Celgene (NASDAQ:CELG) could be the subject of a sad country song.
The big biotech has lost over one-third of its market cap during the past six months. It suffered a huge clinical setback with the late-stage failure of once-promising Crohn's disease drug GED-0301. And a couple of weeks ago, Celgene was downright embarrassed by receiving a refusal-to-file letter from the FDA for its new drug application (NDA) for ozanimod in treating multiple sclerosis (MS).
No member of Celgene's management had appeared at an official public event following the ozanimod debacle until CFO Peter Kellogg spoke at the Barclays Global Healthcare Conference on Tuesday. Here are three things you'll want to know from Kellogg's statements at the conference.
1. What's next for ozanimod
The most pressing question for investors related to what Celgene's next steps are for ozanimod. Kellogg said Celgene was "disappointed" with the setback, but it gave the biotech "energy to double down and get everything right going forward." He stated that the company has requested a meeting with the FDA to discuss the refusal-to-file letter for the drug's NDA. For now, though, Celgene is still waiting for the FDA to schedule the meeting.
Kellogg said Celgene planned to review details from the FDA meeting and the company's strategy to move forward with obtaining approval for ozanimod in the MS indication during the Q1 earnings conference call. Normally, that call would be held in late April or early May. However, Kellogg said the call would be later this time around because of the closing of the Juno Therapeutics acquisition.
Celgene remains confident that ozanimod will win approval and achieve commercial success. Kellogg said the biotech thinks ozanimod can generate peak annual sales of around $2 billion in the MS indication even with stiff competition. He specifically pointed to ozanimod's safety and tolerability profile, noting that older drugs such as Avonex and Copaxone continue to be dominant in the first-line setting despite other drugs with better efficacy because of their safety profiles.
2. What to expect with the challenge to Revlimid
One cloud hanging over Celgene's head that investors would love to go away is another generic challenge to its top-selling drug, Revlimid. Kellogg said a Markman hearing, a pre-trial hearing in a U.S. district court for patent infringement cases, is coming up in the second quarter related to Dr. Reddy's Laboratories' (NYSE:RDY) attempt to launch a generic version of Revlimid.
While Kellogg didn't want to say too much about the legal dispute, he stated that Celgene was "pleased" that the same judge who was involved in the generic challenge from Natco Pharma is conducting the upcoming Markman hearing. Celgene reached an agreement with Natco Pharma in 2015 that allows a generic version of Revlimid to enter the U.S. market on a limited-volume basis in March 2022 and without volume limits beginning in 2026.
Celgene "feels very good" about its case, according to Kellogg. He thinks that a final trial date might be set by the end of this year or early next year. Of course, that assumes that a settlement isn't reached prior to that point. At the Leerink healthcare conference in February, Kellogg noted that other companies will probably need to "see the strength" of Celgene's intellectual property before further settlements are reached.
3. What kind of deals the company is looking to make
Celgene has already announced two major acquisitions in 2018 with the buyouts of Impact BioSciences and Juno. The biotech is clearly looking to make more deals. But what specifically is Celgene looking for?
Kellogg said the company would "let science dictate" what assets it seeks to acquire or license. He stated that Celgene didn't really have any short-term holes to plug but was instead looking beyond 2020. While Kellogg admitted that the biotech "would love to get [its] hands" on a promising late-stage program, he said such deals are often very competitive and expensive.
The one specific area Kellogg mentioned as a possibility for more deal-making was neurology. He said "it would be logical for us to broaden our portfolio" in the therapeutic category. However, Kellogg stressed that Celgene wasn't looking for "me too" deals as some have done in the Alzheimer's disease space.
Singing a different tune
Despite Celgene's series of miscues and setbacks, I think the company remains in good shape overall. Like Celgene's management, I remain confident that ozanimod will be a big winner -- eventually. My view is that the biotech will probably protect Revlimid from generic competition by settling with Dr. Reddy's in an agreement similar to the one reached with Natco. And I'm looking forward to more acquisitions.
Although Celgene's saga of late perhaps would be good fodder for a country song, I suspect the biotech will be singing a different tune in the not-too-distant future.