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Celgene Hits 52-Week High on Positive CHMP Opinion

Zacks Equity Research

Shares of Celgene Corporation (CELG) have been riding high after the company announced that the European Medicines Agency's (EMA.TO) Committee for Medicinal Products for Human Use (CHMP) has rendered a positive opinion for its phosphodiesterase 4 (PDE4) inhibitor, Otezla.

Shares of the company hit a 52-week high of $114.50 on Nov 28, eventually closing a little lower at $113.69. The stock has amassed a year-to-date return of 34.6% on an adjusted basis.

The Positive CHMP Opinion

The CHMP has issued a positive opinion on the drug for the treatment of moderate-to-severe chronic plaque psoriasis in adults 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).

The CHMP also recommended the approval of Otezla for the treatment of active psoriatic arthritis in adult patients who have had an inadequate response or who have been intolerant to a prior disease modifying antirheumatic drug (DMAR) therapy – either as a monotherapy or in combination with DMARDs (read more: Celgene's PDE4 Inhibitor Otezla Gets Positive CHMP Opinion).

We note that Otezla is already approved by the FDA for the treatment of adult patients with active psoriatic arthritis (Mar 2014) and for the treatment of patients with moderate-to-severe plaque psoriasis who are candidates for phototherapy or systemic therapy (Sep 2014). Otezla sales were $18 million in the third quarter of 2014 as compared to $5 million in the preceding quarter.

We believe that Otezla has a high chance of gaining approval in the EU following the positive recommendation from the CHMP, which would boost Otezla’s sales potential significantly.

Meanwhile, the company’s primary growth driver Revlimid is expected to continue performing well.

Celgene carries a Zacks Rank #2 (Buy). Other well-ranked stocks in the health care sector include Amgen Inc. (AMGN), AMAG Pharmaceuticals, Inc. (AMAG) and Actavis (ACT). While Amgen carries a Zacks Rank #1 (Strong Buy), AMAG Pharma and Actavis carry the same rank as Celgene.

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