CELG pipeline and its 25 partnerships with the best in small bio make it an infinitely better investment...GILD has huge cash flow but huge pricing pressure is coming in Hep C and its a cure so the patient population and duration of therapy will diminish. GILD is a good company but dont be fooled by PE based on Hep C. CELG is an infinitely better investment
Very cheap - what is absolutely amazing is the slide that shows what is NOT in the conservative $20 billion revenue and $12.50 EPS in 2020....We will hit your $180 within a yr when Natco/ACT settles....then the sky is the limit
See CELG IV board
Med Tech Stock Letter..."ZIOP has a few major advantages over KITE/JUNO. And in our view, at a $1.3 billion market cap – half of KITE and almost a quarter of JUNO- – that discount offers investors an opportunity"....
….A Little More On Sentiment – Following up on our Sentiment piece last Issue, we briefly implied but failed to mention that, in some instances, investors choose sides between competitors. We have written many times that there are more than one player in a “Hot New Class” and it is rather easy for an analyst and less sophisticated investor to choose a market leader as the presumed winner. For example, the war between GILD (Zydelig) and PCYC (Imbruvica) was an interesting one that had so many analysts/PCYC bears siding with Gilead just because they’re Gilead. Yet the data on Zydelig never truly compared favorably with Imbruvica – and that has been well decided upon in the clinic and now in the marketplace. What many short-term investors failed to realize was that – before the hepatitis C success of Solvadi/Harmoni – GILD was a very flat stock for a few years searching for its successor. But because GILD was so successful with HCV and HIV before its foray into oncology and its stock had become the new biotech sector leader, the consensus believed GILD management despite the obvious (to us) inferiority of Zydelig (and GILD’s other blood cancer efforts). ABBV and analysts/PCYC shorts were also very aggressive with ABT-199. It is a cool, powerful compound but now filled with baggage due to toxicity and uncertainty of dose. It will find a place eventually, but Imbruvica’s leadership position is solidified further as the days go on. It was frustrating at times to fight GILD and ABBV, but over time the truth usually wins out. PCYC was always an underdog based upon this perceived competition, but has been the one of the best stocks in biotech for 2015 (and one of the best over the past five years).
That brings us to the newest of hot classes – cancer immunotherapy and CAR-T. Not a day goes by when an oncology-related company makes an announcement, an acquisition, preclinical something and/or some declaration that they have the “next best thing” in these fields. To us, this is without question a game-changing field that is exciting albeit early in it development. Moreover, the I/O class is being dominated by Big Pharma and a handful of biotech companies. One early winner for us has been INCY with its IDO-inhibitor (INCB-024360), a novel compound that has been partnered with every major pharma’s PD-1/PDL-1 checkpoint inhibitor in nonexclusive collaborations. Imbruvica’s combination potential has also emerged in I/O of late with synergy in pre-clinical studies and a few collaborations with Big Pharma as well. No one believed in IDO initially, and most thought checkpoints/CAR-T would eventually make Imbruvica obsolete.
That brings us to one of our recent recommendations, Ziopharm (ZIOP). In the white hot field of CAR-T, the presumed leaders are JUNO and KITE – recent IPOs with extraordinary market caps of $4.7 billion and $2.8 billion, respectively. Before they went public, both companies shared similar characteristics: 1. They are run by executives with pristine pedigrees and successful experience in creating major shareholder value; 2. They have aligned with the world’s leading cancer centers (e.g., Sloan Kettering, NCI, The Hutch, etc.); 3. They raised significant capital from the crème-de-la-crème of private/public and corporate investors. Lastly, they delivered some incredible yet early stage results in treating and in some instances curing very difficult-to treat cancers. (In some cases, selective dissemination.) By our take, at this stage of development the sentiment on these companies would fall in the “Extreme Greed” category. They have been the easy ones, the kind most analysts/investors like.
ZIOP appears to be a newcomer to this class. With their Intrexon (XON) collaboration and MD Andersen joint venture announced last month, they are beginning to show up on the radar screen in I/O and CAR-T for the first time. But other than the MD Andersen deal, they do not exactly share the same pedigrees as either JUNO or KITE. However, based upon our fundamental analyses (see two Issue ago), ZIOP has a few major advantages over the other two – a non-viral delivery system and a pill to turn off/on the gene therapy if toxicity is observed. Yet there exists a “CEO Discount” in Chief Executive Jonathan Lewis. And in our view, at a $1.3 billion market cap – half of KITE and almost a quarter of JUNO- – that discount offers investors an opportunity.
Sigh - Citi removes CELG from Preferred list citing patent cases.....Yaron say it ain't so....
Alert: Changes to Most and Least Preferred List - Stay Tactical - Adding REGN and VRTX to Preferred List - Removing CELG
· Key Points – We making changes to the lg cap biotech preferred list. We are removing CELG ahead of the Revlimid polymorph patent case vs Teva and Mylan. While the outcome of this EPO hearing will only determine whether the patent lasts until 2022 or Sept 3, 2024 it could become a near-term headwind. Instead we are adding REGN for its deep newsflow and Praluent launch in 2015 and VRTX ahead of the Kalydeco/VX-661 data in March and combo launch in July. We are keeping GILD on the list as we anticipate upside to hepC estimates and stock buybacks to drive near-term appreciation.
· Removing CELG – On March 9th, the final briefing documents are anticipated to be filed with the European Patent Office for the opposition proceedings. Based on the initial review from our external patent attorney the EPO is leaning to side with the opposition of the EP ‘682 polymorph patent. But the final briefing are due on March 9th and the patent case will be held on May 5th. This will have an impact on whether Celgene’s patent will survive challenge and what of the patent will remain if amended. While this should not have direct implications on the US polymorph case due to different court interpretations of polymorph patents and as the challengers are different (only Natco is challenging in the US), this could be an overhang on the stock and could lead to near term weakness.
· Adding REGN – We expect the stock to outperform driven by Praluent launch following expected approval by the PDUFA date of July 24th. Praluent has potential to be the next blockbuster. Regeneron has multiple pipeline catalysts in 2015 including Sarilumab ph 3 data + filing by YE for RA. 2 ph 3 studies of dupi for AD are ongoing with potential data by YE. Dupi ph 3 in asthma will start in 2015 and o
After 10,000 Mar $20 ZIOP calls traded, someone asked the CBOE t0 open $21& $22 strike ZIOP options all months....Hmmmmm
Nomura-This EU CELG approval a $3.4bn incremental revenue opportunity.Watch for ASCO Transplant Eligible OS Data to Expand Label also..
