221 will generate HIGH LEVEL of excitement-go right into pivotal testing accelerating approval. Raising RLI and Pomalyst ests"...
CELG - BUY - ASH'14 Preview; Expect Positive Revlimid, Pomalyst, and AG-221 Datapoints; Raising PT to $133
December 2, 2014
BRET HOLLEY, PH.D. ANALYST
Investment Thesis: Growth
RAISE PRICE TARGET $133.00 FROM $121.00
Conclusion: We believe CELG is attractive ahead of ASH'14, which should highlight key clinical results and growth prospects for Revlimid in multiple myeloma/lymphoma and Pomalyst in multiple myeloma, as well as raise visibility on CELG's pipeline, especially AG-221. We are raising our PT to $133 from $121 on higher LT Revlimid/Pomalyst sales estimates.
New analyses from Phase III FIRST trial should highlight Revlimid's broad benefit in newly diagnosed multiple myeloma (NDMM). We believe detailed FIRST follow-up results should calm fears regarding Revlimid's efficacy/safety in elderly NDMM. In our view, the results have the potential to broaden Revlimid's use in this patient population, increasing LT U.S./E.U. sales.
Expect positive Ph.IIIb results for Pomalyst in advanced myeloma. Based on results presented in the ASH abstracts and prior results from the MM-003 trial, we expect results from the Ph.IIIb STRATUS trial to further demonstrate Pomalyst's high level of efficacy in advanced myeloma. We expect the reSults to reinforce our view that Pomalyst will gain dominant market share in this setting.
Phase I results for AG-221 should highlight the potential for rapid approval.
We expect an enthusiastic response to Phase I results for AG-221 in advanced/IDH2-mutated lymphomas at ASH, given already reported high levels of efficacy for the drug. Further, given the well-defined patient population for AG-221 and high unmet need, we see a good probability CELG will advance the drug directly into pivotal testing, accelerating the timeline for approval to '17.
Revlimid FIRST results: Results reported in the ASH'14 abstract show that continuous Revlimid plus low-dose dexamethasone (Rev-dex) numerically improved PFS and interim OS in all age groups vs. melphalan-prednisone-thalidomide (MPT). Although we expect slightly reduced efficacy for Rev-dex in 75 year old patient cohort vs. the
If we can get out of this little biotech dip here - next week to 10 days is PACKED with CELG & CELG partner catalysts imo
I'm expecting a positive CELG update from ISI early next week and remember Tues CELG new CFO presents at DB BioFest, ASH starts in a week and SA Breast Cancer Conference starts the day ASH ends....
December 1-5 Perhaps "very, very soon" GED-031 data comes right before ASH as well...NEJM hardcopy for some is out today...Lancet publishes as well. Both have "Online First" sites as well.
(See full post with links on Investorvillage CELG site)
CELG at CS Healthcare conference November 11th:
"We are quite excited and you’ve heard us speak about this a lot lately. You saw data earlier on the GED-0301 late stage product that we acquired earlier this year. And you will hear us speak more about the plans for taking that through to Phase 3 and then approval as we move through our regulatory discussions and can give you some more details on that soon.
But the data and the potential for transforming the treatment of Crohn’s with this product is quite striking. We are very excited about it and are anxious to add it into the franchise alongside OTEZLA and treat unmet medical needs in Crohns’s.
So we hear a lot more about that. We should immediately see the publication of the Phase 2 results for this compound in a major medical journal. So it should be coming very, very soon and you will hear more about our development plans for the product over the coming weeks and months"
December 1-5 - I expect a positive ISI update this week following last week's Summit visit by ISI with 40 hedge fund, mutual fund and other institutional investors that I hear went very well...All the key senior CELG execs made this a priority...I suspect those funds plus ISI tipping off to their large clients that a positive report is coming is part of reason for five all-time highs in a row including today. I was told by ISI report is coming. Has to be this week
December 2 (tomorrow) - 3:25 PM eastern- Celgene presents at the Deutsche Bank 2014 BioFEST in Boston...First presentation with new Celgene Executive Vice President, Chief Financial Officer Peter Kellogg as lead presenter.
December 7 – 11 PM eastern - Celgene analyst/investor meeting at the American Society of Hematology at in San Francisco 11:00 p.m. ET. First ASH meeting with Dr Fouse in charge of Hematology Business I would expect her to run the presentation and ensure a successful ASH.
December 8 – 3:30 PM eastern - CELG partner AGIO's ASH analyst/investor presentation webcast. Link wont post go to IV
December 6-9 - Expect over 160 ASH related presentations/abstracts at this yrs ASH (Moscone Center, San Francisco) plus important partner data - Including:
December 6-9 - Important data sets from CELG partner XLRN at ASH - JMP's M King likes XLRN and KPTI into ASH....
There should be plenty on the docket for even the most jaded data-hound. We believe this begs the question about how influential these conferences will be, and whether they will be sufficient to forestall the anticipated “ASH hangover." While there are many companies in our coverage universe presenting data at ASH, Acceleron (XLRN, MO, $52 PT) and Karyopharm (KPTI, MO, $57 PT) in particular, and we suspect that these stocks may fare better than the averages through ASH and the end of the year...
December 6-9 - Full Phase III Revlimid data in non-del 5q MDS (MDS-005) at ASH
December 6-9 - Full Phase II Revlimid data from MCL-002 study in r/r mantle cell lymphoma
December 6-9 – Additional information on dose escalation study data in solid tumor and hematologic malignancies with IDH2 mutations in AML for Celgene partner AGIO on their partnered AG-221 drug that Celgene mgt was publicly very excited about on Q2 earnings call in July - Celgene opted in Q2 to take AG-221 over and have the global rights to this compound - (Maximum tolerated dose has not been reached & not all mutations have been identified, Leerink believes there is a $1Billion+ blockbuster opportunity here). This data should provide positive clarity on durability of response which will be a positive for AGIO and CELG investors.
Hugin & Alles commented on AGIO last earnings call:
Robert Hugin - Chairman, Chief Executive Office
Capturing the full value of our franchises is the highest order of corporate priority. We’re making exceptional progress in building for the future. During the quarter, we strengthened our hematology product portfolio with important new clinical data in MDS, AML, and mantle cell lymphoma. The future of our hematology franchise was further enhanced through meaningful progress on strategic collaborations, including ACE-011 and ACE-536 in beta thalassemia, and exciting data in targeted relapse refractory AML with AG-221. We’re aggressively moving these programs forward with our partners, Acceleron and Agios
Mark Alles - Global Head, Hematology and Oncology
We are excited about the data from the ongoing Phase I study of AG-221, a small molecule oral inhibitor of the mutant form of IDH-2 discovered by our partner, Agios Pharmaceuticals, that was presented at EHA. These results summarized the activity and safety of AG-221 in 35 patients homogenously defined with the IDH-2 mutation positive relapsed and refractory AML. Treatment with AG-221 demonstrated a very high objective response rate with a very manageable safety profile. Given these early but promising Phase I data, we exercised our option to an exclusive worldwide license to AG-221 in June. This is now a high priority program and we are rapidly advancing plans to conduct global registration trials
December 6-9 - Celgene partner AGIO initial AG-348 data at ASH in Dec (potential proof of concept in PK deficiency in 2015). -- Not yet a Celgene drug but halo effect and important if Celgene takes over AGIO or partners this drug later.
