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Celgene's Management Presents at Stifel Nicolaus Weisel Healthcare Conference (Transcript)

Celgene Corporation (CELG) Stifel Nicolaus Weisel Healthcare Conference Call September 11, 2013 4:25 PM ET

Executives

Perry Karsen - Chief Executive Officer, Celgene Cellular Therapeutics and Chief Operations Officer

Analysts

Joel Sendek - Stifel Nicolaus

Joel Sendek - Stifel Nicolaus

The first day of the Stifel Healthcare Conference, everyone can join us. We’ve naturally saved the best for last, which is Celgene. You asked for that, right?

Perry Karsen

Yes.

Joel Sendek - Stifel Nicolaus

So a nice setup there. So Celgene is a buy-rated stock at Stifel, and here representing the company is Perry Karsen, who is the COO of the company and also the Head of the Cellular Therapeutics Group within Celgene. So the format for today is a fireside chat for Celgene. We are going to have Perry to go over just a quick brief update of the company, and then I will go into the Q&A. Feel free to raise your hand, and I have obviously a lot of questions myself, but if you want to add on to any of the line of questions that I am asking, I am happy to be right in. So, Perry why don’t you go on with the brief overview.

Perry Karsen

Okay. Joel, thank you very much, and thank you to everybody here for sticking out today and joining us at the end of the day. It’s been an amazing year of 2013 for Celgene, for our shareholders, and most importantly for our patients. We started the year out by announcing that apremilast had positive Phase 3 data in psoriatic arthritis. We went on shortly thereafter to get approval for POMALYST, pomalidomide for relapsed refractory multiple myeloma, a completely unmet medical need for patients who really have no other therapeutic option. REVLIMID then went and received approval for mantle cell lymphoma in the United States, the first lymphoma indication for REVLIMID, and then from there in Europe, we received approval for REVLIMID in 5Q minus MDS. So, we are able to expand REVLIMID from a myeloma franchise into myelodysplastic syndrome in Europe as well.

And then most recently, the very positive news is getting approval for POMALYST in Europe. So, it’s now a worldwide product, and then of course just a couple of days ago, ABRAXANE in pancreatic cancer which we are all very proud of at Celgene, because this is the first advancement in pancreatic cancer in decades. If you read the FDA release on their website, they also felt very good about being partners with us to advance that product to patients, and continued throughout the year to get additional positive data, and apremilast in psoriatic arthritis and psoriasis, which leaves us to our PDUFA date of March 21 next year. So, a great year this year, and we are really looking forward to the future, 2014 is going to be an even greater year as we execute on all of these significant milestones this year and the future beyond that. So with that, I am open to questions and any dialogue with all of you.

Joel Sendek - Stifel Nicolaus

So one of the things that obviously people are looking toward is what we might see at ASH obviously with regard to REVLIMID in myeloma. Can you give us a little bit of an update on what the expectations are there? And also, any kind of update on where you are with the regulatory agencies in the EU with regard to that filing?

Perry Karsen

So, we are hopeful that MM-20 will be presented at ASH show. We won’t know like all of you until late October. We will find out and then the abstract will be released in early November. So, we are hopeful that MM-20 will be at ASH. The rest of the abstracts that relate to our product, you know many of them are submitted by investigators who are doing work on their own, and we won’t know until we see that released, but hopefully MM-20 will be the showcase for Celgene at ASH this year, and we will know here in a couple of months.

Regarding the regulatory filing for MM-20, as we have said, we are looking at the totality of the clinical data that we have in frontline and maintenance therapy with MMO-15, MM-20 now, IFM, CALGB. We are talking to regulators both in the U.S. and in Europe to got a good sense for how they would like to see the data and what they think is an appropriate presentation for that data for a filing, and our expectation is to file by the end of the year, so we will keep you updated as we go forward.

Joel Sendek - Stifel Nicolaus

And then, obviously it is difficult to answer this with regard to the ASH abstract, but presumably when we see the MM-20 abstract, is there going to be data in there that’s important and that there will be obviously more detail than what we have seen so far, is that a correct assumption that I am making there?

Perry Karsen

Yes, what we have presented so far is the topline data, the primary endpoint of PFS, and we did release that it was statistically significant. We will see what other additional data will be presented at ASH. Again, it will depend on what’s accepted – what’s submitted and what’s accepted in the abstract, and it will be submitted by our principal investigators. So, we are anticipating as well as all of you are.