Remains USD 149.00
ELG.OQ CELG US
EQUITY: AMERICAS BIOTECHNOLOGY
Quantifying EU NDMM Opportunity
Watch for ASCO Transplant Eligible OS Data
We believe EU Revlimid approval in transplant-ineligible NDMM patients
should open a $3.4bn incremental revenue opportunity for Celgene. Celgene
remains our top large-cap pick, given: 1) the potential for acceleration in
Revlimid growth following approval for first line/maintenance; 2) visibility on
label expansion opportunities for Revlimid in lymphoma; and 3) advancement
of the pipeline into late-stage trials that could result in approval of four-to-six
new drugs prior to 2020. These factors support our view that Celgene’s longterm
guidance represents a floor, with multiple sources of upside.
EU approval could address 75% of first line MM. CELG announced that
Revlimid in newly diagnosed MM (NDMM) in transplant-ineligible patients
was approved in Europe, in line with our and the Street’s expectations.
About 25% of NDMM patients are transplant-ineligible, but in reality, most
patients choose not to get transplants. As a result, we assume about 75% of
patients who do not get transplants will be eligible with Revlimid treatment.
A $3.4bn incremental revenue opportunity. We currently assume 14%
Revlimid share in NDMM SCT ineligible patients, with 1st-line revenue of
$155mn at 12-month duration. Our peak sales assumption in 1st line is 75%
share in transplant-ineligible patients in induction (75% of total NDMM
patients), and at 12-month duration and $4,226 per month, our Revlimid
revenue estimate is $930mn, or $775mn in incremental revenue. However,
patients will continue Revlimid after induction therapy (maintenance
therapy) and we currently assume $1.8bn peak revenue in Revlimid in
NDDM. This is based on total duration of 35 months (12-month induction
plus 23-month maintenance). Therefore, this morning’s approval gives us
$3.4bn in incremental peak revenues in 1st line and maintenance sales.
ASCO data in transplant-eligible patients could be filed to broaden the
label. CELG mentioned on its 4Q call that updated overall survival data in
transplant-eligible patients will be presented at ASCO this year and we think
many investors missed its importance. In our opinion, the trial has now
reached overall survival benefit and CELG may be able to file based on this
data. European approval is possible in 2017, which would broaden the
Revlimid label to the 25% NDMM patients who get transplants.
Source: Nomura estimates, FactSet
Our View vs The Street
($mn except per share) 2015E 2016E 2017E
NSI Total Revenue $9,228 $11,537 $13,848
Street Total Revenue $9,279 $11,191 $13,231
NSI vs.Street ‐0.6% 3.1% 4.7%
NSI non‐GAAP EPS $4.70 $6.35 $8.10
Street non‐GAAP EPS $4.85 $6.23 $7.80
NSI vs. Street ‐3.1% 1.9% 3.8%
Welcome - best thing you can do is EVERY DAY go to the CELG Investorvillage message board for analyst reports and people who have followed it for 15 yrs. VERY intelligent posting over there
Added 10,000 trading shares at the open 121.25-30s. eom
Must read Nomura on Survey-Imbruvica’s RESONATE-2 & Revlimid’s REMARC/ REVELANCE Could Be Bigger than Expected.....CELG: Survey Supports $5bn Annual Revlimid Lymphoma Opportunity
Comprehensive Survey of PCYC’s
Imbruvica and CELG’s Revlimid
EQUITY: AMERICAS BIOTECHNOLOGY
Assessing Impact of Upcoming Clinical Data
Imbruvica’s RESONATE-2 and Revlimid’s REMARC/
REVELANCE Could Be Bigger than Expected
We are publishing results from our survey of 30 physicians treating over 1,500
chronic lymphocytic leukemia (CLL) patients and 2,300 lymphoma patients.
Our survey results confirm rapid adoption of PCYC’s Imbruvica in 2nd- and 3rdline
CLL, which supports management’s guidance for 2015 U.S. Imbruvica
sales of $1bn. More important, the survey supports the impact of data from
RESONATE-2 Phase III trial (2H15) on 1st-line CLL share, which could drive
significant upside to PCYC’s shares. Based on the survey results, we are
raising our Imbruvica sales estimates, and our TP to $195 from $158.
We are maintaining our estimates and TP on CELG pending release of
REMARC and RELEVANCE data, which our survey implies could open a
$5bn market opportunity for Revlimid in lymphoma.
PCYC: RESONATE-2 Could Be a Game Changer; Increasing TP to $195
• RESONATE-2 would support 1st-line use in all CLL patients. Our
expectation was that RESONATE-2 would have little impact in frontline use,
because comparator chlorambucil is rarely used as a monotherapy (4% in
our survey) and is minimally effective. However, 45% of respondents in our
survey stated that they planned to use Imbruvica in 1st-line CLL when data
becomes available in 2H15; this would lead market share to increase from
26% currently to 49% two years after data release, with use not limited to
elderly patients. Data from Phase III trials exploring Imbruvica + Rituxan
(2017 and 2018) could establish a new standard of therapy in CLL, in our
• 1st-line CLL use could grow independent of RESONATE-2 data. Our
survey pointed to increase in first-line use independent of data, with market
share increasing from 11% today to 37% in two years.
• Follicular Lymphoma Could Add $4bn to Our Model. Survey
respondents plan to use Imbruvica in 19% of their refractory FL patients
when approved. Phase II DAWN data in refractory FL in 2H15 could support
sales of $950mn, with data from frontline FL studies in 2017 contributing
additional $3bn at peak.
CELG: Survey Supports $5bn Revlimid Lymphoma Opportunity
• Physicians expect rapid adoption of Revlimid in lymphoma. Positive
REMARC data (2H15) would lead to 25% of frontline DLBCL patients
receiving Revlimid maintenance in year 1, increasing to 38% 2 years
following data release. Positive RELEVANCE data would lead to frontline
FL share of 19% after the 2017 data release, with share increasing to 34%
two years after data release. This would support peak sales of $7.5bn.
• $5bn in Lymphoma sales would add $19 per share to our DCF.
Assuming a rate of adoption that is lower than our survey supports peak
sales of $5.6bn, or $19 per share based on our DCF. If instead we employ
the market share assumptions from our survey, peak sales in FL and
DLBCL could exceed $7.5bn, contributing $66 per share to our DCF.
Global Markets Research
17 February 2015
Nomura | Comprehensive Survey of PCYC's Imbruvica & CELG's Revlimid February 18, 2015
We conducted a follow-up survey to gauge current use of
Imbruvica (initial survey conducted in March 2014) and to
determine the probability of 2015 U.S. sales of Imbruvica
reaching management guidance of $1bn, above consensus
More important, we wanted to quantify the impact of data
from RESONATE 2 (frontline CLL) and DAWN (follicular
lymphoma) trials, both of which are expected in 2H15E.