December 6-9 - Detailed oral data presentation of AMGN’s ASPIRE trial which analysts believe will increase Revlimid duration significantly over time (Deutsche Bank says this alone will be worth $24 to $32 incremental to Celgene stock price over time).
December 9 - 13 - Updated Abraxane data in Breast Cancer at the San Antonio Breast Cancer Symposium. Dr Fouse - President of Hematology and Oncology said there will be compelling new data at this conference on the earnings call and updated Wells Fargo (see below) about the late breaker: Abraxane vs. standard paclitaxel conducted by a German breast cancer study group testing neoadjuvant treatment in operable breast cancer
Key SABCS data a potential underappreciated near-term catalyst to help re-accelerate Abraxane sales. The company noted that a study of Abraxane vs. standard paclitaxel conducted by a German breast cancer study group testing neoadjuvant treatment in operable breast cancer will be a late breaker oral at the San Antonio Breast Cancer Symposium (12/10 at 4:45pm local time). The primary endpoint of the study is pathological CR, which recent FDA guidance has supported as a potential endpoint sufficient for accelerated approval in the neoadjuvant setting (see Perjeta recent approval), suggesting the potential for label expansion and use of the agent in a meaningfully broader, earlier-line breast cancer population.
Cramer: A Dozen Sectors to Snap Up
We are nearing the home stretch, and in the home stretch we get a pattern that plays out whenever the indices are having a terrific year -- something that you have only really participated in if you are invested in the S&P 500.
The combination of seemingly endless corporate takeovers and the concentration of winners in areas that had been least expected -- namely, in companies that do well when rates plummet on U.S. Treasury bonds and commodity inflation is in check -- has eluded most stock pickers. It makes sense because, from the very beginning of the year, the groupthink has revolved around the need for higher rates. With these fund managers, the macro -- the idea the Federal Reserve would have to take action -- totally defeated the micro. But the micro ruled.
The sectors that stand out? I have found 12 of them -- 12 sectors where you can almost throw darts and win, with a couple of rare exceptions. I think the gravitational pull of these sectors is so strong that you can expect some of the stocks within them will be anointed. That is, they will be adopted on every dip and will be "go to" names as if they are wide receivers, targeted over and over because they have such obvious technical support.
Going into December, I have always identified the best of the best -- the stocks I have expected would be supported no matter what. I would begin to accumulate these using deep-in-the-money calls out several months, and I would simply buy more calls on every single dip.
So let me give you the 12 sectors, and the best of the best within those sectors, starting with the strongest: health care.
1. Health Care. This group is ideal in a slow- growth, low-inflation environment. It's become obvious of late that U.S. economic growth, aided by lower petroleum prices, has been better than expected. But, somehow, this group just won't quit. That's in part because there are so many takeovers in it, and in part because many investors still don't believe the strength can continue.
The distribution in health care is highly unusual. First, none of the big dogs fits in. This was not a Pfizer (PFE)-Merck (MRK) year. Valeant (VRX) and Actavis (ACT) have replaced that tandem. It's been a year of McKesson (MCK), AmerisourceBergen (ABC) and Cardinal Health (CAT) to control health-care cost. It's an Edwards Lifesciences(EW), Bard (BCR), Becton Dickenson (BDX), Hospira (HSP), Stryker (SYK), Zimmer(ZMH) kind of year for consolidations. Then, if you just want to marvel at a small group, consider the dental-supply companies: Henry Schein (HSIC), Patterson Dental (PDCO) and Dentsply (XRAY).
The health-care cost containers came on strong, as well, and the obvious one isUnitedHealth (UNH) because it's a Dow Jones Industrial Average stock. But Humana(HUM), Aetna (AET), Cigna (CI) and WellPoint (WLP) all have a ton of game. You want to know what else works? The real estate investment trust companies. Ventas (VTR) andHealthy Care REIT (HCN) stand out here. (REIT stocks, in general, have been terrific -- but the health care ones, I think, have the most to run. That said, I think you could make a case to just buy the iShares U.S. Real Estate ETF (IYR)).
If you want the strongest and most visible names, it's going to be Actavis. Mckesson is the easiest -- that group is loved so much it's hilarious. UnitedHealth for visibility. Ventas for dividend yield.
2. Biotech. This sector has been monstrous this year. You really don't want to out-think this. We have senior and junior biotechs that work. Celgene (CELG) and Regeneron(REG) are coin flips. Both are having remarkable years on new products that hadn't even been in the numbers at the beginning of the year -- Celgene with a psoriatic arthritis therapy, and Regeneron with cholesterol and asthma answers.
Some think the last move in Amgen (AMGN) may be the beginning of something big. However, I don't like guesswork. Same with Gilead (GILD) and Biogen-Idec (BIIB). They are resting. We won't know for Gilead until we see more from competitor AbbVie (ABBV) on hepatitis C treatments. Biogen-Idec needs to put up better numbers for its next reported quarter.
The juniors -- Isis Pharma (ISIS), BioMarin (BMRN) and Agios (AGIO) -- make the most sense. Isis has several drugs in Phase III trials that seem on the verge of blockbuster status. BioMarin just made a well-acclaimed acquisition, and Agios has a new kind of method for killing cancer.
3. Defense. With the U.S. Senate going Republican, and with a soon-incoming wartime defense secretary to follow the coming departure of Chuck Hagel, this is a moment when any defense stock is going to win. That's because it is inconceivable to most investors that the U.S. defense budget won't get restored to pre-sequester levels. These are dart throws: General Dynamics (GD), Lockheed Martin (LMT), Northrop Grumman (NOC) and Raytheon (RTN) all work. My favorite is Northrop Grumman, if only because Lockheed didn't have good things to say after its last quarter.
4. Autos. Here's an oddity -- the auto companies are just beginning to perk up on the decline in oil, and that breeds bigger truck purchases, for which the gross margins are bountiful. But the stars of the group? Auto parts. You have to marvel at O'Reilly Auto Parts (ORLY), Genuine Parts (GPC), Snap-On (SNA), Advance Auto Parts (AAP) andAutoZone (AZO). The latter has that amazing share-buyback program, but O'Reilly has become the loved stock. I am partial to Snap-On, but it doesn't have O'Reilly's momentum.
5. Housing. It has taken some time, but housing has finally become a favorite. How did this happen? I think it's the easier lending standards that are being adopted, which allow for lower FICO credit scores. It could also be the lower gasoline prices at the pump, which may be providing for a spending boost.
When it comes to pure housing, it's all about Lennar (LEN). You just can't go down toD.R. Horton (DHI) or Pulte (PHM). People would love Sherwin-Williams (SHW) with a consolidation in the group, although don't rule out PPG (PPG) if you want a little more industrial bent. Whirlpool (WHR) stock is having a standout run -- but, if that's the case, do you go with Home Depot (HD) and Lowe's (LOW)? These sure haven't let you down. Oh, and Williams Sonoma (WSM) works for the high end for certain. Don't overlookStanley Black & Decker (SWK), either, as Home Depot says the tool aisles are hot -- although you have to deal with some European exposure there.
6. Retail and related. That lower gasoline price is putting money in peoples' pockets, and that last decline is going to make the retail group even hotter than dreamed. Wal-Mart(WMT) and Target (TGT) shares have been laggards until now. I think that they have been stuck in the mud, and are now unleashed. We've got some really strong earnings stories, CVS (CVS) and L Brands (LB), both of which can go higher still. Ross Stores(ROST) had been a great growth story, and now it looks like it is back.