Joel Sendek - Stifel Nicolaus

Okay. Now recently just sticking with REVLIMID and myeloma and other opportunities, there is recently a publication in the New England Journal which came out in August with regard to smoldering multiple myeloma, can you talk a little bit about the opportunity there and what investors might be missing in that respect?

Perry Karsen

So, this is a population that is difficult to diagnose, and what the publication did talk about was diagnosing it and ultimately trying to find a way to diagnose it out in the community, because smoldering myeloma is really a pre-multiple myeloma condition. The benefit that was cited in the paper was both in terms of PFS and overall survival of treating those patients early with REVLIMID. So, in terms of opportunity, it’s not something that we are working on actively right now in terms of how to move that forward in development or regulatory approval, but it is another great sign of how the use of REVLIMID early and continuous is a great benefit to patients, and to treat them earlier is much preferable to later. So, we will see as the work goes on by us and investigators in finding ways to identify those patients and then the best paradigm to treat them how REVLIMID can continue to benefit those patients, so we were very gratified to see the publication.

Joel Sendek - Stifel Nicolaus

I also want you talk about CLL. I mean, you’ve had so many successes with REVLIMID and across the pipeline and everything else. There was one study, the ORIGIN study in frontline elderly CLL that was discontinued. And I am wondering does that have any negative read through either within CLL or to other indications for REVLIMID?

Perry Karsen

No, it doesn’t have any negative read throughs, so the Data Safety Monitoring Board that worked and looked at that study and those data also looked at the CONTINUUM study that’s ongoing in CLL and maintenance therapy after patients who received Rituxan and bendamustine. The patient population was a patient population that was elderly, had had numerous lines of therapy, and really had a very significant tumor burden. And so, given what we’ve seen in the past, it was REVLIMID having a very quick reaction to CLL in terms of tumor lysis and managing that tumor burden. Unfortunately, it’s not surprising that we saw the result. We did and the study was stopped as studies often are -- as they move forward, you see effects that tell you that this is not the optimal treatment. So, REVLIMID in frontline CLL in this particular patient setting is not something we are going pursue, the CONTINUUM study is still ongoing in CLL and we are very hopeful about that and certainly all of our studies in NHL are ongoing as well and are unaffected by this study, and that’s part of drug development.

Joel Sendek - Stifel Nicolaus

So going along the lines of NHL, you have the R-squared combination there. And I am wondering what the timing is for the relevant study, and whether – it seems like you are accelerating that. And I am wondering if that’s due to a lot of other activity by other companies and other mechanisms in NHL or is it just that time that you guys were just focusing on that more in isolation?

Perry Karsen

Yes, so our NHL studies are moving forward in follicular lymphoma as you mentioned and also in diffuse large B-cell. The follicular study hopefully will be fully enrolled by the end of this year, and diffuse large B-cell sometime next year, answer these– I sorry, the other way around, diffuse large B-cell will be fully enrolled by the end of this year, follicular next year. I think they are both Phase 3 studies. And you are right the R-squared regimen is a very exciting regimen. This is a clearly non-chemotherapeutic regimen that has better side effect profiles and better toxic agents and we are very hopeful given the preliminary data that we are seeing within R-squared regimen that it will have a major impact in NHL, significant opportunity, unmet medical need. These are studies that have large patient populations in the studies, and they take time to see the results, we are a couple of years away, but again we are moving forward with aggressively enrolling those. Mantle cell lymphoma, as I said, was approved in the U.S. this year. So that was the first lymphoma for REVLIMID, and we are very hopeful about what we will see in NHL going forward.

Joel Sendek - Stifel Nicolaus

So it’s – till next year maybe later, , but we could see some earlier data at ASH, is that possible?

Perry Karsen

In NHL?

Joel Sendek - Stifel Nicolaus

Yes.

Perry Karsen

Again, we are not sure we will see in November what might be presented there if there is any updates at all.

Joel Sendek - Stifel Nicolaus

Okay, perfect. So let’s turn now to the POMALYST, now my question here has to do with the fact that the launch has been incredibly good, and obviously we all know that’s a big deal, Amgen for Onyx, $10 billion, but if you look at sales in the second quarter of Kyprolis , they are 45 and POMALYST is 66. So obviously POMALYST is having quite an impact, and it beats analyst expectations including ours by tens of millions of dollar. So what’s behind that? What is the source of the enthusiasm on the part of the physicians with regard to POMALYST and will that continue?