Phase III RESONATE 2 trial would expand Imbruvica’s
label to include use in elderly frontline CLL patients.
Phase II DAWN trial could s
upport approval in refractory
We believe there is little value in CELG shares for
Revlimid’s potential in diffuse large B cell (DLBCL) and
follicular lymphoma (FL)—despite close proximity to Phase
The Phase III REMARC trial (data 2H15) evaluates Revlimid
maintenance for 24 months in DLBCL patients that respond
to the induction therapy with the current standard of care
Rituxan + CHOP chemotherapy (R-CHOP).
The Phase III RELEVANCE trial (data 2017) compares 18-30
months of Revlimid + 12 months of Rituxan to 12 months of
any Rituxan-based chemotherapy combination in previously
untreated FL patients.
Portfolio Managers Summary
PCYC: Raising TP to $195 from $158; Increasing Imbruvica forecast.
Survey supports Imbruvica U.S. sales guidance of $1bn.
Survey confirmed rapid adoption in 2nd- and 3rd-line CLL and all del 17p patients, which our 2014 survey suggested.
Survey showed that about half of Imbruvica use in first line CLL is off label (i.e., non-del 17p patients). This represents the single largest CLL opportunity for Imbruvica.
Physicians expect to increase 1st-line use despite limited data. Current 1st-line share is 11%, expected to increase to 21% and 37% in 2016 and 2017, respectively.
Positive RESONATE-2 data could more than double 1st-line use, with our survey respondents planning to use Imbruvica in 26%, 40%and 49% in 2015-2017.
Equally important, physicians would not limit use to RESONATE 2 trial population of elderly 1st line CLL patients.
Based on our survey, we are raising our 2015-17 Imbruvica US sales estimates to $950mn, $1.5bn and $1.9bn from $871mn, $1.37bn and $1.76bn, respectively.
Positive data from DAWN trial and approval in refractory FL could add $950mn in Imbruvica sales to our model. Frontline FL (Phase III data from FLR3001 study in 2017) data could add an additional ~$3bn to our model, contributing $100 per share to DCF.
CELG: Revlimid in lymphoma could be $5bn (or $19/share) opportunity.
53% of survey respondents are currently using Revlimid in relapsed refractory FL and DLBCL, with limited use in first-line setting.
Survey points to rapid adoption following release of REMARC (PFS endpoint) and RELEVANCE (durable CR endpoint) data.
Physicians expect to increase Revlimid use in 1st line DLBCL to 25% when REMARC data become available in 2H15, with use increasing to 33% and 38%, one and two years after data release, respectively.
Respondents expect to put 19% of their first line FL patients on Revlimid if RELEVANCE data is positive (data in 2017). The rate of adoption would increase to 28% and 34% one and two years after data release.
Survey suggests FL sales of $1.4bn and DLBCL sales of $2.5bn 2 years after data release. Under this fast-ramp scenario, Revlimid in lymphoma peak sales could exceed $7.5bn, contributing $66/share to our DCF.
Assuming a more conservative rate of penetration, with peak sales of ~$5bn, results in our DCF increasing by $19 per share.
Key Takeaway #10: CELG – Rapid Adoption of Revlimid on REMARC and RELEVANCE Data
Source: Nomura research 16
Celgene is conducting Revlimid maintenance studies in DLBCL
and FL Physicians were willing to put one-third of their frontline
DLBCL and FL patients within two years of positive data
53% of respondents are currently using Revlimid for R/R FL or
According to our survey, 14% of R/R FL patients and 10% of
R/R DLBCL patients are treated with Revlimid.
For DLBCL, Celgene is conducting REMARC, a Phase III study of
Revlimid maintenance in frontline patients who respond to R-CHOP
induction (interim data in 2H15).
Respondents are willing to use Revlimid in 25% of their
frontline DLBCL patients when data becomes available.
We think clinically relevant PFS benefit would be 54 months
(vs. historical PFS of 38.6 months).
For treatment-naïve FL, RELEVANCE, a Phase III study of
Revlimid plus Rituxan in newly diagnosed FL vs. physician
choice, followed by Revlimid/Rituxan maintenance is ongoing
(data in 2017).
According to our survey, positive RELEVANCE data
(Revlimid plus Rituxan superior to physician choice) could
drive up Revlimid shares in frontline FL to 34% two years
after data becomes available.
Lowest efficacy hurdle is 2.4 years in median PFS with
Rituxan + CVP, in our opinion.
Key Takeaway #11: CELG – Survey Supports ~$4bn Revlimid Lymphoma Opportunity
Source: Nomura research 17
Revlimid Lymphoma Revenues Are Upside to Our Model Revlimid Lymphoma Revenues Based on Survey Market Shares
DLBCL is a larger market than FL, with ~150,000 patients in the
U.S. and ~240,000 patients in Europe.
REMARC’s addressable market is front line DLBCL patients
who responded to R-CHOP induction. We estimate
Revlimid’s potential market size is ~60,000 in the U.S. and
~100,000 in Europe, assuming 75% of patients respond to
Our survey suggests $1.6bn in Revlimid revenue in frontline
DLBCL assuming PFS benefit in REMARC.
There are ~100,000 FL patients in the U.S. and ~160,000 FL
patients in Europe.
Our survey suggests $738mn in Revlimid revenue in
frontline FL when RELEVANCE data is released, doubling in
only two years.
We do not model Revlimid in lymphoma. Survey suggests FL
sales of $1.4bn and DLBCL sales of $2.5bn 2 years after data
release; under this fast ramp scenario, Revlimid in lymphoma
peak sales could reach $7.5bn, adding $66 per share to our
Assuming a more conservative rate of penetration with peak
sales of ~$5bn, results in our DCF increasing by $19 per share.
Goal of our Hematologist Survey: Assess Impact of Upcoming Data
Source: Nomura research 2
PCYC: Assessing Impact of RESONATE 2 and DAWN Design of RESONATE 2 and DAWN Trials of Imbruvica
CELG: Assessing Impact of REMARC and REVELANCE Design of REMARC AND RELEVANCE TRIALS of Revlimid
Indication Treatment-naïve CLL Refractory FL
N 272 111
- Age 65 years or older
- ECOG 0-2
- Measurable nodal disease by CT
- Previously treated with at least 2 prior lines of therapy
- Last prior line includes an anti CD20 Ab containing chemo regimen
- Resistant to last therapy, defined as progression of disease within 12
months of the last therapy
- ECOG 0-1
Open-label; Patients are
randomized to 2 arms to receive
Imbruvica 420 mg or
chrolambucil. Randomization of
the Imbruvica arm is stratified on
ECOG performance status,
presence of advanced Rai stage,
and US vs. non-US.