Any dollar store would work -- I like Dollar General (DG). VF Corp (VFC) is a fantastic weather story that is all about the North Face and Timberland brands. Best Buy (BBY) is strong. Oh, and don't forget two holidays stories: Best Buy back from the dead, andGoPro (GPRO), whose stock acted funky after the company's secondary share offering, but which is now roaring.
Restaurant stocks are working, as well -- although the roadside player, Cracker Barrel(CBRL), has beaten out Chipotle (CMG), Brinker (EAT) and Darden (DRI) for the stealth play. You like supermarkets? I know Whole Foods (WFM) is coming on. Nevertheless, the smart money is betting that Kroger (KR) is going to $60 -- maybe in a straight line. Small-cap aficionados will want to be in a resurgent Tractor Supply (TSCO).
But let's not out-think this: The smart money is all on Costco (CSCO), which has nevermissed for retail, and Nike (NKE), which had a remarkable run since the last quarter. Call options on both, please.
7. Insurers: Remember how everyone got the rates wrong? You would think that would mean the insurers wouldn't be able make a stand. You would be wrong. Allstate (ALL),Hartford (HIG) and Chubb (CB) are all incredible. Again, though, you know it'sTraveler's (TRV) by a nose, mainly a nose that's a Dow stock. What's behind the move? I think benign pricing and easy year-over-year comparisons -- and the fact that anything in Traveler's investment portfolios that hadn't come back to life sure has done so by now.
8. Transports: Here's a must for any stock picker to show genius: transports. Every railroad stock -- and I mean every rail, from Kansas City Southern (KSU) and Norfolk Southern (NSC) to Union Pacific (UNP) and CSX (CSX) -- are all red hot. I like Union Pacific best, as it has less coal and more visibility. I think the world's going to pile intoFedEx (FDX), even though UPS (UPS) is cheaper -- remember, though, this is about anointing, and that means FedEx.
Meantime, it's rough to sort through the airlines for a winner, as they are all winners --Delta (DAL), American (AAL), Southwest (LUV), even JetBlue (JBLU). But it's Southwest that has the percentages. It's the one to bet on.
9. Financial Services: Maybe it's an aversion to owning the banks, but the bank-relateds look awfully good here -- the processors, the ancillary businesses and the like. Take a stock such as Dun & Bradstreet (DNB). Under CEO Bob Carrigan, it's is a monster -- no losing with that one. The mutual funds look terrific, among them a Bill Gross-aided Janus(JNS), Legg Mason (LM) and BlackRock (BLK). All totally work. Again, though, you want visibility, which means MasterCard (MA) or Visa (V). Each had a terrific quarter. Like 'em both.
The rest of the winning segments are a little hit-or-miss with some extraordinary standouts. Take tech, for instance.
10. Tech: You know that Apple (AAPL), at 2 discount points to the average S&P 500 stock, will be the stock that people must show they own. The chipmaker stocks -- Intel(INTC), Micron (MU), Altera (ALTR) and, best of all, RF Micro (RFMD) off a merger -- look good.
However, it's the semiconductor-equipment group that's incredible: KLA Tencor (KLAC),Applied Materials (AMAT) and, best of all, Lam Research (LAR). Lam CEO Martin Anstice came on my Mad Money show recently, and I sense a multiyear move in the stock. It's a must-own -- the best call play in the group, shy of Apple. That last quarter will draw money toward Hewlett-Packard (HPQ), though, and you can do much worse than that. Of course, Yahoo! (YHOO) will get money if Alibaba (BABA) shares get marked up, and that's exactly what I think will happen.
11. Packaged-goods stocks: This is another oddity. I think the decline in raw costs, which will come on a delay pattern because of hedges, has boosted Procter & Gamble(PG), Kimberly-Clark (KMB) and Clorox (CLX). It's the carbonated stocks that have shown the best game, though. I don't know if there's enough consciousness about Dr. Pepper Snapple (DPS) for it to be anointed. Mondelez (MDLZ) stock may have made its move too late. That brings the hot money to Pepsico (PEP), which has delivered the best earnings, the best momentum and the most high-profile activist action. Don't forgetMonster Beverage (MNST) -- its takeover and earnings can let this stock roll higher.
12. Industrials: Finally, someone always wants an industrial. Parker-Hannifin (PH) delivered a remarkable last quarter. International Paper's (IP) had a good move recently. As has Boeing (BA). Yet, I think that Honeywell (HON) is the beacon, the one with the big-five year plan that's been delivering consistently.
It's funny, I came to the anointment process out of jealousy and anger. I would see these same stocks roll over and over again. I thought they were extended, overbought, too loved. Yet what happens in the last month of the year is mesmerizing. The visible winners become like magnets for money. I picked call options, not common stock, for extra juice. I just needed to play. I needed the action. It served me well in the last month of the year. I hope it serves you well, too.
Go to Investorvillage CELG message board for FULL report that won't paste here - here are SOME excerpts:
Key events for December: 1) ASH is Dec 6-9 with analyst events Sunday (CELG) and Monday (AMGN,AGIO, PCYC, etc); contact us for detailed planner and inquire about RBC-hosted doc event on Sunday
Our Top 3 Longs Ideas for December:
1) Buy CELG because it could trade at its current 20-21x multiple on 2016 potentially getting it to $125+; possibly a self-fulfilling market prophecy that a "settlement" with ACT could theoretically happen after February '15 when legal discovery ends and before Court could begin in mid-15 (we're not saying it's inevitable by then, but acknowledge the potential exists, could happen even after Court begins); investors should start giving more credit to pipeline – GED-301 going into Phase III....and now Agios' drugs are getting interesting e.g. AG-221 (CELG has rights) and AG-120 (CELG has OUS rights) – we think President Global Hematology, Jackie Fouse, will talk about all of this at ASH next week...
BMRN/VRTX 2 & 3
Our top 3 long ideas for December:
1) Buy CELG: because they should grow EPS 20%+ next year and in 2016 so we think it'sGARP 21x multiple on '15E rolls to '16E, that should get the stock towards $125+, 2) possible self-fulfilling market prophecy that a "settlement" with ACT could theoretically happen after February '15 when legal discovery ends and before Court could begin in mid-15 (we're not saying it's inevitable by then, but acknowledge the potential exists; could happen even after Court begins), 3) investors should start giving more credit to pipeline – they have gotten interested in GED-301 going into Phase III....and now seem to be highly rewarding partner AGIO with two drugs – AG-221 (CELG has rights) and new AG-120 (CELG has OUS rights) – both as hemonc drugs but could be expanding to solid. CELG stock hasn't really moved on the AGIO drugs, likely because they are early stage...this could matter in 2015-16...and 5) we think President Global Hematology,Jackie Fouse, will talk about all of this at ASH next week...
CELG all the way up to Number 9 in the IBD 50.....
FULL Cowen initiation rpt with charts/graphs won't fit or post here - MUST READ - can see on Investorvillage ACAD message board - 20+ pages of text plus many pictures/charts that won't show on yahoo
Equity Research Initiating Coverage
November 21, 2014
Price: $27.74 (11/20/2014)
Price Target: $46.00
Initiation: Elusive Late-Stage Blockbuster
Neuro Asset In Its Native Habitat
The Cowen Insight
We are initiating on ACAD with an Outperform rating and $46 target. We think
Nuplazid has extraordinarily high chances of U.S. approval for Parkinson's Disease
Psychosis. Our KOL survey strongly suggests broad PDP adoption and we estimate
$2B WW peak sales. We also think Nuplazid has potential in other psychoses.
