Chinks in the armor

What’s next for Celgene in light of mongersen failure, Otezla underperformance

Even with slowing revenues tied largely to a single product and a dearth of launches, Wall Street darling Celgene Corp. had been on an extended tear, growing its share price in excess of 300% since the beginning of 2012.

Clinical and commercial disappointments revealed within a one-week period revealed an unexpected weakness, and will see Celgene Corp. relying more heavily on ozanimod for near-term growth, while drivers of mid- to long-term growth are less certain.

The first hit came on Oct. 19, when the company discontinued development of Phase III Crohn’s disease candidate mongersen (GED-0301) following an interim futility analysis. The antisense oligonucleotide targeting SMAD family member 7 (SMAD7; MADH7 ) had been expected to reach the market in 2019.

Then, on Oct. 26, Celgene reported $3.3 billion in 3Q17 revenues -- missing the Street’s $3.4 billion consensus estimate -- while slashing its 2020 revenue guidance by $1-$2 billion. Guidance for the inflammation and immunology portfolio alone fell to $2.6-$2.8 billion from $4 billion.

CEO Mark Alles attributed the reduced growth expectations largely to disappointing sales of psoriasis and psoriatic arthritis drug Otezla apremilast, which the company had previously pegged as a source of near-term revenue growth.

“Our forecast assumptions did not adequately anticipate the deep and persistent slowing growth of the psoriatic arthritis and psoriasis markets, especially during the entire third quarter,” Alles said on the company’s earnings call. “When combined with the discounts tied to the execution of our ongoing managed care strategy, we missed our third quarter Otezla sales target.”

“Our forecast assumptions did not adequately anticipate the deep and persistent slowing growth of the psoriatic arthritis and psoriasis markets.”

Mark Alles, Celgene

He added that while mongersen sales were “relatively modest in our 2020 model, we did forecast multibillion dollar peak sales potential.”

Ozanimod is now the next closest launch in Celgene’s pipeline. The oral selective modulator of spinghosine 1-phosphate receptor 1 (S1PR1; S1P1;

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