Open-label, single arm study. Patients receive 560 mg of Imbruvica on a
Endpoints ORR, safety
DOR, PFS, OS, time to response, number of patients experiencing
resolution of lymphoma related B symptoms
Indication First-line maintenance after R-CHOP in DLBCL Treatment-naïve FL
N 621 1000
- Age 60-80
- CR or PR after first-line treatment with 6 cycles of RCHOP
14 or 8 cycles of R-CHOP 21
- ECOG 0-2
- No prior systemic treatment
- Age over 18
- ECOG 0-2
- All patients are treated with 6 cycles of R-CHOP 14
or 8 cycles of R-CHOP21. Patients can enter the
study either before or after R-CHOP
- Patients who achieved CR or PR will be randomzied
to Revlimid maintenance (25 mg a day for 3 weeks
every 4 weeks up to 24 months) or placebo
- Patients are randomized to two arms, R2 and R-chemo (R-CHOP
- Patients who achieve CR, CRu, PR after 6 cycles of R2 treatment
receive Revlimid maintenance for 12-30 months and Rituxan for
- Patients who achieve CR, CRu, PR at 6-8 cycles with R-chemo
receives Rituxan maintenance for 12 cycles
PFS CR/CRu rate, PFS
OS, percentage of patients who convert from PR to
CR, efficacy according to the response to R-CHOP,
OS, event-free survival, time to next antilymphoma treatment,
Nomura | Comprehensive Survey of PCYC's Imbruvica & CELG's Revlimid February 18, 2015
BMO-NDMM approval will result in increased duration of use... frontline label expansion 12 years prior to patent expiry as meaningful...CELG member Top 15 Large Cap BMO picks...
BMO Capital Markets Corp. Celgene (CELG-NASDAQ) Stock Rating: Outperform Industry Rating: Outperform -----Member of: Top 15 US Large Cap Stock Selections
Target Price $163.00
REVLIMID Label Expansion in US Should Support Continued Growth
Celgene announced expansion of the U.S. REVLIMID label earlier today, which now allows for unrestricted use of REVLIMID with dexamethasone (Rd) to treat multiple myeloma (MM). The inclusion of newly diagnosed MM is based on data from the French IFM FIRST (MM-020) trial first presented at the 2013 ASH meeting. The FIRST trial compared continuous Rd with MPT for 18 months and included Rd for 18 months as a third arm. Compared with MPT, continuous Rd improved both PFS (25.5mo. vs. 21.2mo.) and OS (58.9mo. vs. 48.5mo.). FDA also updated the REVLIMID label to include dosage adjustments for patients with moderate to severe renal impairment or those receiving renal dialysis. With respect to warnings and precautions, FDA added additional language for neutropenia or thrombocytopenia, DVT/PE, and SPM, and included new statements for impairment of stem cell mobilization and risks for serious cardiac events
Impact & Analysis
We are reiterating our Outperform rating on shares of the CELG following review of the REVLIMID label expansion. While frontline use of REVLIMID isalready the standard of care supported by NCCN guidelines and reflected in a market share of 60%, we believe that duration of therapy has significant room to grow as a frontline maintenance therapy, and we expect sustained U.S. REVLIMID growth as a result, with reaccelerating growth expected from near-term label expansion in Europe. Ultimately, we believe, REVLIMID is a long-lived asset with solid polymorph protection extending to 2027, and thus, we see the value of a frontline label expansion 12 years prior to patent expiry as meaningful. Our $163 price target is based on 25x our 2016 non-GAAP EPS estimate of $6.50, discounted 15%. We maintain an Outperform rating on CELG.
Sentiment: Strong Buy
FULL REPORT TOO BIG FOR YAHOO - SEE Investorvillage CELG board to read this excellent detailed report - here is summary
US Equity Research
18 February 2015
PRICE TARGET US$156.00
Celgene is a biotechnology company focused on treatment
of oncologic and autoimmune diseases.
Initiation of Coverage
Celgene leads in oncology landscape; strong
tailwind to penetrate inflammatory diseases
Expect $10B Revlimid revenues by 2020, robust growth
We estimate Revlimid will reach ~$10B in worldwide revenues by 2020, serving as a strong driver of growth. We do not expect generic competition to surface until ~2022-2024, providing substantial cash flows mid-term. Importantly, we expect US FDA approval in front-line multiple myeloma during February 2015 and EU approval during H1/15 to increase current Revlimid sales by ~$400M in 2016.
Broad and diverse pipeline expands Celgene’s potential disease targets
Celgene plans to expand currently marketed drugs (Revlimid, Abraxane, Pomalyst, and Vidaza) outside of hematologic disease states, but also has a robust and broad clinical pipeline to support future revenue and EPS growth. Specifically, we estimate Agios’ AG-221 (IDH-2 inhibitor) and AG-120 (IDH-1 inhibitor) may generate ~$2B in peak sales combined by 2022 if approved. Additionally, we find the data for luspatercept/ sotatercept interesting as we feel these programs can potentially generate $5B in sales by 2022 and trigger significant upside to the stock. Finally, GED-0301 could be a billion dollar-plus asset in Crohn’s disease and ulcerative colitis based on positive data seen to date.
Celgene moves into inflammatory diseases with GED-0301, targets $2B market
Celgene’s wholly owned Anti-Smad7 compound, GED-0301, could potentially be a blockbuster for inflammatory disease, with an estimated ~$800M in peak sales by 2022 in Crohn’s disease (CD) alone, not including potential for ulcerative colitis. Importantly, phase 2 clinical trials demonstrated an impressive 58% response rate in CD patients while having a clean safety profile. We believe the results will resonate favorably with physicians and possibly move the drug into earlier lines of therapy and before toxic biologic drugs, like Humira and Remicade, which could increase our peak sales valuation dramatically.
Potential to penetrate immunotherapy landscape with collaborations in CAR T-cell therapy and checkpoint inhibitors
Celgene is increasing its presence into the immuno-oncology space by collaborating with multiple partners in developing therapies for various hematologic and solid tumors. In addition to trials with PD-1 inhibitors and both Abraxane and Revlimid, we find the company’s entrance into the CAR T-cell race interesting, as the collaboration with Bluebird Bio provides Celgene the ability to compete against Kite, Juno, and Novaritis.
Initiate with BUY, $156 price target
We initiate coverage of CELG with a BUY rating and a $156 price target based on a discounted cash flow (DCF) analysis.
Remember EU approval is coming right around same day (67 days from CHMP thumbs up in Dec)...Both of these approvals will add $3 to $4 billion in annual sales at 96% gross margins and only 16% tax rate. HUGE EPS boost indication expansion and will increase DURATION of therapy...which is the number 1 enhancer of incremental EPS per ISI....These 2 approvals plus coming NEJM crohns data publication should push us to all time high $125 and then to $130 within a month.