We think Nuplazid will be approved in 2015/2016 WW and become standard
of care first line treatment for Parkinson's Disease Psychosis.
Nuplazid is ACAD's NDA-ready 5HT2a inverse agonist for Parkinson's Psychosis
(PDP). The drug has very positive, significant, clinically meaningful Ph3 data and FDA
breakthrough status. Ph3 data also showed strong safety/tolerability. FDA encouraged
ACAD to file on the basis of its '020 trial based on unmet need and strength of data.
We expect a filing in 1Q15, with approval/launch by the end of the year. Based on
our recent survey of high prescribing neurologists, we think clinicians' receptivity
to the drug will be extraordinary. We think there is dissatisfaction with current offlabel
dopaminergic anti-psychotic drugs that have limited efficacy or unacceptable
safety. Survey respondents suggested 35% of PDP patients do not get treatment now
because of fear of side effects and 50% of those currently treated might be switched
to Nuplazid after approval.
Survey says: broad adoption based on great safety - we believe the drug will
have strong pricing, good reimbursement and reach peak sales of $2B WW.
We expect Nuplazid to become the only approved PDP therapy. Given this and the
strong safety/efficacy data generated, we think the drug will be able to secure a
~20% premium price to current branded anti-psychotics. Given our survey data and
Ph3 data that suggest reduced caregiver stress, we think adoption will be broad,
and use in the outpatient setting may prevent/delay need for LTC to a degree that
pharmacoeconomic analyses support wide reimbursement. Our survey suggests to us
the drug could reach ~40% peak share of moderate to severe PDP patients, including
new patients and switches. This could represent around $2B in WW peak sales for
We also think Nuplazid has strong potential in schizophrenia; market potential
in Alzheimer's Psychosis, if clinically successful, could be huge.
Nuplazid may also have potential in schizophrenia given the association between
5HT2a agonism and psychosis. Early proof of concept data suggests it has potential in
schizophrenia maintenance with a superior safety/tolerability profile to current drugs.
We think Nuplazid could reach $1.2B peak sales for schizophrenia in the US alone.
ACAD is also studying the drug in a proof of concept Ph2 for Alzheimer's Psychosis,
another major unmet need. High prescribing neurologists in our survey believe the
drug has significant potential in this indication (and would widely use in the near-term
if possible) although academic KOLs are more skeptical. While we give this indication
a large $5B+ peak sales potential, we give it only a 20% chance of success.
At A Glance
Our Investment Thesis
Acadia is a CNS-focused company with lead drug NDA-ready pimavanserin having
completed Phase 3 development for Parkinson's Disease Psychosis (PDP). Currently,
none of the approved antipsychotics are FDA approved for PDP. Seroquel and Clozaril
are the two most prescribed off-label drugs for PDP but have critical flaws. Based
on efficacy and safety of pimavanserin for PDP, pimavanserin is well positioned
to fill an unmet need. Pimavanserin is in Phase 2 development for ADP which
started enrollment in November 2013. Complete enrollment is expected to take
two years. Finally, pimavanserin is also being investigated as an add-on therapy for
1Q15: NDA filing
2H15: FDA approval
2H15: US launch
2016: EU approval/launch
2016: Ph2 ADP data
Base Case Assumptions
Pimavanserin is successfully developed
for PDP and schizophrenia with robust
Pimavanserin is not successful in its Ph2
Pimavanserin uptake upon
commercialization is significantly higher
Pimavanserin fails to gain FDA approval
for PDP, fails clinical development for
ADP and schizophrenia
Acadia is a biopharmaceutical company focused on unmet needs in CNS indications.
Lead program is pimavanserin for PDP for which the company plans to submit an
NDA application by the end of 2014.
Nuplazid: Addressing An Unmet Need In PDP
We see Acadia’s Nuplazid (pimavanserin) as underappreciated in the investment
space and believe it will become the backbone of future therapy for Parkinson’s
Disease Psychosis (PDP). Nuplazid is a selective serotonin inverse agonist of the
5HT2a receptor with very high receptor subtype selectivity. It has next to no
dopaminergic, adrenergic, histaminergic, or muscarinic activity, which limits off-target
side effects. The 5HT2a receptor has long been associated scientifically and clinically
with psychosis and hallucinations. We think Nuplazid has proven to have excellent
efficacy in this condition, strong enough to support US and EU approval and strong
PDP Represents A Large, Unmet, Growing Market Opportunity
Because of lengthening life spans, the average age in the US, EU and WW is rising.
With the aging world population and improvements in the elderly-care space fueled
by population demand, we see a large potential market for therapies for diseases
associated with aging like Parkinson’s and PDP. Nuplazid satisfies a significant unmet
need in the PDP space. There are over 1MM Parkinson’s patients in the US alone and
~33% have PDP but there are currently no approved therapies for the condition.
Further, many KOLs believe PDP is either triggered or at least exacerbated by the very
same dopamine treatments that improve Parkinson’s Dyskinesia. Very rarely can dose
reduction strike a balance between less psychosis with acceptable dyskinesia.
Current PDP Drug Options Are All Off-Label With Less Than Ideal Therapeutic Profile
Available typical and atypical antipsychotics (particularly Seroquel and Clozaril) are
frequently used but either lack definitive efficacy signals (in the case of Seroquel)
and/or cause significant undesirable side effects (Clozaril). Currently, Seroquel is the
most popular first line treatment for PDP, despite the lack of evidence (no trial has
shown benefit to statistical significance). Meanwhile Clozaril requires regular blood
monitoring for agranulocytosis side effects, and can be associated with significant
drowsiness and drooling.
Nuplazid Is The First Potential PDP Therapy That Has Proven Efficacy And Benign Side
Nuplazid met the primary endpoint of its most recent Phase 3 ‘020’ study to strong
statistical significance. Further, the trial also met all of its pre-specified secondary
endpoints, which suggests broad benefit not just to patients but also a reduction in
caregiver burden, a critical element for commercial uptake. Additional efficacy details
and previous development are discussed later in this report. The ‘020 trial also showed
continual excellent safety, with no evidence of dyskinesia, which is often exacerbated
in PD patients on antipsychotics (due to their antidopaminergic mechanisms).
Nothing With FDA Is Ever A Slam Dunk, But We Think Nuplazid Comes Close:
Assuming 2015 Launch
ACAD has communicated that FDA encouraged them in April 2013 to file on the basis
of the single successful ‘020 trial. Nuplazid earned breakthrough designation in
September of this year and priority review will potentially be assigned 60 days after the
NDA filing, which will occur 1Q15. While the NDA timing was delayed by one quarter
we do not see this being the result of anything that impacts the approvability of the
Nuplazid data package. We also view priority review as likely given the clear interest
the agency has in this application, but even if it is not granted (which would likely
cause some short-term volatility in the stock), we still see a high probability of
approval. Acadia will apply for EMA approval with the same data package, and
interactions with EU regulators and regulatory consultants have been positive. We are
extremely optimistic for approval based on the robust data and safety package for
Nuplazid in PDP as well as the availability of clean long-term treatment effect in
Our Proprietary Survey Suggests Nuplazid Adoption Will Be Broad And Sales Will Be
Our recent survey of 25 high-prescribing neurologists bodes extremely well for
Nuplazid sales expectations. They report about 33% of their PD patients as having a
PDP diagnosis, and of those, only 51% currently take antipsychotics. 35% of their PDP
patients who should receive treatment do not currently take antipsychotics because of
their side effects. Responders indicated that 53% of their currently treated PDP
patients would likely be switched to Nuplazid on approval, with a total of ~41% of
total PDP patients being on Nuplazid about 3 years after approval.
