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WIKI ANALYSIS
Celgene (NYSE:CELG) is a pharmaceutical company that develops and sells drugs to treat blood cancers. Its main drugs include Thalomid, which is used to treat multiple myeloma, a cancer of the plasma cell in blood; Revlimid, which is a first-line treatment for myelodysplastic syndrome (MDS); and a family of Ritalin drugs, which are used to treat Attention Deficit Disorder (ADHD). The company generated $2.6 billion in revenue and $777 million in net income in 2009.[1]
However, Revlimid will face its stiffest competition yet when rival company Millemnium's new drug Velcade is approved for use in first-line treatment of multiple myeloma. Velcade has shown much greater efficacy as a first-line treatment in its clinical trials, surpassing the performance of Revlimid, which means it will compete fiercely with Revlimid after it receives FDA approval and enters the market.
Celgene took a step to respond to the challenge posed by Millennium with its acquisition of Pharmion (PHRM). The company expects the Pharmion deal to help it capture additional market share in the treatment of multiple myeloma by incorporating Pharmion's Vidaza into its existing drug portfolio. Unlike Revlimid, which targets low-risk multiple myeloma patients, Vidaza is a popular and effective treatment for high-risk multiple myeloma patients. Potential future combination drugs that include both Vidaza and Revlimid would allow Celgene to increase market share by expanding its targeted patient base.
Company Overview
Major Products[2]
Celgene sells leading drugs in the fields of hematology (blood cancer) and oncology. Its hallmark drugs include Thalomid, Revlimid, and a family of Ritalin products. Both Thalomid and Revlimid are drugs used in the treatment of multiple myeloma and associated blood cancers.
Multiple myeloma is the second most prevalent of all blood cancers and represents 1% of all cancers and 2% of all cancer deaths. Approximately 63,000 Americans are affected by multiple myeloma, and 14,600 new cases are diagnosed annually. [3]
- Thalomid: Thalomid consists of the active ingredient thalidomide, which was imported from Europe in the 1950s as a painkiller for pregnant women but discovered as the cause of severe birth defects.[4] (Celgene was not involved in the marketing of Thalomid as a painkiller). However, in the past 2-3 years, Celgene recognized Thalomid's value as a blood cancer drug effective in treating multiple myeloma. Celgene developed the STEPS program to restrict distribution of the drug, which received FDA approval in 2005.[5]
- Revlimid: Revlimid has shown promising growth since its approval by the FDA in 2005. Revlimid is used to treat low-risk myelodysplastic syndrome (MDS), a blood disorder that is characterized by chromosomal abnormalities as well as anemia and blood cell abnormalities. [6]
- Ritalin: The family of Ritalin products developed by Celgene is used widely to treat Attention Deficit Disorder (ADHD) in adults as well as in children. Celgene has licensed the rights to market Ritalin in a collaborative relationship to Novartis AG (NVS). In turn, Celgene collects royalty revenues from the sales of Ritalin products by the licensee Novartis. [7]
Business Growth
FY 2009 (ended December 31, 2009)[1]
- Net revenue increased 19% to $2.7 billion. Sales of Revlimid and Vidaza increased by 29% and 87% respectively.
- Net income improved to $777 million compared to a net loss of $1.5 billion in the previous year.
Trends and Forces
- Revlimid faces potential competition from (MLNM)'s Velcade: Millennium Pharmaceuticals (MLNM) has put its new blood cancer drug, Velcade, into Phase III VISTA clinical trials to test its efficacy in previously untreated multiple myeloma patients. Velcade has elicited a response in first-line patients that surpasses the performance of Revlimid in terms of prognosis for treated patients and increased life expectancy. If Velcade receives FDA approval and enters the market as a first-line multiple myeloma drug, Revlimid will face significant competition and potential market share reductions. This is a major risk for the company's balance sheet since Revlimid consists of 30% of Celgene's sales revenue. [8]
- Cephalon's Treanda may restrict Revlimid's expansion into new blood cancer markets: Revlimid has been submitted for use in treating multiple other blood cancers in an effort to expand into other markets. However, Cephalon's new drug Treanda has shown significant results in treating chronic lymphocytic leukemia. Celgene has also submitted Revlimid for FDA approval in treating chronic lymphocytic leukemia, so approval of Treanda will significantly reduce Revlimid's potential market share. If Revlimid is unsuccessful in expanding to new markets, either because it fails to win approval or cannot compete with Treanda, Celgene's revenues will be negatively impacted. [9]
- Thalomid may face generic competition: Since Thalomid's patents expired, generic substitutes may be developed to evade the STEPS program currently licensed to Celgene. Generic substitutes can be developed to reduce Thalomid's market share significantly. Competition from generic substitutes would hurt Celgene's balance sheet, since Thalomid is responsible for 40% of Celgene's sales revenue.
- Ritalin may incur liability claims due to linkage to increased risk of cancer: Since 2005, research studies have shown that chronic Ritalin use may be linked to an increased risk of cancer in children. If future studies ascertain this connection, FDA approval may be revoked for the use of Ritalin in ADHD treatment, and Ritalin may incur liability charges on Celgene from affected patients. This is high risk for Celgene due to the continually increasing amount of literature showing the linkage between Ritalin and increase risk of cancer in children. [10]
Competition
Celgene's leading products, Revlimid and Thalomid, have shown consistent strong performance due to their efficacy in treating blood cancers. However, competition from drugs such as MLNM's Velcade and CEPH's Treanda may significantly limit future growth of Revlimid sales.
The following chart shows the drugs in development at Celgene's major competitors that may affect the performance. Celgene's current and future products.
Main Competitors in Pre-Commercial Drug Development Fields
- Amgen (AMGN) - TNFa and kinase inhibitors
- Novartis AG (NVS) - IMiDs compounds and kinase inhibitors
- Bristol-Myers Squibb Company (BMY) - IMiDs and TNFa inhibitors
- Genentech (DNA) - IMiDs and TNFa inhibitors
- AstraZeneca (AZN) - IMiDs and TNFa inhibitors
- Pfizer (PFE) - Kinase Inhibitors
Celgene Drug/Competitor Drug (cancer type)
CANCER DRUGS
- Revlimid (blood) (CELG)
- Thalomid (blood) (CELG)
- Alkeran (ovarian) (CELG)
- Erbitux (skin) (BMY)
- Taxol (ovarian) (BMY)
- Sprycel (blood) (BMY)
- Vectibix (generic cancer) (AMGN)
- Glivec (blood)(NVS)
- Zometa (generic cancer) (NVS)
IMMUNOMODULATORY DRUGS
- Revlimid (CELG)
- Thalomid (CELG)
- Orencia (BMY)
- Enbrel (AMGN)
- Epogen (AMGN)
- Voltaren (NVS)
- Rituxan (DNA)
ADHD DRUGS
- Ritalin (CELG)
- Concerta (JNJ)
Notes
- ↑ 1.0 1.1 CELG 2009 10-K "Selected Financial Data" pg. 42
- ↑ CELG 2009 10-K "Commercial Stage Products" pg. 3-6
- ↑ Multiple Myeloma Incidence
- ↑ Thalomid as Cancer Drug, CNNMoney
- ↑ Thalomid STEPS Program
- ↑ Revlimid treats low-risk MDS
- ↑ Ritalin licensed to Novartis
- ↑ Velcade Clinical Trials Successful
- ↑ Cephalon's Treanda works in Chronic Lymphocytic Leukemia
- ↑ Ritalin and Cancer risk
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