Perry Karsen

Yes, POMALYST is a great drug, and we have known that it was going to be a great drug for years. It was a more potent IMiD than THALOMID or REVLIMID. And so we had great prospects for what it was going to be able to do for patients. I think we have seen the uptake, because physicians are comfortable using the IMiDs. They know how to manage the IMiDs in therapy. They understand the mechanism of action of POMALYST now as we have elucidated it with cereblon. They understand why POMALYST works after failures and progression from REVLIMID and THALOMID. And there is a huge unmet medical need here. These patients previously had no other therapeutic alternative. And so, when POMALYST was made available, we have seen the uptake that we have. There is other therapies in that setting for those relapsed refractory patients with sales in IMiD and sales of bortezomib, but none of us cured the disease yet, so we are sure we will see things in terms of sequencing therapies combination, but we are very hopeful and confident that POMALYST will continue to do well as there is an unmet medical need and we are hopefully satisfying that and allowing these patients to live a lot longer than they would have without POMALYST being available.

Joel Sendek - Stifel Nicolaus

And the other thing that I often get asked about is the whole IP strategy and whether you want it to go up into earlier lines of therapy, can you share with us what the internal strategy is in that respect?

Perry Karsen

Yes. So, POMALYST is perfect in the setting that it’s been developed in. It is again more potent IMiD, and it works extremely well after failures of REVLIMID and THALOMID. So to have it in that relapsed refractory patient population, where patients have failed an IMiD and bortezomib is ideal, that’s where it works well, that’s where there is a huge unmet medical need, and that’s where it was developed and approved and that’s where the label is. So, that’s where we will continue to focus on and promote it in that setting and hopefully continue to make it available to patients on a worldwide basis in the U.S., it’s in Europe, and we’ll look at rolling it out in other markets around the world as well.

Joel Sendek - Stifel Nicolaus

Okay. Turning to yet another accomplishment that you guys had, ABRAXANE approved for pancreatic cancer, obviously it’s early days, but what are your expectations with regard to the uptake there and will reimbursement take time? Should we expect a step function with regard to sale, anything you can share with us on the pancreatic opportunities for ABRAXANE?

Perry Karsen

So, we are very hopeful that ABRAXANE and pancreatic cancer in combination with gemcitabine will become the standard of care worldwide, but initially in the U.S. now that we are approved here, and the survival benefit that we were able to show with the combination of ABRAXANE plus gemcitabine versus gemcitabine was significant. There has been nothing like this in pancreatic cancer in years and years, a long way to go yet, and we are going to continue to work in pancreatic cancer with additional studies, additional combinations to see if we could advance the survival benefit for patients with ABRAXANE, but we are very hopeful that we will see certainly a nice uptake of ABRAXANE in pancreatic cancer now that we are launched and we are able to promote it in the U.S. Regarding reimbursement, we had companion listing even before the drug was approved, and pancreatic cancer in the U.S. -- in Europe once we get approval, and we are hopeful that will have approval sometime early next year, then we will have to go country-by-country for reimbursement, but given the magnitude of the benefit of ABRAXANE in combination with gemcitabine in pancreatic cancer, we are confident that it will be made available to patients and that patients’ market access will certainly be forthcoming.

Joel Sendek - Stifel Nicolaus

Are there any hurdles to the EU approval, number one; and number two, does the relatively quick U.S. approval have any positive read through to the regulatory review in Europe?

Perry Karsen

Each regulatory body makes a decision on their own based on the data that they have seen. In fact the data that they review, regulatory agencies will review different aspects of the data, but again given the overall survival benefit that we showed, statistical significance in overall survival and the benefit overall to patients of this therapy, we are confident that it will ultimately be approved in Europe. We were able to submit it in Europe only about a month after we submitted in the U.S. So, we will see hopefully early next year – first half next year we will have approval for ABRAXANE in pancreatic cancer.

Joel Sendek - Stifel Nicolaus

And what’s next for ABRAXANE melanoma presumably?