We Estimate Strong Pricing, Excellent Reimbursement, Wide Uptake And Robust
Sales: $2.1B Global PDP Peak Sales
Based on our survey and discussions with KOL consultant, and given the clear safety
and efficacy of Nuplazid we think there will be significant enthusiasm for Nuplazid
treatment immediately upon launch, which should bode well for peak share. We think
uptake in newly diagnosed PDP patients will be particularly strong. Given the unmet
need, proven efficacy and excellent safety, we also don’t foresee major payor
pushback given Seroquel and Clozaril have been used off-label with little
reimbursement pushback in spite of a black label and exacerbation of motor
symptoms in PD.
We conservatively model 50% and 30% retail and US penetration by 2022 for PDP
patients and expect peak US sales of $1.1B. is worth $28 to our valuation.
Clinician Directed Use In ADP Even Before POC Data
We are only moderately confident in the Alzheimer’s Psychosis (ADP) indication
because of the lack of overlap in the mechanisms of Parkinson’s and Alzheimer’s and
the dissimilarity in the characteristics of PDP and ADP. Our survey, however, indicates
that neurologists are more optimistic and 88% surveyed believe there is a scientific
rationale for Nuplazid efficacy in ADP patients. ACAD believes neurodegenerative
conditions like Alzheimer’s and Parkinson’s can lead to a reduction in normal
inhibition of the inherent constitutive signaling of 5HT2a receptors. Despite efficacy in
PDP, there has been no evidence of 5-HT2A efficacy in Alzheimer’s, although there
are benefits in schizophrenia. ADP patients tend to be more demented, delusional,
and difficult to treat. While we suspect there will be clinician-directed alternate
indication use in ADP patients (again, because of the lack of available treatment
options), we are cautious with regard to trial success. We expect Phase 2 completion
in November 2015.
Early signs of promise in schizophrenia. Given the extremely large schizophrenia
market (2MM patients in the US), we believe even a small market share would
generate meaningful revenues for Acadia. We are optimistic for Acadia’s ability to
create a niche in the schizophrenia market given its efficacy and clean safety profile,
which makes it superior to available antipsychotics that are accompanied with a slew
of adverse events. We believe that the market is large enough to accommodate
pimavanserin even though there are other 5-HT2A drugs that may enter the market
before our anticipated 2020 launch. We model global peak sales at $3.3B for the
Acadia’s Pipeline Doesn’t Preclude Buyout – By Any Stretch
Acadia already has Allergan-partnered programs for pain and glaucoma and two unpartnered
preclinical programs in ER-beta and Nurr1, which could work to treat
Parkinson’s and other neurological diseases. The ER-beta is also in investigation for
neurodegeneration associated with MS. We additionally see Acadia partnering for ex-
US sales in PDP. This partner-heavy structure may complicate buy-out potential,
although we note the scarcity of late stage potential blockbuster neurological assets
today. We believe that the company will continue to grow in value and that
management will carefully evaluate all business development opportunities.
November 20, 2014
Reason for report:
Price Target: $124.00 from $90.00
AGIOS PHARMACEUTICALS, INC
.AG-120 Data Strengthen Proof of Principle; Remains an Interesting Name for 2015
• Bottom Line: At the 2014 EORTC-NCI-AACR (ENA) meeting, AGIO presented initial data from AG-120 (IDH1 inhibitor) in acute myeloid leukemia (AML). The initial robust activity was comparable to the efficacy from more mature data for AG-221 (IDH2 inhibitor). We believe the consistency between AG-120 and AG-221 data strengthens the proof of principle data for both agents and the approach of targeting IDH mutants pioneered by AGIO. Although we are mindful of the high valuation after the recent rally, we believe AGIO remains a highly interesting name for 2015 with solid tumor data on AG-120 and potentially Phase II patient data on AG-348 (for pyruvate kinase deficiency) beyond ASH data on AG-221 and AG-348. We increase our valuation for AGIO from $90 to $124 based on a revised model of AG-221 and AG-120 and a higher probability of success for AG-120.
• Comparable, if not better, efficacy for AG-120 vs. AG-221 (see page 2); early signs of durability encouraging. Although this was an initial report from a Phase I trial, efficacy data appeared more meaningful with a somewhat larger number of evaluable patients than we imagined (14). Similar to AG-221, activity for AG-120 was seen across all 4 dose cohorts. Although overall response rate (ORR) was slightly lower (50% vs. 56% for AG-221), both complete response (CR) rate and compiled complete and incomplete CR rates were better than AG-221. Treatment duration reached ~6 months for 1 CR patient and overall treatment duration appears good since no patients relapse after achieving an ORR. At the ENA presentation, AGIO management continued to state that there has been no known mechanism of resistance identified.
• Plasma 2HG biomarker reduced to normal range across all dose levels. While there was a clear dose-related drug exposure, plasma 2HG was reduced across all doses at a similar level (up to 98% inhibition). Consistent with preclinical data, IDH1 inhibition led to 2HG lowering, which further validated drug effect
• Overall good safety profile. Although there was one limiting toxicity (QT-prolongation), maximum tolerate dose (MTD) still hasn’t been reached and dose escalation continues. Additionally, QT-prolongation was resolved when dose was reduced from 800mg QD to 500mg QD and the patient remains on study with Grade 1 QTc prolongation but achieving a CR. All 6 deaths occurred after 28 days of dosing and were considered not related to the drug.
• AG-120 expansion cohorts to be initiated in 1H:15, solid tumor data expected in 2015. While dose escalation still continues, expansion cohorts are expected in 2015 in AML, MDS and MPD. Similar to the AG-221 program, AG-120 could have a rapid path to commercialization.
Please refer to pages 6 - 9 for Important Disclosures, Price Charts and Analyst Certification.
AGIO’s strong platform in cellular metabolism has resulted in seminal discoveries which the company has been able to capitalize and translate into a full array of early clinical or late preclinical pipeline agents targeting cancer and ultra-orphan indications of inborn errors of metabolism (IEMs). AGIO is a clear leader in the discipline of cancer metabolism, a potentially
fruitful area of exploration for new cancer therapeutics. AGIO’s most advanced candidates, AG- 221 and AG-120, target mutations in the enzymes isocitrate dehydrogenase 1 and 2 (IDH1 and IDH2). Both targets are genetically validated and mutations have been identified in acute myeloid leukemia, brain cancer, sarcoma, and biliary tract cancers. Third candidate AG-348 targets the ultra-orphan blood disorder of pyruvate kinase deficiency which is an IEM manifested by severe hemolysis. Although we are clearly mindful that AGIO’s pipeline is very early, there is very strong genetic validation for the lead candidates. The observations of single mutation in IDH1 and IDH2 (isocitrate dehydrogenase) on a single allele being associated with cancer point to gain of function alterations that are well suited for drug therapeutics. As AGIO pioneered the field, there does not appear to be visible competition. AGIO’s strong partnership with CELG (OP) not only funds the programs but also leaves good upside including full US rights for 1 in 3 compounds. These terms, based purely on the cancer metabolism platform with compounds still on the drawing board, are impressive and in our view provide clear validation for AGIO. Additionally, AGIO is leveraging its metabolism platform to target rare IEMs that we believe could provide a rapid path to market. Its lead IEM compound AG-348 appears to be able to accomplish the difficult task of activating multiple defective forms of pyruvate kinase-R and potentially provides a therapy for pyruvate kinase deficiency (PKD), a rare blood disorder.
