Recently, Celgene (CELG) gave an update for its multiple sclerosis drug ozanimod. It stated that it likely would be able to file early next year. That may seem like a negative, but the management pointed to the fact that another study may not be required. In my opinion, that means a filing could take place by Q1 2019 if everything remains on track. For that reason, I’m bullish on Celgene.
With the new announcement by Celgene on its MS drug ozanimod, it means that a regulatory filing could take place sometime in early 2019. This is not bad when you think about it. The original filing date expected by Celgene for ozanimod was Q3 2018. So in essence, it was pushed up two quarters. I understand why investors would not be happy about this, but the recent news of not needing another study should be seen as a major positive. As much as many would have loved to see ozanimod approved a lot quicker, it is better that the company takes its time to make sure all safety issues are accounted for. The big reason for the delay is due to ozanimod’s chemical structure in which it has a long half-life of 10 to 13 days. When it is metabolized in humans it forms as one major active metabolite and a few other minor active metabolites. The half-life is the amount of time it takes for a biological substance to be degraded in the body by half. The rate of removal during the breakdown process is exponential. In my opinion, the FDA is being cautious.
When The Problem Started
The issue started when the FDA gave Celgene a refusal-to-file letter back in February of 2018. The FDA refused to file Celgene’s application, because of insufficient information for ozanimod. More specifically, the FDA was not clear on both the non-clinical and clinical material in the application. The worst case scenario back then was stated as being that it could take up to 2 to 3 years to run another study. Instead, Celgene will be able to analyze non-clinical studies of the drug that researchers were working on. That data, plus additional PK/PD results as well can work well for approval. Both of these could be used in place of having to run another long study. That’s a big positive for Celgene. Another piece of good news is that a filing for European approval for ozanimod in MS is also expected to take place in Q1 2019 as well. That means both filings could potentially take place during the same quarter.
Hematology Franchise In Place
No doubt the setback for ozanimod is downright disappointing. The bright side is that Q1 2019 is not that far away. It could have been worse, where the FDA could have required another study that could have taken 2 to 3 years to complete. When you think about it though, Celgene will do just fine without ozanimod. Plus, if and when it does receive FDA approval the drug could bring in between $4 to $6 billion in sales. The good news is that the hematology franchise is holding up well. In the recent earnings report for Q1, Celgene noted that Revlimid sales increased by 19% year over year. Sales of Pomalyst (another blood cancer drug) increased by 24% year over year. The fact that both of these blood cancer drugs are still generating double digit gains year over year should be enough to sustain operations until ozanimod is ultimately approved.
Celgene lucked out big time, because if things got really bad the FDA could have required another long study. Instead, it seems that the company is getting away a lot easier than expected. That’s why I’m highly confident that it will receive FDA approval sometime during Q1 2019. I believe that Celgene’s management handled this situation well. The issue with the half-life metabolite of ozanimod was unfortunate, but it’s best to fix things first before seeking approval. The risk involved here would be that Novartis (NVS) has its own multiple sclerosis drug Gilenya which is currently approved by the FDA. Even then, Gilenya is coming off patent protection sometime towards the end of 2019. The good news is that Celgene’s ozanimod will still have the upper hand in terms of safety. That’s because both drugs match just about the same on efficacy, but ozanimod’s safety is better. Based on the better than expected recovery after the refusal-to-file letter, I believe that Celgene is a good buy.
This article is published by Terry Chrisomalis, who runs the Biotech Analysis Central pharmaceutical investment research service on Seeking Alpha Marketplace. If you like what you read here and would like to subscribe to my Service, I’m currently offering a two-week free trial period for subscribers to take advantage of. My service offers deep dive analysis of many pharmaceutical companies throughout the biotech sector. Come see for yourself if my service is right for you.
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