It is but it wont - its ECC model wants the trial expenses in a separate company - it gets 50% of the profits without expenses....so when down the road their are multiple billion dollar drugs on market from ZIOP (or the Big Pharma that ultimately buys them) XON gets huge income with no capital needed and it will have huge ROI/ROE/SVA/EVA....expect mutlple Big Pharma/Bio deals or a couple and then a buyout of ZIOP with XON retaining 50% of drug profit. ZIOP is SERIOUSLY undervalued
I own both stocks and will continue to but ZIOP is MUCH more leverage to a Big Pharma cancer or CAR T deal....CAR T is the single hottest area of biotech right now and imo the STREET has not properly valued 1) what the MD Anderson deal means to ZIOP and 2) what is ZIOP's ownership of EVERY human cancer drug developed by XON for perituity (and half the profits) worth ?!??! THE ANSWER COULD BE STAGGERING...MD Anderson just validated XON/ZIOP on the science side after 9 months of due diligence - actually called them and turned down others cash offers for ZIOP/XON stock....next will big Big Pharma/Bio partnerships that validation on the investment side...when that happens we will see $20s quickly imo and that will be the starting point for negotiations for a ZIOP buyouts (Barton's $4 to $6 billion would put that buyout at $40 to $60)...Before you think that's crazy - PCYC with one drug bought from Celera (When XON's Sam Broder was there) went from $6 to $160.....what if you have a PLATFORM win the hottest area of biotech - CAR T - with 5 + INDs this yr alone and more announcements, data, deals coming in "days,weeks, months" per both the ZIOP and XON CEOs
Just talked to Joe Barton (who went ON THE RECORD with Herb Greenberg on CNBC in Nov touting XON at $20-$23 ($40 now)).Asked him What ZIOP is worth to be Pharma He said "at least $4 to $6 billion"......
Just had a nice conversation with Joe Barton from White Rock Capital - Joe is the legendary hedge fund investor - formerly a VERY successful (and feared) short seller who Greenberg says in the article below has morphed into a successful long investor... Back in November Greenberg put out the written report below on Barton/XON/ZIOP/XON cubs - For that report and for the November 11th Fast Money Greenberg appearance - he told Herb Greenberg he wanted to go "on the record" about how bullish he was on Intrexon XON. (XON was in the $20-$23 area when article and Fast Money mention happened - $40 now). Herb wrote an article about it and went on Fast Money again saying Joe wanted to be "on the record"
I asked Joe what he thinks ZIOP is worth to big pharma.
Here is what Joe Barton told me: "given the technology of XON with the rheoswitch and the capabilites gained in the MD Anderson deal, I believe it is worth $4 to $6 billion, potentially more. Remember this is more than car-t, think solid tumors and the exquisite control and this is a needed and wanted, unrivaled set of capabilities."
Given his track record with Intrexon his ZIOP valuation at the very least should cause you to do serious due diligence if you have not. ZIOP and XON CEO have been telling you more news, announcements, deals are coming in days, weeks and months.Dr Cooper of MD Anderson said mutliple data sets and at least 5 IND's are coming this year as well.
Here is the Herb Greenberg written report on this from early November - when Greenberg wrote this report ZIOP was in the low 3's and XON was near $20 on Nov 7....Nov 11th he went on Fast Money and again said Barton wanted to be on the record
New Report Intrexon (XON): On the Verge of Something Very Big? -- By: Herb Greenberg | 10/07/14 - 09:39 AM EDT
He actually did a pretty good job....I think this is just the beginning of more visibility for ZIOP and XON into yr end and Q1
New Report Intrexon (XON): On the Verge of Something Very Big?
By: Herb Greenberg | 10/07/14 - 09:39 AM EDT
Summary: For all of its purported potential, synthetic biology is largely under-the-radar on Wall Street. So is the company that claims to be well ahead of most others working on ways to commercialize it: Intrexon (XON:NYSE), the closest to a public pure play on syn bio. Intrexon has generated little in the way of buzz since its IPO a little more than a year ago. But as the growth crowd looks for the next big thing -- using the history of syn bio’s once-removed sibling, biotechnology, as a template -- that may not last long. At least not if Intrexon signs the kind of big deals its proponents (and the company itself) have been counting on.
With 29% of its float sold short, Intrexon already qualifies as a battleground stock, even if it isn’t yet a highly chatted up one. And despite its generally low profile, it has attracted an impressive group of investors, with Dan Loeb’s Third Point near the top.
For anyone long, Intrexon is highly speculative and largely a bet on CEO Randal J. Kirk -- or the “cult of Kirk,” as some have called it. For those short, it’s equally speculative, but more of a bet that Intrexon isn't everything it’s cracked up to be -- and that a bet on one person is the most dangerous bet of all.
Quite frankly, it’s the kind of company you would expect me to raise the red flag on. Yet I’m giving Intrexon a green flag (albeit, a highly speculative one) for the Watch List. And, no, I haven’t gone nuts. I explain below.
I typically stay far away from anything in early-stage biotechnology (because I have no edge) and in particular companies like Intrexon. They’re simply too speculative and, for the most part, they’re what I like to call leap-of-faith investments, because it’s impossible for most of us to understand the nuances of -- let alone the science behind -- what it does to make a fully informed judgement.
This risk factor alone, from its 10-K, is enough for many to steer clear of a company with little in the way of revenues and a market value of $1.8 billion:
“To date, no commercial products have been enabled by our technologies and even if our technologies prove to be effective, they still may not lead to commercially viable products.”
How, then, can I give it a green flag -- speculative, or otherwise? It started with a phone call I received awhile back from Joe Barton of Dallas-based White Rock Capital, a small investment fund. I’ve known Barton for at least 25 years. Along with his brother, Tom, he was best known back in the day as a serious (and seriously feared) short-seller. He later morphed into more of a long investor, and we’ve kept in touch over the years.
Barton suggested I look at Intrexon, and made it clear he wanted to go on the record if I wrote anything. He had first mentioned the company four years ago, when it was still private -- and he and his brother had first taken a stake. Last time he wanted to be quoted by me was in 1999, when he called to chat up Hain Food (HAIN:Nasdaq).
When someone calls with a stock idea it’s clear they’re talking their book; when they emphasize that they want to be quoted, it shows a high level of conviction. And, in his case, Barton felt strongly enough that he wanted to be on the record in the investment community, as an early syn bio backer and expert.
His level of on-the-record conviction was so high with Intrexon that, given my baseline, it was hard to ignore. On the one hand it made me even more skeptical; on the other, given that Barton bought into Intrexon at a much lower price when the company was private, it intrigued me enough to dig deeper.
