Unknowns plague Celgene after Revlimid filing withdrawal

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On the face of it Celgene’s shock withdrawal yesterday of a European filing to extend use of Revlimid to first-line multiple myeloma patients is not a huge blow: a delay, of perhaps only months, and apparently no additional studies needed.

But, taken in the context of the hype that had surrounded Revlimid’s expanded use and the fact that the company still trades on over 20 times last year’s earnings per share, the move has to be seen as a major setback. As is so often the case the trouble is not what we know but what we do not: Celgene has revealed little about the EU regulator’s real or perceived concerns, and will not specify how mature the data from ongoing studies have to become before it will consider refiling.

Growth trajectory

Revlimid, Celgene’s biggest growth driver, is approved in the US and EU for treating multiple myeloma in the refractory (second-line) setting and has been selling exceptionally well, its total 2011 revenue roaring ahead 30% to $3.2bn. However, analysts believe that the product is reaching a plateau, and that expansion into the first-line setting in Europe is key to maintaining the growth trajectory.

The EU’s CHMP had been deliberating this week on the application for first-line use, and was likely to decide on approvability today. However, Celgene said a positive outcome was becoming increasingly unlikely, and because it saw no immediate solution to the agency’s concerns it decided simply to withdraw the filing.

In the US Revlimid is already widely prescribed and reimbursed for off-label use first line, which is thought to account for as much as 40% of its prescriptions there. In Europe, however, use outside a clinical trial setting is limited to second and third line, and formal approval is necessary to unlock the important front-line revenue stream (Event – Celgene hopes for big European prize, April 27, 2012).

Spectre of 2010 safety scare

It appears that the safety scare relating to second primary malignancies (SPMs) that first arose two years ago has come back to haunt Revlimid. SPMs had threatened Revlimid’s sales, but with strong endorsement from key opinion leaders the drug overcame this issue and its growth continued.

However, it now seems that EU regulators want more reassurance on the matter.

Key to Revlimid’s EU first-line approval are three pivotal studies codenamed MM-015, IFM-0502 and CALGB. While interim data from all three support use in the front-line setting, this is on the strength of Revlimid’s effect on progression-free survival; none of the trials has shown an overall survival benefit, although CALGB suggested this in some patients. Another study (MM-020) in newly diagnosed patients is ongoing, and is due to undergo an interim analysis later this year.

A major concern now is whether the EU regulator has shifted the goalposts for approval, and wants to see an overall survival benefit. On a conference call with analysts yesterday, Celgene management would not confirm whether that was the case. Data emerging from the three pivotal studies are being monitored at three-month intervals, they said, but again would not specify what would trigger a resubmission.

They did stress that the progression-free survival effect had to be “robust”, with no evidence of a long-term deleterious outcome. This, in itself, should allay concerns that an overall survival benefit is needed. However, the difference between a progression-free survival benefit with no deleterious SPM effect on the one hand and an overall survival benefit on the other might be one of semantics.

Interpretation

Without clear guidance from Celgene as to what the regulator wants to see - which could be down to deliberate obfuscation or just lack of clarity from the regulator - the path forward for Revlimid in this setting is hard to predict.

ISI Capital’s Mark Schoenebaum said that more follow-up was likely needed from the three pivotal studies to ensure that SPMs were not affecting patients’ overall survival, which he stressed did not necessarily mean that a benefit on overall survival had to be shown.

He had earlier spelled out the possible scenarios: the most optimistic case was that Celgene just had to wait another year to allow pivotal data to mature and demonstrate that patients were not being harmed. On the other hand, if it had to wait for the results of the MM-020 study this would take longer, and if the new standard was overall rather than progression-free survival – a worst-case scenario, and one unlikely to generate data before 2014 – this might signal first-line approval being delayed until 2016.

The company would not say whether it was looking for overall survival in the MM-020 trial, but did say that there was “no regulatory action” currently linked to MM-020.

Overreaction?

The uncertainties aside, with Celgene down 11% to $59.44 on the news yesterday many analysts take the view that the stock might now be worth buying.

At around $60 a share the market seems to be pricing in a scenario whereby Revlimid is never approved for European first-line use at all, Mr Schoenebaum said on a call. UBS analysts said they were sceptical as to whether first-line approval would occur in the near future and trimmed their 2016 worldwide sales expectations for Revlimid from $6.1bn to $5.9bn, adding that they nevertheless saw a favourable risk-reward balance in the stock.

Still, while the worst fears for Revlimid - a requirement to prove an overall survival benefit - might not have materialised, as Celgene fights the fire it could increasingly face credibility issues; at the beginning of the year the company was vocally very optimistic about this opportunity. It is of little comfort that it intends to proceed with first-line submissions in Switzerland and Australia, ie, outside the core EU market.

The trouble for management is that investors are finding upbeat assurances harder and harder to believe.

Revlimid selected Phase III multiple myeloma studies  
MM-015   First line  NCT00405756
IFM-0502  Post ASCT  NCT00430365
CALGB Post ASCT  NCT00114101
MM-020   First line NCT00689936

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