Celgene's would-be blockbuster fails in Phase III for spinal arthritis

Celgene's ($CELG) apremilast couldn't quite beat placebo in a late-stage trial on a form of arthritis, imperiling a potential indication for a drug the company believes can break the blockbuster barrier.

In a 490-patient Phase III study, apremilast failed to chart a statistically significant improvement in symptoms of ankylosing spondylitis at 16 weeks. The disease, marked by swelling and stiffening of discs and joints in the spine, can lead to hampered movement and fused vertebrae, and the study's missed primary endpoint was a 20% reduction in severity on a scale set by spondyloarthritis experts.

The study didn't spotlight any new safety concerns for apremilast, and Celgene said its independent data monitoring committee recommended the trial keep moving as planned, noting vaguely that "meaningful efficacy was observed at week 24 in a large subset of patients with early-stage disease." Taking a positive spin on the slip, Celgene said it plans to hold out for 52-week MRI data from the study and eventually launch another Phase III trial on ankylosing spondylitis, possibly zeroing in on that aforementioned subgroup.

"Ankylosing spondylitis is a chronic, debilitating disease, and despite advances over the last 15 years, there remains significant unmet need for a safe, effective, oral therapy--especially for patients early in the progression of their disease," Celgene inflammation and immunology head Scott Smith said in a statement.

Apremilast's late-stage failure sent the Big Biotech's shares down about 3% in premarket trading on Wednesday, and the news has at least partially damaged Celgene's case for the oral treatment as a top seller. Ankylosing spondylitis affects about one in every 200 U.S. adults, according to the Spondylitis Association of America, and losing out on that patient population would mar apremilast's potential.

But Bernstein analyst Geoff Porges said a win in spinal arthritis has always been a bit of a long shot for apremilast, writing in an investor note that, despite the positive subpopulation activity, "we would not hold our breath for a meaningful revenue contribution from this indication."

The drug, marketed as Otezla, won FDA approval in March to treat psoriatic arthritis, but its major catalyst won't come until September, when the agency is expected to make a final call on its potential in psoriasis. If all goes according to plan, Celgene figures apremilast will peak at around $2 billion by 2017. Analysts have tended toward polarity with their sales estimates, and EvaluatePharma pegs the consensus at somewhere around $1.2 billion.

The drug is a small-molecule therapy that blocks the enzyme phosphodiesterase 4 to reduce swelling in joints. Beyond ankylosing spondylitis, psoriatic arthritis and psoriasis, Celgene is developing the treatment for rheumatoid arthritis, the rare Behçet's disease, atopic dermatitis and inflammatory bowel diseases.

- read the release