Celgene (CELG) Down On Discouraging Data On Revlimid

Shares of Celgene Corporation (NASDAQ:CELG) were down after the company reported disappointing data from the phase III study, RELEVANCE, on Revlimid in combination with Roche Holdings (OTC:RHHBY) ’s Rituxan for treatment-naïve follicular lymphoma.

The study evaluated Revlimid plus Rituxan (R2) followed by R2 maintenance compared with the standard of care featuring Rituxan plus chemotherapy (R-CHOP, R-bendamustine or R-VN CVP) followed by Rituxan maintenance on patients with previously untreated for follicular lymphoma.

However, the R2 treatment arm could not achieve superiority in the co-primary endpoints of complete response or unconfirmed complete response CR/CRu) at 120 weeks and in terms of progression-free survival (PFS) observed during the pre-planned analysis. None of the arms proved superior for either of the co-primary endpoints. Meanwhile, an additional analysis of the trial is underway.

Revlimid, an oral immunomodulatory drug, is currently approved for several indications including MM, myelodysplastic syndromes and mantle cell lymphoma.

The failure of the study is disappointing as Revlimid is Celgene’s growth driver and the drug’s label expansion would have boosted its sales potential for the company expected lymphoma to majorly increase Revlimid’s growth prospects by 2020 and beyond. AUGMENT — a combination with Rituxan in relapsed/refractory follicular and marginal zone lymphoma — is also in progress. While Revlimid sales continue to be impressive, we are concerned about the company’s sole dependence on the product for growth.

Celgene’s stock has lost 21.3% of its value in the last six months against the industry’s loss of 7.4%. The stock was also hit earlier after a phase III trial, REVOLVE, (CD-002) on the candidate GED-0301 in Crohn’s disease and the extension trial, SUSTAIN (CD-004), was discontinued.

The deep yet persistently slow growth of the psoriatic arthritis and psoriasis markets, especially during the entire third quarter, has led to a weak performance of Otezla. Consequently, the company also reduced its annual guidance. The challenging market conditions were driven by an increasingly restrictive PBM formulary control.

Meanwhile, in August 2017, the company obtained an FDA approval for Idhifa (enasidenib) for treatment of relapsed and/or refractory acute myeloid leukemia with isocitrate dehydrogenase 2 (IDH2) mutation. The drug was developed in partnership with Agios Pharmaceuticals, Inc (NASDAQ:AGIO) .

Going forward, we expect approval of new drugs to boost the top line. Celgene is also encouragingly working on the label expansion of drugs like Pomalyst/Imnovid and Abraxane among others. For instance, Pomalyst/Imnovid is being evaluated in multiple combination studies for relapsed/refractory MM. The drug’s label was recently updated in the United States as well as the EU to include data from a pooled pharmacokinetics analysis of patients with relapsed and/or refractory MM and an impaired renal function.

Zacks Rank & Key Pick

Celgene is a Zacks Rank #3 (Hold) stock. A better-ranked stock in the same space is Sucampo Pharmaceuticals (NASDAQ:SCMP) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Sucampo’s earnings per share estimates have been moved up from 31 cents to $1.12 for 2017 and from $1.15 to $1.19 for 2018 over the last 30 days. The company delivered a positive earnings surprise in three of the trailing four quarters with an average beat of 15.63%.

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