It's been a tough year for Celgene Corp. (NASDAQ:CELG) investors, but upcoming phase 3 data on luspatercept from Acceleron Pharma (NASDAQ:XLRN) could rekindle interest in Celgene's stock price. Acceleron is expected to report trial results for luspatercept in myelodysplastic syndromes (MDS) and beta thalassemia anytime now, and if the results are positive, Celgene thinks luspatercept could be a multibillion-dollar-per-year blockbuster.

What does it do?

Luspatercept is an erythroid maturation agent (EMA) that addresses chronic anemia by promoting the production of healthy red blood cells and regulating TGF-beta proteins involved in the late stages of creating red blood cells. 

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The drug's ability to restore the production of healthy red blood cells is important because it may potentially reduce or eliminate the need for blood cell transfusions in tens of thousands of people diagnosed with bone marrow disorders, including MDS and beta thalassemia.

A group of rare, cancer-like, bone marrow disorders affecting 60,000 plus older Americans, MDS is characterized by an inability to produce a sufficient number of healthy red blood cells. Patients with high-risk MDS can develop acute myeloid leukemia (AML) while patients with low- and moderate-risk MDS suffer from anemia and fatigue.

An inherited genetic disorder, beta thalassemia patients are unable to create adequate amounts of the oxygen-carrying protein, hemoglobin, which in turn lowers their red blood cell counts. There are about 1,500 new cases of beta thalassemia diagnosed in the United States every year.

MDS and beta thalassemia patients often rely heavily on red blood cell transfusions. However, these transfusions increase the risk of iron overload, which can damage organs, and they take a toll on patients' quality of life. In a 2011 survey entitled "Perceptions of disease state, treatment outcomes, and prognosis among patients with myelodysplastic syndromes: results from an internet-based survey", over one-third of transfusion dependent MDS patients have said that they "felt they were burdening their family" and almost two-thirds said they would "consider treatment that temporarily made them feel worse if it stopped or reduced the need for transfusions." 

MDS patients may also use drugs such as Amgen's Epogen and Procrit, which work like erythropoietin, a protein that stimulates bone marrow to make red blood cells. Not everyone is eligible to take these drugs, though, and the positive response to ESAs is temporary in most patients. 

Because ESA's have limitations and frequent transfusions are associated with a higher mortality rate because of iron overload, there's a need for new treatments, such as luspatercept.

A blockbuster opportunity

Luspatercept's phase 3 trials could flop, but phase 2 trial data is encouraging.

At the American Society of Clinical Oncology meeting earlier this month, updated mid-stage data from a trial evaluating luspatercept in lower-risk MDS patients, 55% saw a clinically meaningful erythroid improvement and 44% of transfusion patients became transfusion independent for eight weeks or more. Furthermore, some patients are still benefiting from luspatercept at the 40-month mark.

Data from mid-stage studies reported in 2017 suggests luspatercept works in beta thalassemia, too. In trials, 69% of patients saw a 33% reduction or better reduction in transfusion burden during any 12-week treatment period when compared to their baseline burden and 71% saw a clinically meaningful increase in hemoglobin from baseline.

The phase 3 studies enrolled many more patients than the phase 2 trials, so there's no guarantee that responses in these pivotal trials will mirror those in the mid-stage trials.

According to Clinicaltrials.gov, the primary endpoint these companies hope to achieve in the MDS phase 3 trial is a clinically significant proportion of patients becoming "transfusion free over any consecutive 56-day period within week 1 through week 24."

And in the beta thalassemia trial, the primary endpoint is the "proportion of subjects with hematological improvement from Week 13 to Week 24 compared to 12-week prior to randomization." Hematological improvement is "defined as ≥ 33% reduction from baseline in red blood cell count (RBC) transfusion burden with a reduction of at least 2 units from Week 13 to Week 24 compared to the 12-week."

We'll know soon

Celgene and Acceleron Pharma say that data from both the MDS and beta thalassemia trials will be available this summer and that means investors won't have to wait long to find out if these companies have a winner on their hands.

A success would be welcome. Celgene's suffered a number of clinical-stage setbacks in the past year including the failure of a Crohn's disease trial last fall and a Refusal to File letter from the Food and Drug Administration for its application for approval of ozanimod, a multiple sclerosis drug. Acceleron Pharma has the most to gain from a win, though, because luspatercept is its only drug that's in phase 3 trials.

The stakes are undeniably high and that makes these stocks risky. A phase 3 failure would take a big toll on share prices, so investors will want to watch these companies closely over the coming months.

 

Todd Campbell owns shares of Celgene. His clients may have positions in the companies mentioned. The Motley Fool owns shares of and recommends Celgene. The Motley Fool has a disclosure policy.