Celgene's blockbuster dreams fade as apremilast PhIII fails to excite

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In mapping out an aggressive plan for growth, Celgene ($CELG) executives have highlighted a blockbuster future for the oral psoriasis drug apremilast. But on Saturday investigators rattled the company's die-hard enthusiasts, noting that Phase III data for the anti-inflammatory treatment fell short of an earlier round of mid-stage efficacy data which had helped whip up high hopes. Nevertheless, Celgene is on its way to filing for an approval later this year, with good odds of winning a green light from the FDA.

Apremilast easily bested the placebo in the study. A third of the patients in the Phase III had a 75% reduction in psoriasis, compared to only 5.3% in the control arm. But 41% of the patients in the earlier Phase II study had reached the same mark, leaving some analysts shaking their heads over the oral drug's iffy future competing with established biologics.

Celgene's shares slid about 2% Monday morning on the news.

"Overall, the efficacy was a bit below what was seen in the Phase II trial and appear to place apremilast below the injectable biologics," ISI's Mark Schoenebaum said in a note to investors today. "Early physician feedback on efficacy matches our view, and even the presenter remarked the efficacy was 'modest' during the official presentation. However, we believe the drug is clearly approvable and could be adopted by a meaningful number of dermatologists as a 'bridge' between methotrexate (generic pill) and biologics. Recall that the majority of dermatologists do NOT use biologics--thus, even though apremilast's efficacy is below biologics, we believe its good safety profile and the ease of oral administration could drive significant use."

But Celgene's estimate of $1.1 billion to $1.75 billion in peak sales, Schoenebaum cautioned, is "aggressive," with most Street projections coming in well below that.

It's hard to overestimate the importance of apremilast to Celgene. The company sees it as one of three likely new blockbusters to inject billions of new dollars into the company. And it represents a key effort to diversify its product base. But the drug will have to compete against Amgen's ($AMGN) Enbrel and AbbVie's ($ABBV) megablockbuster Humira, biologics with a powerful impact. 

Celgene does have a shot at providing a therapy with an improved safety profile, with investigators noting a 3.6% rate of serious adverse events compared to 3.2% in the placebo group. And with no cases of TB and lymphoma, a threat presented by the biologics, some doctors could prefer it.

"Dermatologists want safety. They don't want long-term monitoring of serious side effects for their patients," Celgene spokesman Brian Gill told The Wall Street Journal.

"I see this as a prime candidate for future management of psoriasis that allows us to treat a range of patients, including more moderate cases earlier on," said Kristian Reich, an investigator for the company.

- here's the press release
- get the story from The Wall Street Journal

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