Celgene’s (CELG) Revlimid Marches on

Celgene Corporation (CELG) received a boost with its lead product Revlimid gaining approval in Japan for the treatment of deletion 5q myelodysplastic syndromes (MDS). The approval comes close on the heels of the drug receiving Japanese approval in combination with dexamethasone for treating patients suffering from multiple myeloma, who have received at least one prior therapy. The approval for multiple myeloma from Japan’s Ministry of Health, Labor and Welfare came in June 2010.

Management stated that the latest approval was based on safety and efficacy data from multiple international studies, which have supported regulatory approval in 19 countries across the globe. The company further asserted that Revlimid, the key growth engine at Celgene, would be available through its proprietary distribution program, RevMate.

Celgene, which is looking to expand the label of Revlimid, presented data earlier in the year suggesting that continuous treatment with Revlimid in patients suffering from multiple myeloma has the potential to become the standard of care. Celgene intends to file an application seeking marketing approval for Revlimid as a front-line treatment for multiple myeloma in Europe by the year-end. The submission will be based primarily on late-stage data supporting continuous Revlimid therapy in patients with newly diagnosed myeloma.

Our Take & Recommendation

Celgene, which boasts of Vidaza and Thalomid apart from Revlimid in its oncology portfolio, is seeking to expand its portfolio through acquisitions. The company acquired Gloucester Pharmaceuticals earlier this year and should complete the acquisition of Abraxis BioScience (ABII) by year-end to strengthen its cancer portfolio. The purchase of Abraxis will add the cancer injection Abraxane to Celgene’s portfolio. Abraxane is already available in the US and European markets as a second-line therapy for metastatic breast cancer. The drug is being developed for other indications such as skin, lung and pancreatic cancer.

We believe that the impending acquisition of Abraxis BioScience coupled with the purchase of Gloucester Pharmaceuticals should boost Celgene’s cancer portfolio and drive growth. Although the myelodysplastic syndromes market will continue to be dominated by Celgene’s Vidaza and Revlimid, competition in the multiple myeloma market remains tough. Additionally, the negative growth of Thalomid is also a concern. This is likely to continue due to competition from better alternatives in the multiple myeloma market.

Consequently, we believe that the risk/reward profile is balanced at Celgene. This forms the basis of the Zacks #3 Rank on the stock, which translates into a short-term Hold rating, and our long-term Neutral stance on Celgene shares.

CELGENE CORP (CELG): Free Stock Analysis Report

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