Second Coming of Biotech
Intrexon claims to be a leader in synthetic biology, which is regarded by those in the know as the second coming of biotechnology. The company, in its 10-K, claims it has “no direct competitors, who provide similar technologies which fully enable the commercialization of products developed using synthetic biology across a broad spectrum of biologically based industries.” Instead, it says its competitors are “more indirect and general in nature.”
As you might expect, there’s quite a bit of debate about that in the world of syn bio, where a number of private companies claim to have something similar, perhaps most notably, Synthetic Genomics, which is run by Craig Venter, widely regarded as one of the top genomic scientists.
And that’s just in the broad commercialization and industrialization part of syn bio, a rapidly growing field that is gaining traction with separate departments at such schools as Stanford, University of California at Berkeley and MIT. It has also grabbed the attention of the venture community, with a growing number of startups. According to a 2013 surveyby the Woodrow Wilson International Center for Scholars, the number of synthetic biotech firms over the last four years has tripled to 192.
In general, syn bio uses computer science to make it possible to manipulate and build new DNA faster and cheaper with impact across a wide variety of industries, including health, food, energy, environment and consumer.
A DNA Assembly Line
One way to think of it is like using computer-aided design to design a jet, rather than drawing it by hand on a drafting table.
Don’t laugh. Earlier this year, when the Economic Times of India asked CAD software-maker Autodesk’s Chief Technology Officer Jeff Kowalski what innovations excite him the most, he said:
“I have a lot of choices, but if I had to pick one that I think is really provocative -- and it's in the really early stages -- I have to say that it is design for synthetic biology. And I think so because it touches everything. It has the potential for changing everything from agriculture to medicine. It is literally reprogramming cells to do fundamentally different things in the way they were naturally created.”
Or as Discovery magazine put it last year in a story headlined, “Life as we grow it: The promises and perils of synthetic biology”: “Think of it this way: The automobile was a useful innovation, but until the advent of the assembly line, it wasn’t actually available to most people. After this critical block was overcome, the accessibility of cars has made them ubiquitous in much of the world. They have changed how (and where) we live. Likewise, living systems can be engineered to address all kinds of critical issues we face as a species, and then be manufactured for large-scale distribution. Biological engineering aims to design solutions with intention and precision rather than groping around in hopes of finding them, as was often the case with genetic engineering.”
The story goes on to say:
“Researchers are reimagining biology to turn the inherent productivity of living things into a whole new method of manufacturing solutions to real problems. These scientists say before long, synthetic biology will join the growing list of revolutionary technologies -- like cars, smartphones and the Internet -- that initially scared or surprised us, but have since become so pervasive and necessary in our daily lives that we take them for granted.”
What makes Intrexon different?
Not the part about making DNA cheaper. According to Kirk, that’s less than 1% of what Intrexon does. The rest, he says, is more broadly engineering biology to commercially create new products or variations of existing products. That’s something that isn’t currently being done on a widespread basis.
If it gets commercial acceptance, Kirk believes, Intrexon can help disrupt the manufacturing process in industries ranging from oil to fishing to the way cancer is treated.
The added (and perhaps most impressive) difference for Intrexon is how it’s doing it.
Not Burning Cash
Rather than making the products directly, the hope (and hype) is that Intrexon will reap riches on royalties of the products made by its customers, which also sign on as “exclusive channel collaborations.”
So far, the company says it has around 30 collaborations, mostly with smaller companies, including some Kirk and/or Intrexon have stakes in (which can often be a red flag.) Just last week it signed a deal with little-known Histogenics to use synthetic bio in the regeneration of knee cartilage. As part of the deal, Intrexon has the right to buy $15 million in Histogenics stock.
But the goal going forward, Kirk says, is to strike these deals almost exclusively with large, well-known companies, such as those it has with Johnson & Johnson (JNJ:NYSE) (for consumer products) and Sanofi (SNY:NYSE) (for pharmaceuticals.)
The beauty of these deals, Intrexon says, is that the collaborators pay anywhere from half to all of the research and development costs. As a result, it’s barely burning cash.
Betting on Management
Therein lies the culture of Kirk, a billionaire lawyer who is often thought to know more about science than the scientists he hires. He is perhaps best known, to those in pharma, for running New River Pharmaceuticals and Clinical Data, both of which were bought out at big prices. He took over control of Intrexon in 2009, when he decided he wanted “to spend the rest of my life at this company.” (This Forbes piece has a good history.)
And Kirk’s the reason Barton owns the stock. “The leap here is not whether Intrexon will be a huge success,” Barton says. “The leap is how a guy with this track record, who has invested hundreds of millions and a number of years in this hugely promising field, will not build this into a large company and a leader in the field. And the progress to date is under appreciated.”
Barton’s not the only fan. Says Dr. Sam Broder, a former head of the National Cancer Institute and a biotech pioneer, who is credited with creating some of the first effective drugs for AIDs:
“R.J. has this capacity to see beyond what people are seeing at a given moment, and he can synthesize things and come up with an approach or pathway most people couldn't do.” Broder, who worked at Intrexon a short time, told me he has been associated with Kirk “in one way or another” for several years. “He’s one of those rare polymath people -- a Renaissance person. I can’t think of anyone else quite comparable.”
Not Kowtowing to Wall Street
Kirk, to his credit, clearly doesn’t kowtow to Wall Street or hedge funds, doesn’t give many interviews -- and goes out of his way not to actively promote Intrexon’s stock.
Sounding very much unlike the CEO of a public company, he told me Monday, “I strive everyday to be very boring. I want Intrexon to be the largest company nobody ever heard of.”
And it’s clear, with a 63.2% stake, he wants to own most of it -- so much so that he bought 1.8 million shares worth $30 million on last year’s IPO, at $16, or a little lower than the stock is right now -- adding 1.8 million shares to the 60 million shares he already owned. That amounted to 20% of the deal’s size -- and that’s already after he poured $400 million into Intrexon when it was private.
Kirk has a history of never selling a share of any company he controls until the entire company is sold. Still, why did he buy so much on the deal? “Because I believed -- as I still believe -- that it was a great investment,” he says.
‘We Didn’t Have to IPO’
The kicker: “We didn’t have to IPO because we didn’t need the money.”
So why did he go public? “I needed to recruit people,” he says, “and they wanted options.”
He says he also realized the big public companies he yearned to do deals with preferred “a more recognizable corporate face” rather than a “small company they had never heard of.” And he figured stock could be used to “help us play an aggregating role in our field,” especially with smaller private companies that prefer his stock to their own.
As a public company, Kirk has no warrants and very little in the way of stock options; the few he does have dates from when the company was private. And he doesn’t take a salary. In addition, neither Kirk nor his top officers have employment contracts. And directors, who include ex-Monsanto CEO Robert Shapiro and former Pfizer CEO Jeffrey Kindler, have opted to take payment in shares rather than cash.
