3 Revelations From This Blazing Biotech

Blazing. Sizzling. On fire. They all describe Celgene (NASDAQ: CELG  ) pretty well these days.

With all of the heat generated by this biotech and its stock, it pays to pay attention to what Celgene says. The company's Chief Operating Officer Perry Karsen spoke at the Stifel Nicolaus Weisel Healthcare Conference this week. Here are three of the most significant revelations from Celgene's conference appearance.

1. Plans for Pomalyst
It didn't take long for a question to arise about the launch of Celgene's multiple myeloma drug Pomalyst. The questioner noted that Pomalyst beat Kyprolis, a competing drug from Onyx Pharmaceuticals (UNKNOWN: ONXX.DL  )  in sales for the second quarter. That win came despite Kyprolis entering the market sooner than Pomalyst.

Karsen adroitly sidestepped making any specific comments about any rivalry and, instead, pointed out that Celgene expected to see combinations of therapies given in different sequences to address the medical needs of multiple myeloma. He did note, though, that physicians appear to have a comfort level with prescribing the company's other immunomodulatory, or IMiD, drugs Revlimid and Thalomid. That familiarity makes it easier for doctors to go with Pomalyst, which is also an IMiD drug.

The revelation about Pomalyst was that Celgene doesn't plan to try to position the drug for earlier-stage treatment of multiple myeloma. It's currently approved as a third-line treatment when a patient doesn't respond to Revlimid or Velcade. Karsen said that the drug is "perfect in the setting that it's been developed" (i.e., as a complementary product for Revlimid), and that's where the company will focus. This wasn't really surprising, but it does seem to put to rest for now any questions that Pomalyst could rob market share from Revlimid.

2. Anticipations for apremilast
Many were somewhat disappointed with the phase 3 results from psoriatic arthritis and psoriasis drug apremilast, because those results weren't as strong as earlier mid-stage results. However, Karsen called the anticipated launch of apremilast a "transformational step" for Celgene.

Celgene's research reflects a great opportunity for apremilast to create a new market between methotrexate and biologics like AbbVie's (NYSE: ABBV  ) Humira. Karsen commented that physicians and patients report a large unmet need. Many patients, who no longer are responsive to methotrexate, or have side effects, aren't excited about moving to biologics because of either not wanting an injection, or risking of adverse effects.

The key to apremilast's success probably lies in how much it will cost payers like insurance companies. Humira can cost over $20,000 per year. Karsen indicated that a lot of research is going into how to price apremilast, but that it will be somewhere between the relatively lower cost of methotrexate, and the high-dollar price tag of biologics such as Humira.

3. Down-low on deals
Celgene sits on over $4 billion in cash and equivalents. Its stock is trading at an all-time high. Is the company ready to make some deals to acquire other products or companies? Karsen's revelation: yes -- with caveats.

He commented that Celgene will be "valuation-sensitive," and that right now, biotech "valuations are getting a little frothy." Those aren't what you would expect from someone itching to go shopping for a smaller company to scoop up.

On the other hand, Karsen said that the company is actively looking for solid tumor drugs to add to its oncology portfolio with Abraxane. He noted that Celgene would prefer drugs already on the market, but would consider late-stage candidates.

Saving the best for last
The Stifel analyst introducing Karsen on Wednesday night said that they had "saved the best for last" with Celgene. There were plenty of presentations the following day, so the comment referred only to Wednesday.

If "best" was intended to refer to best stock performance this year, the speaker was off the mark. For example, ACADIA Pharmaceuticals (NASDAQ: ACAD  ) and Isis Pharmaceuticals (NASDAQ: ISIS  ) both presented earlier in the day, and are up more than 380% and 190%, respectively, year to date. Celgene has had a great year, but it's up "only" 90% so far this year.

Browsing the list of companies represented at the conference, though, I tend to agree with the accolades. Sure, ACADIA has soared this year, but it doesn't yet have a product on the market. Isis has Kynamro, but its peak sales projections are for around $400 million. That's nearly pocket change compared to Celgene's blockbuster Revlimid.

That's not to disparage either ACADIA or Isis, though. They're great up-and-coming biotechs. Celgene, though, is way past the up-and-coming stage. It's one of the biggest biotechs on the planet -- and still getting bigger. Big and blazing makes for a great combination.

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