AG-120 and AG-221 Data Comparison
Source: Company reports and Leerink Partners LLC
Positive read through to data readout in solid tumors, a much larger market potential.
While solid tumors and hematologic malignancies are very different tumors, two independent positive studies have validated the underlying science and supported anti-IDH cancer therapeutics. Incidence of IDH1 mutations is higher in solid tumors (e.g. ~71% in low grade and secondary glioblastoma, 40% of chondrosarcoma and 1-3% in several solid tumors including colon, melanoma, lung and prostate), which in aggregate could represent 60k patients or multibillion market potential.
Evaluable pts # 14 25
ORR 50% 56%
CR 29% 24%
CR+CRi+CRp 43% 36%
Compound Timing Event
8-Dec-14 ASH investor event
4Q:14 Initiate Phase I in advanced solid tumors with IDH2
ASH 2014 (Dec 6-9) Update from Phase I dose escalation study in hematologic malignancies with IDH2 mutations
AG-120 (IDH1) 1H:15 Initiate expansion cohorts
AG-348 (PKR activator) ASH 2014 (Dec 6-9) Phase I dose escalation data in healthy volunteers
By early '15 Initiating Phase II in PKR pts
Medical conferences in 2015
Initial data from natural history study
Drug Status Note
AG-221 (IDH2 inhibitor) Phase I
Phase I dose escalation study in IDH2m
hematologic malignancies initiated in 3Q:13.
AG-120 (IDH1 inhibitor) Phase I
Phase I trials in solid tumor and hematologic
malignancies initiated in 1Q:14
AG-348 (PKR activator) Phase I
Phase I trial in healthy volunteer initiated in
We are increasing our valuation from $90 to $124 for AGIO to reflect increased probability of success for AG-120. Our $124 price target is based on DCF and sum-of-the-parts methodology. Our assumed probability-of-success is 70% for AG-221 (IDH2) in AML and MDS, 70% (from prior 55%) for AG-120 (IDH1) in AML and MDS, and 30% for AG-348 as well as AG -221 and AG-120 in solid tumors and $150k per patient pricing (vs. $100k previously). We use a 10% discount rate and believe it is appropriate given probability-weighted sales projections. Our royalty assumption is 10-13% for IDH2 w/w sales and IDH1 Ex-US sales. We include $500M valuation for the platform and other pipeline and an estimated $260M cash
Another all time high $111.97 and all time closing high $111.07 for CELG with Crohn's data & ASH soon - 160 data presentations at ASH and GED-031 Crohn's data in a "MAJOR MEDICAL JOURNAL VERY VERY SOON"
CELG, AGIO, ACAD, ZIOP, XON, TGTX, CRMD
High confidence from management in potential share gains with NDMM label expansion.
CELG was particularly enthusiastic on the potential for significant share and duration gains for Revlimid
over time once the label is potentially expanded to incorporate front-line MM patients. They pointed out that
in the EU, front-line market share is
Much better than the usual Wells CELG report - packed with positive info. ISI is meeting with CELG in Summit right now - hope we get a similar update from them tomorrow. They might wait until there next Friday Video webcast but not sure they will have one this Friday.
November 23, 2014
CELG: Highlights From Meeting With Management
Summary: We had the opportunity to host a meeting with CELG’s senior
management on 11/20. Coming out of our meeting, we are even more confident
CELG is favorably set up for the near term (with continued commercial
execution), medium term (with major gains possible by Revlimid, pomalidomide,
and Abraxane), and long term (with proprietary pipeline candidates such as ‘301
and partnered programs potentially driving considerable value). We remain
bullish on shares and continue to see significant opportunity for stock
appreciation. CELG is on the Wells Fargo Priority Stock List.
Regulatory discussions ongoing for GED-0301 (mongersen) for
Crohn’s disease, with some hints at a phase II/III strategy that could
assess the drug’s maintenance prospects and still enable approval by
the ~2019 timeframe. CELG remains in an ongoing dialogue with regulators
on pivotal trial design, which we believe centers around areas like how to assess
‘301 maintenance and the role of endoscopy as an endpoint, not surprisingly. Our
sense is CELG hopes to begin a ph.IIb study (which would be part of a
registrational package) before year-end, assessing the usual 14-day induction, but
closely tracking durability of effects, with potential for retreatment. Clinical
response and endoscopy data rolling out of this study, in conjunction with
additional analyses of the prior phase II results, would guide potential
incorporation of a retreatment protocol (if needed) into a phase III, planned to
start H1 2015 and run in parallel. The company expects studies in the pivotal
program could accrue very rapidly. Management remains very confident in the
conduct of the prior phase II and that the response seen in trial subjects will be
representative of response in a real-world Crohn’s population, also noting
“striking” improvements in physician perceptions of the drug coming out of the
UEGW data presentation in their quantitative poll.
Revlimid NDMM regulatory discussions appear on track. Though the
company did not provide specifics on the exact nature of their ongoing
discussions with EMA and FDA on label expansion into newly-diagnosed multiple
myeloma patients, they noted no changes from their prior assumptions in terms
of likelihood and timing of approvals. We see this as a positive sign reducing
potential risk, especially as we would expect increasing focus on the NDMM
regulatory processes as potential 2015 approvals approach. The company will use
a collection of studies, led by ‘020, which they remain confident will
overwhelmingly support approval. Potential nuances in the expanded label could
include recommendations on age (+/-75), number of cycles, etc.
High confidence from management in potential share gains with NDMM label expansion.
CELG was particularly enthusiastic on the potential for significant share and duration gains for Revlimid
over time once the label is potentially expanded to incorporate front-line MM patients. They pointed out that
in the EU, front-line market share is
JMP on KPTI - Outperform & $57 target - KPTI: - ENA2014 conference contained pre-clinical data that provided a fuller picture of KPTI anti-cancer mechanisms
November 24, 2014
Biotechnology - Company Update
Karyopharm Therapeutics Inc. (KPTI)
ENA2014 Wrap-Up: Selinexor Pre-Clinical Studies; Early Glimpse of PAK4 Inhibitor Activity
MARKET OUTPERFORM | Price: $41.21 | Target Price: $57.00
Presentations at last week’s ENA2014 conference contained pre-clinical data
that provided a fuller picture of Karyopharm Therapeutics' selinexor anti-cancer
mechanisms; PAK4 inhibitor profile begins to take shape; reiterate Market
Outperform rating and $57 price target, based on our DCF, CAGR, and SOTP
methodologies. Multiple data presentations were provided at ENA2014, both by KPTI
and outside investigators. Two pre-clinical presentations further elucidated selinexor's
anti-tumor properties, while a discussion by outside investigators spoke to the drug’s
ability to synergistically or additively combine with other anti-neoplastic agents.