Impressive List of Investors
Just as intriguing, especially for a company this out of the way, is the list of investors. Topping the list is Fidelity, which apparently has invested alongside Kirk in the past; Third Point, and LMM LLC, which is part owned by veteran fund manager Bill Miller and Legg Mason. According to filings, David Einhorn’s Greenlight Capital, an early investor in the public company, has sold most of his shares.
Among big holders, Third Point has been the most vocal. In its quarterly shareholder letter in January, it said:
“While Intrexon’s business model may seem foreign to the healthcare industry, it reminds us of an undisputed technology leader: Qualcomm (QCOM:Nasdaq). Qualcomm out-licenses its CDMA technology and in return receives significant economics from its partners upon commercialization; the explosive growth of the global wireless communication market and its dominant position has driven Qualcomm to a $125 billion market cap.
“While we aren’t saying that Intrexon will become a $125 billion company overnight, we will note the following two points: (1) the manipulation of DNA and gene sequences to produce beneficial outcomes is a well-established paradigm; (2) the global health, food, and energy markets dwarf the wireless communication market in size.”
The Bartons, in their shareholder letter, were a little more direct. Speaking of synthetic biology, they wrote:
“Syn Bio represents the largest market opportunity we have ever seen, eclipsing the mobile computing and semiconductor industries.
Getting from Here to There
The trick, of course, is getting from here to there.
The lure, for many investors, is the announcement of collaborations with bigger companies -- those like J&J and Sanofi were impressive. Even Barton concedes the announcement of more deals with big companies is taking longer than he had expected.
The reason for his disappointment is that while Kirk is not overly promotional, one thing he has made clear in public statements is that deals are in the works.
In the company’s March earnings report, he said:
“Our deal queue has never been more fulsome and today almost all of our collaborative talks are with leading companies around the globe. Although focusing on larger transactions with larger companies naturally came at a cost of pushing new ECC's into later time periods, we believe that the wisdom of this shift in our partnering programs will soon become self-evident.”
But then, in May, he said:
“Although we believe that our current deal pipeline is by far the best that we have had, our challenge throughout this year will be to equal and surpass our 1Q performance. While we are making steady progress in narrowing our gaps, we believe that we still are not yet the sort of managed enterprise to which we aspire."
And on the company’s first-ever earnings call, in August, Kirk said:
“It has always been our intention to see this Company achieve great scale, at least on a horizontal dimension. And to do that, that means we need the capability to expand from dozens of ECC relationships to hundreds, and hopefully at some point in the future even thousands.”
So, where are the big ones everybody’s expecting? Kirk is philosophical. In an email to me, he said;
“There always is a tension between satisfying the more short- sighted investors on the one hand and building intrinsic value for the long term on the other -- the two are often dissonant. Indeed, I had heard the same criticism with regard to some other companies with which I have been associated and yet the ultimate result was deemed satisfactory by all. If there is any advantage to having a majority shareholder, however, perhaps it is that we can resist the pressures (or temptations) to sacrifice the latter in the interests of the former. We do not need to do a bad deal or a deal with the wrong partner. On the other hand, I am very pleased by our current deal queue and expect that we shall announce some significant matters in the near future.”
Beyond Intrexon itself, Barton says there are “Intrexon family of companies,” which he also refers to as the “Intrexon cubs,” including Ziopharm Oncology (ZIOP:Nasdaq), Synthetic Biologics (SYN:NYSE) and Fibrocell Science (FCSC:Nasdaq). He owns stakes in some.
The catch: Many of these companies haven’t even entered into early phase clinical trials, which means commercialization of products using Intrexon’s technology could be years off. But not all uses of synthetic bio require clinical trials, such as using it to produce fuels and lubricants.
Not Without Controversy
There’s controversy, of course, surrounding syn bio. Stripped down, syn bio is a tool in the advancement of the world of genetically modified, which is a battleground in food and agriculture.
ETC Group, which claims to be a watchdog of the impact of new technologies, warns syn bio “could impact the $22 billion global flavour and fragrance market....” (That also shows its potential.)
And as the New York Times reported earlier this year, it has even raised concern as it is being used to create oil for use in a liquid laundry detergent. From the story:
“Synthetic biology, originally aimed at producing biofuels, has been around for about 20 years, but applications have only recently begun to emerge across several industries including cosmetics, flavorings and scents.
“Unilever recently announced that it was using algae oil made by a company called Solazyme in Lux, a popular soap. The two companies signed an agreement in 2009 to explore use of Solazyme’s products in the consumer giant’s goods.
“But in an illustration of how reluctant companies may be to disclose the use of synthetic biology, it is unclear whether the oil in Lux was generated through the same synthetic process. Unilever declined to comment.”
The bulls, such as the Bartons, are betting that the potential is so enormous that concerns like these will be barely a footnote in the history of where all of this is going.
From the letter Barton and his brother wrote to their investors:
“We have spent the last four years concentrating on the space and the set of names which remain misunderstood and unrecognized by most of Wall Street. The value will become apparent as Intrexon signs more joint ventures and the market recognizes the company’s unique capabilities and lead.”
Intrexon is one of those companies that is impossible to cross check with any certainty, no matter the rigor -- even if you really do understand the science and its implications. This is a bet not only on Kirk, who has intentionally kept much of the company’s science under wraps, but on a belief that Intrexon is on the leading edge of a technology that will be a game changer.
I remember when Qualcomm, in its early days, was referred to by some shorts as Qual-con, because they believed the company was promoting a technology -- CDMA -- that would never gain widespread acceptance. (Talk about getting that one wrong!)
Will the shorts be wrong here, too? No idea, but what I do know is that while you can never fully embrace things you don't fully understand, some technologies, especially when they’re still not mainstream, really do require a leap-of-faith.
I’ve spent much of my career tilting against the fads, frauds and outright promotes. Synthetic bio is not a fad or a fraud, and Intrexon, despite what some might call a lofty valuation, doesn’t go out of its way to promote itself to investors.
I rarely give green flags, let alone speculative ones. But after an hour talking with Kirk, who can't repress his enthusiasm, it’s easy to understand why the bet is on him.
He’s as over-the-top excited as any salesman I’ve met, but it's clearly genuine and there are these important differences from the typical promoter of a public company: Most if not all aren’t already the biggest owners of their own company's stock, most didn't go on to buy more than a token amount on the IPO and most seek out people like me -- not the other way around, as was the case with Kirk.
