Celgene’s (NASDAQ:CELG) move to withdraw its multiple myeloma drug Revlimid new application submission from the Committee for Medicinal Products for Human Use was a setback for the drug developer. But the significance of the setback was a matter of some debate between analysts that follow the company.
Revlamid was initially approved by the U.S. Food and Drug Administration in 2005 for myelodysplastic syndrome. In 2006, Revlimid got FDA approval for use in multiple myeloma patients who have received at least one prior therapy. It is seeking additional indications for newly diagnosed multiple myelomas and maintenance therapies.
The Summit, New Jersey-based company said it would resubmit the drug with more mature data on its risk to benefit ratio. It added that it would reevaluate its application to the FDA for Revlimid’s use in newly diagnosed patients, which it expects to submit next year, according to a company statement.
Sanford Bernstein analyst Geoffrey Porges criticized the company’s management in a Forbes article for what he said was the company’s bullishness.
“Owning this stock is like Bill Murray in Groundhog Day … the same bad experiences over and over again.”
Morningstar senior stock analyst Karen Andersen took a more hedged perspective.
While this is a significant delay for one of Celgene’s biggest growth drivers, we continue to expect that Revlimid will see approval in this indication in the long run, with timing as the biggest uncertainty.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Piper Jaffray analysts scaled back their estimates with the expectation that the announcement will push back approval by up to one-and-a-half years and parked at least some of the blame on the recent leadership changes at the European regulator.
We believe the decision reflects the conservative politics at the CHMP following recent changes in leadership and less so risk/reward of Revlimid in this setting. …With a couple months required for repackaging the filing, we expect the resubmission to occur within a year. We suspect Celgene withdrew the filing due to the changing political environment of CHMP, which has increased in conservatism, as seen in the recent firing of the French CHMP head.
Revlimid has been a major revenue driver for the company, accounting for $3.2 billion of Celgene’s $4.8 billion revenue last year.
Revlimid is a more potent version of Celgene’s drug Thalomid. But Thalomid is derived from the notorious drug thalidomide, which produced physical disabilities in thousands of children whose mothers were prescribed the drug to treat morning sickness in pregnant women for four years until it was withdrawn from the market in 1961.
The National Cancer Institute at the National Institutes of Health estimates that there will be 21,700 new cases of multiple myeloma diagnosed in 2012 with 10,710 deaths from the disease. It is the second most common form of blood cancer after non-Hodgkin’s lymphoma, according to the NCI.