Additionally, the next asset in the company’s pipeline (PAK4 inhibitor) is demonstrating
Selinexor blocks the expression of DNA damage repair genes, and sensitizes
both solid and hematologic cell lines to DNA damage, inducing agents. In a poster
presented by scientists from KPTI, selinexor, although not a DNA damaging agent, was
shown to disrupt the expression of DNA repair proteins, including Rad51 and CHK1.
Experiments showed that treatment of AML cells with selinexor after their exposure to
doxorubicin and idarubicin inhibited the repair mechanism of DNA damage, and resulted
in apoptosis as measured by PARP and caspase-3 cleavage. In a separate experiment,
effects of single-agent selinexor, radiation, or the combination in lung tumor xenografts,
showed a reduction in tumor size of 15%, 43%, and 96%, suggesting synergy between
selinexor and radiation. Selinexor also provided additional cell killing when added to
CHK1 inhibitors in a cervical adenocarcinoma cell line. Our interpretation of these
data is that combination therapies, including selinexor, along with other chemotherapy
agents and radiation, are likely to provide even more impressive clinical benefit than
has been seen with single-agent selinexor. We have already seen a strong hint of
combination therapy with selinexor in the myeloma results wherein the drug is combined
with dexamethasone (albeit not a cytotoxic agent).
Is selinexor on its way to becoming the partner of choice for a wide variety
of anti-cancer agents? In a discussion by Dr. Daniel Sullivan of the Moffitt
Cancer Center in Tampa, FL, selinexor was seen to be additive or synergistic
with, and can restore sensitivity to, a wide variety of anti-cancer agents. While
these experiments were all conducted in cell lines, much of the early pre-clinical
work examining selinexor in cells has been recapitulated in humans. In
combination with doxorubicin, selinexor was shown to sensitize drug-resistant
cells to destruction, as well as to increase the number of double-strand breaks in
DNA. Dr. Sullivan repeated his results with bortezomib (Velcade) and carfilzomib
(Kyprolis), but also showed that these combinations did not increase toxicity to
peripheral blood cells (PBMCs). Finally, in series of experiments wherein the
sequence order of agents was varied (carfilzomib followed by selinexor, and then
vice-versa), Dr. Sullivan once again confirmed the synergy with the
aforementioned agents as well as with melphalan, a commonly used agent for
the treatment of myeloma (particularly in Europe). Recall, this combination is the
subject of an abstract to be presented at ASH. Oddly, Dr. Sullivan stated that his
experiments showed no synergy with dexamethasone, a steroid commonly used
in myeloma patients. We were surprised but not concerned about this finding;
recall at EHA in June, the company showed robust synergy between selinexor
and dexamethasone in a highly refractory myeloma patient population. Updated
findings that confirm these results are also the subject of an oral presentation at
PAK4 inhibitor packs a wallop against cancer. At the Friday morning poster
session, KPTI presented pre-clinical data on KPT-7523, an orally available,
potent and specific small molecule inhibitor of PAK4, also known as p21
activated kinase. The PAK family of proteins regulates cell survival, cell division,
and apoptosis (cell death). PAK4 is up-regulated or mutated in many tumor
types. It is also downstream of the KRAS oncogene and mediates cell
movement, division and survival by binding to certain essential cell proteins.
KPTI investigators presented data to show that another PAK4 inhibitor, KPT-
8752, inhibited 91 different tumor cell lines with an IC50
Of the 4 large-cap biotechs, we believe CELG will probably perform the best for 2015 because 1) we think they should be able to grow EPS over 20%+ next year and in 2016, so if its current reasonable, in our view, GARP 20x multiple on '15E rolls over to '16E, that should get the stock towards $125+, 2) we note there could be a self-fulfilling prophecy of expectations that a "settlement" with ACT is closer to happening, perhaps even after February '15 when legal discovery ends and before Court could begin in mid-15 (we're not saying it's inevitable by then, but acknowledge that the potential exists; otherwise that could also happen even after Court begins), and, 3) we believe investors are going to start giving more credit to the pipeline – already they have gotten excited on GED-301 going into Phase III....and now seem to be highly rewarding partner AGIO with two drugs – AG-221 (CELG has rights) and new AG-120 (CELG has OUS rights) – both as hemonc drugs but could be expanding to solid. Nevertheless, CELG stock hasn't really moved on the AGIO drugs, likely because they are early stage...this could matter in 2015-16...
For GILD: We continue to watch scripts carefully and clearly acknowledge that analysts are probably "over-modeling" Q4 HCV around $2.7B+ USA, but this is still "achievable" and potentially higher with inventory stocking. But we think the Street may be nervous about Q4 holiday impacts, ABBV launch in Dec, ABBV pricing, and 2015 estimates...so stock might be more choppy until clarity likely emerges in Q1 on the above mentioned.
For BIIB: Street is nervous about Tecfidera scripts which have been flattish for 2 months...Q4 should be achievable but we believe it's about whether Q1 might be too high if TRx are flattish and consensus models solid growth in 2015...we think the stock is a long going into LINGO data in January here at low end of $300 range, but data may need to be strong in order to keep interest high afterwards if Tecfidera scripts are under scrutiny...
In mid-caps we like BMRN and VRTX for 2015. In sticking with our theme of growing interest in biotech, we would want to be long BMRN into the Dec 10th analyst event and 5 pipeline readouts for '15, especially Phase II achondroplasia data in Q2 which should work regardless: it could be stat sig, but even if not, it can dose higher and there should be (+) trends that seem likely. VRTX should be a long into early '15 Phase II VX-661 3-month homozygous data which should look better than first-gen '809 combo. We want to own into '809 strong pricing and USA launch for mid-15...
RBC bios into yr-end & 2015 "Of 4 lrg caps, "CELG will perform best in 2015 with 1) 20% EPS growth 2) ACT settlement 3) Pipeline incl 2 AGIO drugs and GED-031"...
What we're saying into holiday year-end and going into 2015
Maintain CELG, BMRN, VRTX as top ideas into 2015
November 23, 2014
RBC Capital Markets, LLC
Michael J. Yee (Analyst)
Thanksgiving biotech thoughts
After lots of recent marketing meetings across regions, sentiment for biotech remains positive but importantly, a few themes seem to be prevalent across discussions: 1) fund managers are already asking on themes and ideas for '15 and do think the group can work for 2015 but are not expecting as much outperformance as 2014, 2) thus if biotech continues to work for 2015, then we think midcaps should continue to work which we believe would be good for names like BMRN and VRTX. If fund managers are going to buy biotech, why buy AMGN for 10%+ potential when BMRN or VRTX might see 25% or more over next 12 months?...but, importantly, 3) investors have been watching performance of GILD and BIIB as two big-cap growth biotechs that have been choppy for the last few months and wonder that if they continue to lag whether that will impact generalist interest in biotech...
Of the 4 large-cap biotechs, we believe CELG will probably perform the best for 2015 because 1) we think they should be able to grow EPS over 20%+ next year and in 2016, so if its current reasonable, in our view, GARP 20x multiple on '15E rolls over to '16E, that should get the stock towards $125+, 2) we note there could be a self-fulfilling prophecy of expectations that a "settlement" with ACT is closer to happening, perhaps even after February '15 when legal discovery ends and before Court could begin in mid-15 (we're not saying it's inevitable by then, but acknowledge that the potential exists; otherwise that could also happen even after Court begins), and, 3) we believe investors are going to start giving more credit to the pipeline –
I just posted the CELG chart on Investorvillage CELG message board.. unfortunately it wont paste here but go there and see it.One of the better charts on CELG I have seen in awhile - about to breakout here imo on GED-031 data publication in major medical journal.....
