Celgene (CELG) ASH Data Points

December 11, 2010

Revlimid, used to treat MDS (myelodysplastic syndromes) and multiple myeloma, saw revenues increase 44% from Q3 2009. Vidaza, also used to treat MDS, had revenue up 37% y/y. In 2010 Celgene (CELG) stock began at $55.68, yesterday (Friday) it closed at $57.46, so this year has not had a big run up.

That is mainly due to a plunge from some of the data presented at the American Hematological Society (ASH) meeting last weekend. Celgene is trying to show that Revlimid should be used both earlier in the treatment of multiple myeloma and myelodysplastic syndromes (before or coincidental with other therapies) and for a longer duration. Right now "REVLIMID or lenalidomide in combination with dexamethasone is indicated for the treatment of multiple myeloma or MM patients who have received at least one prior therapy." What Celgene wants is Revlimid to be prescribed to new MM patients, without trying any other therapy first.

The data presented in that regard was very positive. See, for instance, Analysis of Revlimid Phase III Study Reports a Significant Improvement in Survival for del(5Q) Myelodysplastic Syndromes and Phase III Study Evaluating Revlimid in Patients with High-Risk Smoldering Multiple Myeloma Reported Statistically Significant Reduction in Risk of Disease Progression. There were many more reports on Celgene products at ASH.

The plunge was due to some data suggesting that patients taking Revlimid for long periods of time had an increased risk for secondary cancers compared to patients taking placebos. This is certainly something to look at; if the increased secondary malignancies are actually caused by Revlimid, rather than a statistical fluctuation (so far the numbers are small), then that would have to be weighted negatively. But Revlimid is not a diet drug, where a few deaths would be weighed against limited benefits. Death is still par for the course with untreated blood cancer patients, and even with treatment. The survival data on patients in the trials has consistently shown that Revlimid prolongs life, and that would include an adverse events, including the development of other cancers.

Mark Shoenebaum, the former Bear Stearns analyst who wrote pointed out the negative data, also pointed out that the results may have been skewed by not looking for secondary tumors in patients whose myeloma progressed, so that Revlimid patients, who had longer times before their myeloma progressed, were not actually compared to a like set of patients.

Celgene stock fell rather dramatically on December 6 (from $60.59 on the prior close to $55.64) as a result of the "news." What this mainly shows is the danger of pricing by auction markets. No one knows if the news is even true, or how significant it is. Buyers disappear, so even normal selling can tank a stock.

Celgene is already trading at a very reasonable forward price to earnings multiple of 22. Most likely Revlimid will be approved for use as a first-line treatment in 2011. In addition, Celgene has an extensive, high-quality pipeline. So my guess is that in a few months the December 6 drop will just look like background noise on the stock charts.