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Image source: National Cancer Institute.

Blue-chip biotech company Celgene (NASDAQ:CELG) has had an incredible five-year run, with its shares up nearly 280% compared with around 65% for the broad-based S&P 500. Shareholders have the company's organic growth to thank.

Celgene's product portfolio is headlined by a trio of powerhouse drugs: Revlimid for multiple myeloma, Abraxane for breast, pancreatic, and lung cancer, and Otezla, a recently approved anti-inflammatory pill.

Revlimid comprises close to two-thirds of Celgene's sales currently and is its shining star with substantial market share in first- and second-line multiple myeloma. However, Celgene is also looking to expand Revlimid into more than half a dozen additional indications in hopes of eclipsing $7 billion in sales in a single year by 2017. To get there, Abraxane is being studied as a first-line treatment in triple-negative breast cancer. Otezla, as well, could find use in a half-dozen new indications as time passes. Abraxane and Otezla could both deliver around $1.5 billion to $2 billion in annual sales by 2017.

The most important drugs in Celgene's pipeline
This organic growth has been critical to pushing Celgene's sales and profits higher. But Celgene's management team and shareholders also understand that new drug approvals are needed to continue this growth cycle. While it's certainly up to argument since Celgene has a deep product pipeline, I'd pinpoint the following three pipeline drugs as the company's most important.

Ozanimod
It's rare for Celgene to go out and acquire a pipeline, but that's precisely what it did this year with its $7.2 billion acquisition of Receptos.

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Image source: National Cancer Institute.

The linchpin of Receptos' pipeline, and now the prize development in Celgene's, is ozanimod, an S1P1 receptor agonist. Ozanimod is currently being studied in three indications: relapsing multiple sclerosis (RMS), ulcerative colitis, and Crohn's disease. Wall Street believes that an approval for ozanimod in all three indications could lead to anywhere from $4 billion to $6 billion in annual peak sales.

What really excited Celgene and caused it to pay quite the premium for Receptos was ozanimod's phase 2 results in RMS. As reported during the phase 2 portion of the RADIANCE trial, ozanimod met its primary endpoint of a reduction in brain lesion activity as detected by an MRI. The study analyzed 258 patients who received either ozanimod or a placebo. The results showed a statistically significant reduction in gadolinium-enhancing lesions of 86% at both doses tested (0.5 mg and 1 mg) compared to the placebo. Additionally, ozanimod demonstrated a favorable safety profile, which is important because we're talking about a drug that would, in theory, be taken for a long time.

If you're going to focus on any one drug within Celgene's pipeline, this should be it.

AG-221
Shareholders can also find a lot of excitement in Celgene's partnerships. Currently boasting 31 separate partnerships, Celgene's collaboration with Agios Pharmaceuticals (NASDAQ:AGIO) is one worth closely monitoring.

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Image source: National Cancer Institute.

What initially drew Celgene to Agios all the way back in 2010 was the company's research into mutations of IDH1 and IDH2, which are enzymes thought to be critical to the development of certain types of cancers. Agios has two collaborative IDH mutation-targeted drugs in development: AG-120 for IDH1 mutant tumors and AG-221 for IDH2 mutant tumors. Of the two, it's the IDH2-mutant inhibitor AG-221 that looks most exciting.

At the American Society of Hematology's annual meeting earlier this month, Agios announced updated data from its phase 1/2 study involving AG-221 for 209 patients. Of the response-evaluable patients, 37% (59 of 159) with relapsed or refractory acute myeloid leukemia demonstrated an overall response rate, with 18% (29 of 159) showing a complete remission. Furthermore, responding patients who were taking AG-221 for up to 18 months demonstrated a median 6.9-month durable response rate.

Agios' stock took some heat after releasing this data since AG-221 had demonstrated an overall response rate of 40% in a prior update. However, even with an ORR of 37% in relapsed and refractory AML, AG-221 has the potential to become a standard of care treatment. As a standard of care treatment, it would likely command $1 billion-plus in sales per year.

Demcizumab
Finally, I'd stick with the collaborative trend and focus on Celgene's partnership with OncoMed Pharmaceuticals (NASDAQ:OMED).

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Image source: OncoMed Pharmaceuticals.

OncoMed has an interesting way of attacking cancer. Instead of trying to contain the proliferation of existing cells, OncoMed is developing drugs that target cancer stem cells, or CSCs, which are typically impervious to chemotherapy and radiation therapy. It's believed by researchers that CSCs are also what's responsible for cancer recurrence and metastasis.

OncoMed's lead product is demcizumab, a monoclonal antibody that targets DLL4, an activator notch that's important for the development of cancer. Although it's early in the development process, results from a phase 1b study involving demcizumab suggested the drug was safe and gave hints of early efficacy. The real test will come in the DENALI and YOSEMITE phase 2 trials for first-line non-small cell lung cancer and first-line pancreatic cancer where we'll be able to get a good look at the efficacy of demcizumab relative to a placebo.

Celgene and OncoMed are currently partnered on up to six developing compounds, but its demcizumab and its blockbuster potential that looks, by far, the most intriguing.

What now for Celgene?
Now that you have a better idea of what's in Celgene's pipeline, you might be wondering what you should do with Celgene's stock. My suggestion? Consider buying in or adding more.

Celgene's ability to grow organically, boost its growth through collaborations, and purchase growth on an as-needed basis, gives it multiple ways to churn out double-digit sales growth. Plus, Celgene announced a $4 billion addition to its share repurchase program earlier this year to reward its faithful investors. Considering that Celgene's PEG ratio is still below one and its collaboration and in-house pipeline is incredibly deep, I'd suggest taking a good look at potentially adding this stock to your long-term portfolio.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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