Perry Karsen

So the melanoma data, we saw very positive PFS data in the melanoma trial earlier this year. And we are just awaiting the survival data from the particular trial, some of the newer agents have been approved in melanoma were approved on survival. So it would be helpful for us to have survival data as well. We should see that survival data by the end of this year and then we will make a determination based on those data and in consultation with regulatory agencies whether it’s filable or not. If it is, certainly we will file and then we have another approval, but right now, ABRAXANE in the U.S. at least is approved in breast cancer, non-small cell lung cancer and now pancreatic cancer and it’s really proving to be a very broad based solid tumor therapeutic.

Joel Sendek - Stifel Nicolaus

I wanted to just go back to pancreatic for a second and also maybe a higher level question, which is what kind of strategy you have to do for their partnerships, look at acquisitions and these sorts of things, because one of the things you and I talked about before was the potential to get to an even higher level of efficacy for pancreatic cancer maybe by combining with other drug. So you can talk about that specifically in the broader thought of partnering in acquisition?

Perry Karsen

Yes. So with ABRAXANE in pancreatic cancer, we are looking at doing an adjuvant study and working on that right now. In breast cancer area with ABRAXANE, we are looking at doing a triple-negative breast cancer study. So, we are going to continue to develop ABRAXANE in these various settings in some of the approved indications, but broadening it within those approved indications. As we have done with REVLIMID in multiple myeloma, we’d like to setup ABRAXANE as a standard of care in pancreatic cancer. So any new agents would be added to ABRAXANE and we will go out externally and look for those new agents and where it is appropriate for us to partner with companies like we recently did with MorphoSys for their anti-CD38 antibody in multiple myeloma. We will try to develop partnerships and develop the drug ABRAXANE and these novel compounds in concert, but hopefully overall, ABRAXANE becomes a standard of care in that backbone and any new agents are added to it, which is similar to what we have seen with REVLIMID over the years, where dexamethasone are not at standard of care and everything new gets added there.

In terms of partnerships and business development, we are constantly active out externally looking at things across the entire spectrum, where are their areas in research that we want to participate and where a collaboration with a set of experts would really be beneficial to both parties, where it would be a win-win relationship. And we have done with a number of companies right here in Boston Cambridge without just in cancer metabolism, in epizyme and epigenetics, and form an E3 ligases Acceleron. So we will continue to look for those partnerships where we can partner with great science of tremendous management team to bring new molecules forward whether they are in combination with our therapies or as monotherapy. And we also are looking at later stage opportunities as well as we did with Avila, for instance, where we acquired Avila, they had a compound that within development, a BTK inhibitor and great chemistry platform with our relationship now with MorphoSys, which is an antibody that’s in development, and now we are going to advance it together in concert with them.

If there are marketing opportunities, market and product opportunities, we certainly that fits our franchise as we certainly want to look at those as well as we do with Pharmion and Abraxis. In Gloucester, those were marketed product that really added to our franchises. And additionally, now that we know we have an immunology and information franchise with apremilast, we will be looking externally there as well as compounds that fit within the call patterns, the rheumatologists, the dermatologists that we will be calling on with apremilast, and bring in products that fit there that are in development. And if there are marketed products that makes sense, that don’t convert us from our apremilast launch, we consider those as well. So, our BD group is constantly out there for bringing the landscape, talking to companies, building relationships, and looking for opportunities for Celgene, because we know we can’t do it all internally nor do we want to, we want to create those partnerships with experts, where both companies ultimately win. And at the end of the day it’s the patient who benefits, because we are bringing novel therapies to those patients who are in need.

Joel Sendek - Stifel Nicolaus

You mentioned apremilast is going on with that we have day-to-day CRE getting ready for launch you have some filings bring us speed on what’s going on?

Perry Karsen

Yes. This is a very exciting transformative time for Celgene. The most recent transformative time in my view for Celgene was only decided to go along and commercialize REVLIMID outside of the United States on our own in 2005-2006 timeframe and that transformed us into a global company. The launch of apremilast will read that next transformational step, where we will become a much broader company, broader beyond our hematology/oncology franchise, which is obviously very strong, but now moving into the INI area. And it’s an exciting time, because we are bringing in a whole host of great new people and the Celgene people who are experts in the Hawaiian Eye fields who have launched some of the anti-TNF agents who have been really major drivers and leaders in establishing some of these new therapies in the areas that we are going to be participating with the POMALYST like psoriasis, psoriatic arthritis hopefully ankylosing spondylitis if that goes well and other indications as we develop it.

