Celgene's Apremilast Encourages

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Celgene Corporation (CELG) recently announced encouraging results on its candidate apremilast from a phase III study (PALACE-1: n~500), which evaluated patients suffering from psoriatic arthritis at 20 mg and 30 mg dosages. We note that psoriatic arthritis refers to a painful, chronic inflammatory disease, associated with psoriasis (a skin-related disorder). Results were presented at the annual conference of the American College of Rheumatology (:ACR).

Data from the randomized, placebo-controlled, multi-center study revealed that patients treated with apremilast achieved statistically significant and higher ACR20 responses at week 16 compared to those in the placebo arm

We note that apart from the PALACE-1 study, the PALACE program consists of two more phase III studies (PALACE 2 and PALACE 3). We remind investors that Celgene presented encouraging data from the PALACE-2 and PALACE-3 studies in September 2012.

Celgene intends to seek US approval for apremilast in the psoriatic arthritis indication based on data from the PALACE program in the first half of 2013. Celgene is also evaluating apremilast in patients suffering from moderate-to-severe psoriasis, US approval is expected to be sought in the second half of 2013.

Celgene intends to seek EU approval for apremilast in the psoriasis and psoriatic arthritis indications in the second half of 2013. Apremilast, on approval, would compete with drugs such as Amgen/Pfizer’s (AMGN /PFE) Enbrel in the market for inflammatory diseases. Moreover, Celgene is also evaluating apremilast as a treatment for Behcet's disease.

Our Recommendation

We currently have a Neutral recommendation on Celgene. The stock carries a Zacks #3 Rank (Hold rating) in the short run.

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