Celgene strikes again with Receptos acquisition

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On the surface, the $7.2bn that Celgene is paying for Receptos might look like an example of the overinflated biotech bubble. But on closer inspection it could be another canny deal for Celgene – if Receptos’s main asset, ozanimod, lives up to its promise.

The oral sphingosine 1-phosphate modulator, in phase III development in relapsing multiple sclerosis, shows signs of being cleaner than Novartis’s Gilenya, a $2.5bn drug despite its adverse effects on the heart and liver. If ozanimod can overcome these issues, analyst forecasts of $1bn by 2020 might end up looking conservative.

Celgene is predicting peak sales of $4-6bn for ozanimod in MS and ulcerative colitis, where the drug is also in phase III trials. This is before taking into account other potential indications including Crohn’s disease, psoriasis and lupus.

The $232-per-share deal, which will be financed with a mixture of cash and debt, represents a 12% premium to Receptos's closing price yesterday – but Leerink analysts noted that a buyout had been widely anticipated by investors.

Crowded MS field

Data from the ongoing Radiance and Sunbeam phase III studies of ozanimod in MS are expected in the first half of 2017. If positive, Celgene plans to launch the drug in this indication in 2018, where it believes it will be used in newly diagnosed patients, putting it on par with Biogen’s Tecfidera and ahead of Gilenya in the MS treatment cycle.

Ozanimod’s favourable side-effect profile comes from its more selective mechanism of action, targeting S1P1 and 5 – Gilenya binds to S1P receptors 1, 3, 4 and 5. In a conference call to discuss the transaction, Celgene executives refused to be drawn on whether the company is planning head-to-head trials of ozanimod versus Gilenya.

But competition is more likely to come from an increasingly crowded pipeline of selective S1P-targeting agents, including Novartis’s BAF312 and Actelion’s ponesimod, both in phase III (As multiple sclerosis competition steps up, Actelion steps in, April 17, 2015).

Ulcerative colitis more lucrative

Ulcerative colitis could be an even more lucrative indication, UBS analysts believe. Receptos has already reported positive results from the Touchstone phase II trial, and full data from the 32-week maintenance period are anticipated at a major medical meeting, possibly United European Gastroenterology Week in October.

They are likely to be positive – Celgene had access to the results as part of its due diligence process. The company is targeting a 2019 launch date in UC.

One casualty of the deal could be mongersen (GED-0301), which Celgene picked up from Nogra Pharma for $710m and is expected to enter phase III in Crohn’s disease this year; a phase II study is also planned in UC. But while analysts questioned mongersen’s future, Celgene chief executive Bob Hugin maintained that the firm is still optimistic about the drug.

He said during a conference call to discuss the acquisition that the Smad7 mRNA antisense product has a different mechanism of action to ozanimod, meaning the two drugs could be used sequentially or in combination.

Celgene’s other existing inflammation and immunology asset is the PDE4 inhibitor Otezla, already launched for psoriasis and psoriatic arthritis, and in development for Behçet syndrome, ankylosing spondylitis, atopic dermatitis and UC.

Trial name Indication Trial ID
Radiance Relapsing MS NCT02047734
Sunbeam Relapsing MS NCT02294058
Touchstone Ulcerative colitis NCT01647516
True North Ulcerative colitis NCT02435992

The Receptos buy is Celgene’s third big deal of late, with the other two coming in the hot area of immuno-oncology, the most recent a $1bn tie-up with Juno (Celgene goes for broke, June 30, 2015). It may take some time to digest the latest purchase, but with a huge mountain of cash remaining, Celgene might go shopping again in the not too distant future.

To contact the writer of this story email Madeleine Armstrong in London at madeleinea@epvantage.com or follow  @medtech_ma on Twitter

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