This really is like the guy who liked Remington razors so much he bought the whole company. Of course there’s risk, the biggest being every deal flopping, or something somehow derailing
Suntrust - Celgene upcoming catalysts
Product Timing Indication Event
Hematology & Oncology
Revlimid Feb 22, 2015 Newly-diagnosed multiple myeloma PDUFA date for label expansion
Revlimid Q1 2015 Newly-diagnosed multiple myeloma EMA decision on label expansion
Abraxane H1 2015 Non-small cell lung cancer EMA approval decision
Revlimid H1 2015 Myeloma (maintenance after transplant) Phase III data from IFM2005-02 trial (OS follow-up)
Revlimid H1 2015 Myeloma (maintenance after transplant) Phase III data from CALBG 100104 trial (OS follow-up)
Pomalyst H1 2015 Relapsed multiple myeloma Japan approval decision
Revlimid ASCO (May 29-June 2) Newly-diagnosed multiple myeloma MM-020 Phase III survival follow up
Revlimid ASCO (May 29-June 2) Follicular lymphoma Meta-analysis correlation between sustained CR and PFS
Revlimid H2 2015 Chronic lymphocytic leukemia Complete enrolment of the Phase III CONTINUUM trial
Revlimid H2 2015 Newly-diagnosed multiple myeloma Japan approval decision
Vidaza H2 2015 Elderly acute myeloblastic leukemia CHMP decision
CC-122 H2 2016 Diffuse Large B Cell Lymphoma Advance Phase I/II trials
AG-221 H2 2015 IDH2-mutated acute myeloblastic leukemia Launch pivotal program
Sotatercept/luspatercept H2 2015 Beta-thalassemia Start a Phase III trial
Revlimid 2015 All indications, intellectual property Possible settlement with Natco
MOR-202 2015 Phase I data in relapsed/refractory MM Data presentation (potentially at ASCO 2015)
Revlimid + CC-292 2015 Phase I/II data in CLL Data presentation (potentially at ASCO 2015)
Revlimid Late 2016/early 2017 Follicular lymphoma Phase III study readouts
Revlimid Late 2016/early 2017 Diffuse Large B Cell Lymphoma Phase III study readouts
GED-0301 Early 2015 Crohn's disease Publication of Phase II trial data
GED-0301 Early 2015 Crohn's disease Begin an endoscopy trial
GED-0301 DDW (May 16-19) Crohn's disease Ad-hoc analysis of GED-0301 Phase II data
GED-0301 Mid-2015 Crohn's disease Launch two Phase III trials
Sotatercept 2015 End-stage renal disorder anemia Complete enrollment of a Phase IIb study
CC-220 2015 Systemic Lupus Erythemathosus Complete enrollment of a Phase IIa study
GED-0301 Early 2017+ Crohn's disease Phase III trial topline data begins to read out
Zero chance that Bass/IPR ever impacts sales of Revlimid -posted by attorney moranpicks on IV board
The Bass IPR story is not something that anyone who knows what they are talking about actually considers a threat to the Revlimid patents.
I doubt that Bass will even file an IPR against Revlimid, and if he does, there is absolutely no chance it leads to a generic Revlimid on the market in the US.
Celgene has 22 "composition of matter" and use patents for Revlimid. To enable anyone to market a generic Revlimid, a challenger would have to file an IRP against ALL 22 patents - one by one - and prevail in ALL 22 cases - and then survive ALL 22 appeals that would go directly to the Federal Circuit Court of Appeals.
The ACOR case - in which Bass merely filed an IPR, but has not actually prevailed in any sense - is far different than Revlimid. There, the company had 5 "method of use" patents for a drug that has been on the market for a considerable amount of time.
I am quite familiar with challenging patents through the US PTO. From 2000 to 2007, I played a prominent role in litigating many of the Internet patents that led to the creation of IPR in 2012. I managed to invalidate one of the most prominent patents issued to one of our competitors, and helped collect a substantial sum for a patent held by my company. I completely supported the concept of IPR and was elated to see it enacted into law. However, it was created to address the abuse resulting from "business method" patents that were issued by the bushel in the prior decade by a PTO that had very little understanding of what it was doing.
Legitimate composition of matter patents earned by pharmaceutical companies for their many years of research were not the intended target, and well researched, well prosecuted and well defended patents such as the 22 held by Celgene for Revlimid will easily survive any IPR proceeding that is brought.
Further, more than a decade ago, the biggest supp
closing of a separate IP deal CELG did years ago.
Complexity of the polymorph science would require significantly more investment into obtaining expert testimony and legal work than other more commonly challenged biopharma patents (e.g. dosing patents) – so likelihood of overturning may be even lower. ACT has invested significant capital and expertise into ongoing normal court process – and fact discovery (and testimony) finishing up in next couple months is likely to give CELG further confidence. Recall no other generic companies with billions to gain chose to fight polymorph...
A settlement with ACT can still occur (and our confidence around this is still good) and theoretically be written around exceptions related to IPR. Our understanding is first-to-file concept means no generic can launch until after ACT launched anyways which would probably be after 2023-24+, in our view.
Separately, contact us around thoughts on GED-0301 publication and newsflow timelines.
RBC "Spoke to mgmt...our thoughts about Revlimid IPR noise – CELG mgt VERY confident on IP/IPR - We're buyers on recent weakness around some recent investor IPR patent questions and concerns....
Celgene Corp. (NASDAQ:CELG; USD 115.72)
Spoke to mgmt...our thoughts about Revlimid IPR noise – Outperform
FIRST GLANCE | COMMENT
February 13, 2015
RBC Capital Markets, LLC
Michael Yee (Analyst)
John Chung (Associate)
We're buyers on recent weakness around some recent investor IPR patent questions and concerns.
In parallel with our separate report issued today around understanding some of the recent IPR (inter partes review) patent challenge questions – we also discussed this hypothetical risk with Celgene management, and other industry channel checks. To be clear – there is no IPR patent challenge filing on Revlimid but "IPR" risk has been heavily discussed amongst buysiders recently causing some pullback in the stock and we have fielded tons of questions. In our investor marketing over the last 2 days, IPR risk questions came up in essentially every meeting we held but we found buysiders generally agreed that CELG risk seems less than some other biopharmas and the stock weakness is just consistent with typical refreshed worries about Revlimid polymorph risk after a very strong recent run in the stock.
Our conclusion is mgmt is very confident on IP and IPR has been around for years, nobody has filed on Revlimid and biopharma IPR filings have been (8% of IPR). Recent risk has been in context of a third-party (ie not a generic drug company) filing on ACOR. We believe likelihood of any IPR review and actually going against all the key polymorph patent claims seems unlikely given:
Totality of history with polymorph patent including a 2nd assessment of the claims years ago supporting novel invention and non-obviousness. We understand a 2nd separate reviewer also allowed the polymorph claims as part of diligence and closin