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How Big Is Celgene's Latest Good News?

By Keith Speights – Updated Aug 18, 2019 at 1:09PM

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FDA approval of fedratinib could lead to significantly more revenue for the biotech. But even better news could be on the way.

After a couple of years of mainly bad news, Celgene (CELG) is enjoying a streak of good news so far in 2019.

The biotech won U.S. Food and Drug Administration (FDA) approval for a combination of Revlimid and Rituxan in May as a second-line treatment for follicular lymphoma or marginal zone lymphoma. It received FDA approval in June for Otezla in treating Behcet's disease. And on Friday, Celgene announced that the FDA approved Inrebic (fedratinib) in treating myelofibrosis.

Just how big is Celgene's latest good news? Maybe a $1 billion-per-year kind of big.

Cup of coffee and saucer on top of red paper with the words Good News printed on a white piece of paper.

Image source: Getty Images.

Another option in myelofibrosis

Celgene's press release about the FDA approval for Inrebic trumpeted that it marked the "first new treatment in nearly a decade for patients with myelofibrosis." That statement was correct. The last FDA approval for a myelofibrosis treatment came in 2011, when Incyte (INCY 0.20%) picked up its first approved indication for Jakafi.

Ann Brazeau, CEO and founder of patient advocacy group MPN Advocacy and Education International, stated that "Inrebic is a much-welcomed new treatment for the myelofibrosis community." She added, "This FDA approval marks an important milestone for people living with myelofibrosis as we embark on making greater strides in the diagnosis, understanding, and treatment of this disease."

The FDA approval for Inrebic was based on Celgene's Jakarta phase 3 clinical study. In this study, 37% of patients treated with a 400 mg dose of Inrebic experienced spleen volume reduction of 35% or greater compared to 1% of patients on placebo. In addition, 40% of patients taking Inrebic had a total symptom score (a measurement of myelofibrosis symptoms) improvement of 50% or higher compared to 9% of patients on placebo.

Inrebic does have some concerning potential safety issues, though. The drug has a black-box warning for serious and fatal brain disease encephalopathy. Serious encephalopathy was reported in eight of the 608 patients treated with Inrebic in clinical studies. Serious adverse reactions were reported for 21% of the patients treated with Inrebic in the Jakarta study, with cardiac failure occurring in 5% of patients.

Great expectations

Celgene picked up fedratinib with its 2018 acquisition of Impact Biomedicines. The big biotech paid $1.1 billion up front and up to $1.25 billion in contingent payments based on regulatory approval milestones for myelofibrosis. This deal could pay off nicely for Celgene if fedratinib lives up to expectations. Celgene estimates that the drug will deliver peak annual sales of $1 billion.

That peak sales estimate is in line with what investment firm Deutsche Bank projects for fedratinib. Analyst Navin Jacob thinks that the drug should be able to make around 20% of the peak sales for Jakafi, according to a report on TheFly.com, which translates to $1 billion at peak for fedratinib. 

However, that peak sales estimate for Jakafi could be overly optimistic. Raymond James analyst Reni Benjamin expects the cancer drug will reach peak sales of between $2.5 billion and $3 billion. Assuming he's right and that Inrebic can achieve 20% of that total, Celgene's drug would only generate peak sales of $600 million at most.

Even with a lower sales figure, though, Celgene should see a solid return over the long run with its buyout of Impact Biomedicines. And Inrebic isn't the biggest good news the company hopes to have.

Bigger news on the way

Celgene hopes to win two FDA approvals for luspatercept in the near future. The FDA is scheduled to announce its decision on the drug in treating beta thalassemia by Dec. 4, 2019, with another approval decision for luspatercept in treating myelodysplastic syndromes (MDS) due by April 4, 2020.

The biotech looks for better results with its second attempt to win FDA approval for ozanimod in treating multiple sclerosis. The FDA should hand down its decision by March 25, 2020.

Celgene expects to file for approval for liso-cel in the fourth quarter of 2019. It also plans to submit ide-cel (bb2121) for FDA approval in the first half of next year.

In total, Celgene has four new products that it anticipates launching by late 2020 in addition to Inrebic. The company thinks that all of them will be blockbusters. Celgene's streak of good news could last for quite a while longer.

Keith Speights owns shares of Celgene. The Motley Fool owns shares of and recommends Celgene. The Motley Fool recommends Incyte. The Motley Fool has a disclosure policy.

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