A new and highly anticipated study by Celgene Corp. (CELG +0.00%) shows that its promising multiple sclerosis drug could soon reshape the $19 billion multiple sclerosis market. On Friday, management reported that ozanimod met its primary endpoint for reducing MS relapses better than Biogen Inc.'s (BIIB 0.24%) Avonex, and importantly, it did so without any new safety risks.
A massive market opportunity
Biogen's suite of MS drugs makes it the biggest maker of multiple sclerosis drugs, by market share, but Teva Pharmaceutical, Novartis (NVS 0.34%), and Sanofi SA (SNY +0.06%) are also racking up billions in sales annually in the indication.
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Over the past few years, the biggest advance in MS treatment has been the launch of oral drugs that pose less of a burden on patients. Oral drugs have quickly won away market share from long-standing go-to therapies, including Teva Pharmaceutical's Copaxone and Biogen's Avonex.
The top selling of these oral drugs is Biogen's $4 billion-per-year Tecfidera. Novartis' Gilenya racked up sales of $3.1 billion and Sanofi's Aubagio delivered sales of about $1.4 billion in 2016.
With oral MS drugs capturing so much market share, it's not surprising that Celgene was willing to spend $7.2 billion in 2015 to acquire Receptos and its oral MS drug ozanimod following robust results in phase 2. Now, with phase 3 trial results in hand, Celgene plans to file for Food and Drug Administration approval this year, and if ozanimod gets an OK, it could become the best-in-class oral MS option.
Delivering on its promise
Celgene stepped up to buy Receptos following ozanimod's phase 2 studies, in which the latter delivered solid efficacy and impressive safety.
Like Gilenya, ozanimod is an S1P1 targeting drug, but unlike Gilenya, ozanimod's mid-stage trial results suggest ozanimod patients may not experience the cardiac risks and liver toxicity risks that have crimped Gilenya's use. Gilenya can cause a drop in heart rate following its first dose and that, plus liver toxicity, causes about 15% of Gilenya patients to stop treatment.
Because of its potential safety advantage, Celgene has slapped multibillion-dollar blockbuster-drug expectations on ozanimod, and these phase 3 results appear to back up that heady forecast, given the size of the addressable market.
Looking ahead
Celgene didn't give specifics on ozanimod's phase 3 performance, but it plans to do so at an upcoming conference. If ozanimod performed as well in the larger phase 3 trials as it did in the smaller phase 2 trials, then there's good reason to expect that the FDA will eventually green-light this drug.
If that happens, then ozanimod could become the latest in a long string of Celgene successes. Celgene's $7 billion-per-year Revlimid is the top-selling first- and second-line multiple myeloma drug. Its Pomalyst is the top-selling third-line multiple myeloma drug, with roughly $1.3 billion in sales. Its Abraxane is a go-to pancreatic cancer treatment, with about $1 billion in annual sales. Celgene's most recently launched drug, Otezla, which treats psoriasis, is racking up sales at an annualized $1.2 billion pace, too.
If approved, ozanimod's list price will likely match Gilenya's $90,000 per year, and since doctors have plenty of experience prescribing oral drugs now, I imagine the ramp-up in ozanimod revenue could be rapid. If so, then ozanimod will be one more reason why investors ought to buy Celgene for growth portfolios.
