A new and highly anticipated study by Celgene Corp. (NASDAQ:CELG) 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 (NASDAQ:BIIB) 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 (NYSE:NVS), and Sanofi SA (NASDAQ:SNY) are also racking up billions in sales annually in the indication.
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.
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.