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In July 2015, Celgene (CELG) made headlines with its $7.2 billion acquisition of Receptos -- mainly in order to get its hands on Receptos' lead autoimmune candidate, ozanimod. While estimates vary, Celgene management has guided to peak sales of $4 billion to $6 billion annually -- which would make this a very good deal for Celgene. However, current autoimmune juggernaut Biogen (BIIB -0.85%) may have a trick up its sleeve that could blow ozanimod out of the water.
The multiple sclerosis market
In order to understand the threat to Celgene's ozanimod, you have to understand the MS competitive landscape. The market for MS therapies costs a whopping $19 billion annually. The dominant player in this space is undoubtedly Biogen with its five MS treatments (in order of revenues: Tecfidera, Avonex, Tysabri, Plegridy, Fampyra) composing 45%, or $8.5 billion, of the overall MS market. While MS has historically been treated with injectable drugs like Avonex, in recent years a host of oral MS therapies have gained approval and are rapidly taking market share. Among these, the biggest seller is Biogen's Tecfidera -- with worldwide sales last year coming in just shy of $4 billion -- followed by Novartis' Gilenya and Sanofi's rapidly growing Aubagio.
Ozanimod is part of the exciting new category of S1P modulators, which function by activating the S1P1 receptor expressed on white blood cells. Once the S1P1 is activated it sequesters those white blood cells within the lymph nodes, which in turn decreases the concentration of white blood cells in the blood. Autoimmune diseases occur when the immune system misidentifies its host as a foreign invader and attacks, so decreasing the concentration of white blood cells in the blood should have the effect of reducing the severity of these diseases. In 2014, Receptos made headlines with the announcement that ozanimod (formerly called RPC1063) had met its primary endpoint in a phase 2 trial as treatment for relapsing multiple sclerosis (RMS). In this trial, the drug succeeded in reducing the number of MS lesions by 86% with a possibly best-in-class safety profile. If ozanimod is able to put up similar results in phase 3, it could hold an edge over competing orals -- some of which are labeled for cardiovascular risk or liver toxicity. Ozanimod is currently in two phase 3 trials for relapsing multiple sclerosis (RMS), one phase 3 trial for ulcerative colitis (UC), and one phase 2 trial in Crohn's disease.
The threat on the horizon
With Celgene being such a strong competitor in the pipeline, industry leader Biogen is definitely not going down without a fight. As already mentioned, Celgene paid $7.2 billion to acquire Receptos and ozanimod. Meanwhile, Biogen may have gotten a much better deal when it announced an agreement in September 2015 to exclusively license MT-1303, also an oral S1P, from Mitsubish Tanabe Pharma Corporation for just $60 million in up-front payments. While MT-1303 is undoubtedly not as far along in clinical trials as ozanimod, it has successfully completed a phase 2 clinical trial in MS and Biogen is initiating this molecule in a host of other autoimmune indications. Additionally, Biogen's chief medical officer, Alfred Sandrock, had this to say regarding MT-1303, "Based on compelling efficacy and safety data, we believe that MT-1303 could be a best-in-class S1P modulator." Not bad for a potential blockbuster that cost less than 1% of ozanimod.
While MT-1303 is probably two to three years behind ozanimod in MS, its potential as a threat to ozanimod is substantial given Biogen's expertise and current market share dominance in the MS space. With Biogen's history of successfully developing and commercializing products for autoimmune indications, I wouldn't be surprised to see MT-1303 give ozanimod a run for its money. And if that happens, the $60 million Biogen paid to license MT-1303 might just be the deal of a lifetime.