Constructive Chart - Should explode once we break above that 109.17 area and then above all time intraday high 109.25. Should happen next week on GED-031 data publication (Thanksgiving week usually a good one for market as well)
Yes - CELG is about to explode through all time highs to the upside on publication of GED-031 chrohns data next week,, ASH in 2 wks. with 160 presentations at the biggest hematology conference in the world and of the yr and then with 2020 and a few surprises at JPM healthcare conf in early January
CELG is about to explode through all time highs to the upside on publication of GED-031 chrohns data next week,, ASH in 2 wks. with 160 presentations at the biggest hematology conference in the world and of the yr and then with 2020 and a few surprises at JPM healthcare conf in early January
+ Otezla CHMP opinion de-risks approval; Expected label a little more specific
Celgene received positive opinions from CHMP on Otezla for psoriasis (PsO) and psoriatic arthritis (PsA) (see link http://www.ema.europa.eu/docs/en_GB/document_library/Summary_of_opinion_-_Initial_authorisation/human/003746/WC500177621.pdf). It appears the EU label will have the same indications as the US label, but with more specifics on prior treatment experience. For PsO, the CHMP suggests patients failed to respond to or, who have a contraindication to, or are intolerant to other systemic therapy including cyclosporine, methotrexate or psoralen and ultraviolet-A light (PUVA). For PsA, Otezla is for patients who have had an inadequate response or who have been intolerant to a prior DMARD therapy. In contrast, the US label does not specify the patient characteristics for PsA, and addresses PsO patients who are candidates for phototherapy or systemic therapy. Given the fact that the specified populations are the main targets of Otezla, we don't consider the differences to be commercially important. The timing is in line, and supports our 2015 forecast of $43m in EU sales. Given the long duration and positioning in the treatment paradigm of Otezla, we believe there is real upside to 2015-17 consensus.
+ Two-year data of Otezla at ACR may support the use before biologics
The long term data in PsA were presented earlier this week at the ACR meeting, which showed Otezla continues to be efficacious and safe after 2yrs on drug. The new data strengthen our belief that more coverage plans may require patients fail Otezla before getting biologics (seehttps://neo.ubs.com/shared/d1jaAadfbKVAqow and https://neo.ubs.com/shared/d1T0IDx60v). We are aware this is already happening in some plans, but we think the lack of serious side effects supports an expansion of the policy.
+ Recent inflection in Rx trend suggests upside to 2015
An upward inflection in Otezla scripts was seen following the approval in PsO in late Sept., and the growth trend has been linear since then, with a steady increase of 6-9% w/w. If the current trend continues, Otezla would track towards US sales of $43m for 4Q ex-inventory (Street/UBSe: $44m), and $488m for 2015 (vs. Street WW $344m; UBSe: US: $471m; WW $515m).
+ Valuation: Buy, $112 PT based on 21x 2015e EPS
We still think Otezla can surprise to the upside and drive upward revisions.
Celgene Receives Positive CHMP Opinion for OTEZLA® (apremilast), the First Oral PDE4 Inhibitor for the Treatment of Patients with Psoriasis and Psoriatic Arthritis
Celgene International Sàrl (CELG), a wholly-owned subsidiary of Celgene Corporation, today announced that the European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP) has adopted a positive opinion for OTEZLA® (apremilast), the Company’s oral selective inhibitor of phosphodiesterase 4 (PDE4), in two therapeutic indications: 1
For the treatment of moderate-to-severe chronic plaque psoriasis in adult patients who failed to respond to or, who have a contraindication to, or are intolerant to other systemic therapy including cyclosporine, methotrexate or psoralen and ultraviolet-A light (PUVA).
Alone or in combination with Disease Modifying Antirheumatic Drugs (DMARDs), for the treatment of active psoriatic arthritis (PsA) in adult patients who have had an inadequate response or who have been intolerant to a prior DMARD therapy.
Psoriasis is an immune mediated skin condition characterised by raised scaly lesions on the skin. It affects approximately 14 million people across Europe2 and about 125 million people worldwide.3 Plaque psoriasis, also called psoriasis vulgaris, is the most common form of the disease, representing about 80 percent of cases.4 Up to 30 percent of people with psoriasis may develop psoriatic arthritis, which involves pain and swelling in jointsand other manifestations and may lead to significant disability.5
“This CHMP positive opinion is an important step forward for people with psoriasis and psoriatic arthritis in Europe. These immune mediated diseases are frequently debilitating and cause severe physical and emotional pain to the individual,” stated Tuomo Pätsi, President, Celgene Europe, the Middle East and Africa (EMEA). “We are proud to have moved one step closer to offering patients OTEZLA®, a new, oral treatment approach that could significantly help control their symptoms and make a considerable difference to their quality of life.”
In the ESTEEM studies, which form the basis of CHMP’s positive opinion for apremilast in psoriasis, treatment resulted in significant and clinically meaningful improvements in plaque psoriasis as measured by PASI-75 (a 75 percent improvement in the Psoriasis Area Severity Index) scores at week 16, the primary endpoint.6,7 Patients on apremilast also benefited from significant improvements in difficult to treat areas, such as nail and scalp, and itch, known to have a marked impact on patients’ quality of life and perception of disease severity.8,9,10
In the PALACE program, which forms the basis for CHMP’s positive opinion for apremilast in psoriatic arthritis, treatment resulted in significant and clinically meaningful improvements in the signs and symptoms of psoriatic arthritis, as measured by the modified ACR-20 (a 20 percent improvement in the American College of Rheumatology disease activity criteria) response at 16 weeks, the primary endpoint. 7,11 Patients on apremilast showed improvement across multiple disease manifestations specific to psoriatic arthritis, such as swollen and tender joints, as well as dactylitis, enthesitis and overall physical function.12,13,14
In the two Phase III programs, PALACE and ESTEEM, the clinical response of OTEZLA was maintained through week 52 across multiple endpoints. 15,16
Across these phase III clinical studies, the most commonly reported adverse reactions were consistently diarrhoea, nausea, upper respiratory tract infection, tension headache and headache.6,11 These adverse reactions were mostly mild to moderate in severity. Gastrointestinal adverse reactions generally occurred within the first two weeks of treatment and usually resolved within four weeks.6,11 During the placebo-controlled phase of the clinical trials, the rate of major adverse cardiac events, serious infections, including opportunistic infections, and malignancies, was comparable between placebo and apremilast groups.6,11
OTEZLA® was approved on March 21, 2014 by the U.S. Food and Drug Administration (FDA) for the treatment of adults with active psoriatic arthritis and on September 23, 2014 for the treatment of patients with moderate to severe plaque psoriasis who are candidates for phototherapy or systemic therapy. In Canada, OTEZLA was approved for the treatment of moderate-to-severe plaque psoriasis in November 2014. A New Drug Submission (NDS) for psoriatic arthritis was submitted to Canadian Health Authorities in the second quarter of 2013. Marketing authorisation applications are ongoing in other countries, including Australia and Switzerland.
The European Commission, which generally follows the recommendation of the CHMP, is expected to make its final decision within two to three months. If approval is granted, detailed conditions for the use of this product will be described in the Summary of Product Characteristics (SmPC), which will be published in the revised European Public Assessment Report (EPAR).