So we are building a new therapeutic franchise that will broaden the company that will bring a new novel product to patients that will give us the foundation to bring in other products from the outside and develop our own pipeline in these diseases. And we are bringing in people who are going not only contributes the building of our I&I franchise over the next years, but we’ll contribute to the growth and the leadership of Celgene as the company overall in years to come. So we are all very excited about what’s happening and on the execution really now is all in our control. The clinical risk is gone. We are very hopeful of getting regulatory approvals in U.S. and ultimately in Europe and now its commercial execution, which we are very excited about implementing and things are going extremely well so far.

Joel Sendek - Stifel Nicolaus

So what can you tell us about the launch, I mean, what I understand we are going to go after the dermatology community for psoriasis, the rheumatologist, the psoriatic arthritis. How are those targeted areas different? How are you going to go about that, I know you’re not going to tell us what the pricing is but high level of thoughts about how the pricing will work and then how will the – how big is the market really that’s been biologics and methotrexate?

Perry Karsen

So in terms of the commercialization, our first launch will be in psoriatic arthritis in U.S. hopefully on or right around March 21st which is our PDUFA date in the U.S. And we will target that prescribing population rheumatologists with the dedicated sales force that will call on the rheumatologists with POMALYST for psoriatic arthritis based on whatever label we are ultimately granted. We will file for psoriasis in the U.S. by the end of this year and so we would expect to hopefully have approval sometime the end of 2014. And we will determine in the intervening time how best to go to market with dermatology community whether we can use the rheumatology sales force whether we add sales people, what’s the right configuration, we are trying to figure that out, we are doing that analysis right now.

In Europe, we will file for both indications by the end of this year and we are determining now country-by-country what’s the best way to commercialize the POMALYST for those indications as we go forward. So now it’s an extremely exciting opportunity to start building that commercialization infrastructure and move POMALYST forward to the marketplace. In terms of the market opportunity this is a huge unmet medical need for patients who have progressed from methotrexate and either moved down because of the side effects, well because they are no longer – their disease is no longer responding and maybe are reluctant to start on biologics, they don’t want an injection, there are some of the toxicities and compromised issues even though those agents are extremely effective. So there is a huge unmet medical needs for that patient population that today is not being treated their disease is progressing and in oral therapy it has a very good side effect profile and extremely good efficacy, we have found in all of our market research with clinicians with patients that is a huge unmet medical need.

So in terms of pricing, we are doing all the analysis right now on pricing and it will be somewhere between methotrexate in the biologics, but again it’s hard to define the market opportunities, we are not just looking at the exiting market. We are looking at market today is really a truly unmet medical need and that we believe is going to be response to very well with POMALYST by clinicians and ultimately by patients. And we’ll see as we launch the drug and start moving it out to that patient community.

Joel Sendek - Stifel Nicolaus

So one other things this is a very different market than (IMOG) and so how should we be prepared as investors and analysts when we try to predict especially the market kind of between biologics and methotrexate right now, what’s that launch trajectory is going to look like, that’s my first question here. And the second question is what will be your hurdles to get over to capture the market you are seeking to address?

Perry Karsen

Yes. So this is a new market and again in the market research we’ve done physicians and patients recognized a blinded profile of POMALYST we think something that’s very appealing in this space. It will take medical education, one of the first hires, new hires in our I&I franchise is a Head of Global Medical Affairs to make sure that we are prepared to do the education for physicians to know what to expect, their patients know what to expect, they know how the efficacy will happen over time they know what they will see some side effects profile and will be able to manage all of that and patients gone to great success as we saw in the clinical trials with very low dropout rates and continuing efficacy over 52 weeks. So that education will happen. It is a very different market than oncology. We talk about the POMALYST launch that’s done extremely well and how quickly we have seen the uptake. The uptake for POMALYST probably will be slower than that as clinicians get educated, as patients become familiar, as patients are identified by those clinicians where as the something like POMALYST, it was pretty apparent through that patient population is. So as we get better visibility to what we believe the uptake will be, we will certainly communicate to the investment community, so that you know what to expect, but this will be a very interesting exciting launch. And that’s the reason for us bringing in experts. We have some great people at Celgene on the hematology/oncology side have been very successful, but we now want to bring in those great experts in the Hawaiian Eye area who have had the experience of launching the significant successful product in that space and that help us to be successful with the POMALYST.

Joel Sendek - Stifel Nicolaus

Just a couple of minutes left. I have more questions. Anyone in the audience want?

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