Challenging times for Celgene

Revlimid, a drug for multiple myeloma, is the main stay of Celgene’s business (approx. 2/3 of 2017 $13bn turnover) – the drug also highlights the challenges of large biopharmaceutical companies priced for growth

For 2018, Celegene asset projects $14.4 / $14.8 bn, Revlimib contributing as much as $9.4 bn

In the US, the patent for Revlimid expires in 9 years (April 2027) with an agreement, following litigation, allowing Natco Pharma of India to sell a limited amount of the generic drug as early as 2022 and unlimited amounts a year before patent expiration (January 2026)

Celgene’s efforts of to diversify their drug pipeline have had mixed results so far, resulting in a sharp price adjustment in October ’17 (-30%)

• disappointing sales of Otezla, a treatment for psoriasis, a dermatologic disease launched in 2104
• failure of an experimental Crohn’s disease drug

An aggressive acquisition policy casts new light on diversification

• Early January 2018, Celgene agreed to buy Impact Biomedicines (private), paying $1.1 billion upfront (and additional multi-billion payments depending on achieving certain targets on a late stage drug)
• A week later, Celgene announced talks with biotechnology company Juno Therapeutics asset – valued at $5 bn  - working on an experimental gene therapy drug to treat cancer, a CAR T- cell therapy harnessing the body’s own immune cells to attack malignant cells. Celgene and Juno were partners since 2015, though the research on its most advanced  CAR T therapy study - JCAR015 - appears to have been put on hold in mid-2016 by the FDA
• The acquisition was completed in March '18 for about $ 9 billion

It will be noted that

• Gilead Sciences bought Juno rival Kite Pharma for nearly $12 billion in late 2017
• Novartis announced the acquisition of Endocyte for approx. $2.1 billion. to accelerate the development of innovative radioligand and CAR-T therapies for cancer treatment

A different take is the battle between Bristol Meyers Squibb , Merck and Astra Zeneca for the market of advanced lung cancer, mostly due to smoking with Merck’s Keytruda test trial breakthrough in October ’16 and Bristol-Myers announcing positive results of a combination of the two drugs Opdivo and Yervoy

The takeover of Celgene by Bristol Meyers Squibb - announced in early Januari '19 will be discussed in a forthcoming note