Af­ter some sting­ing set­backs, a top an­a­lyst ques­tions the high fail­ure rate for Cel­gene's drug pipeline

Mark Alles

When Mark Alles got the big pro­mo­tion to CEO of Cel­gene $CELG two years ago, the com­pa­ny was a wide­ly ad­mired big biotech which had com­mit­ted large por­tions of its rev­enue to build­ing a pipeline through some of the most in­tense deal­mak­ing ac­tiv­i­ties in the in­dus­try. To­day, its stock price is bad­ly banged up, its whole pipeline strat­e­gy is in doubt and some an­a­lysts are start­ing to give some care­ful at­ten­tion to de­ter­min­ing what’s gone wrong.

Leerink’s Ge­of­frey Porges has been look­ing at that much laud­ed pipeline strat­e­gy, and he’s point­ing to a record of set­backs and washouts that leaves him to con­clude much has gone wrong. 

In­vestors have as­signed very lit­tle val­ue to the pipeline Cel­gene has, and our analy­sis of the pro­duc­tiv­i­ty of Cel­gene’s R&D ac­tiv­i­ty in the past 5 years sug­gests the cur­rent neg­a­tive sen­ti­ment may be war­rant­ed….Since 2013 we find that two-thirds of the com­pa­ny’s named de­vel­op­ment pro­grams (typ­i­cal­ly phase II or lat­er) have failed, and of the ~20 named clin­i­cal de­vel­op­ment (non- mar­ket­ed) NCE’s in Cel­gene’s pipeline charts in 2013 and 2014, on­ly 1 has reached the mar­ket five years lat­er. This long term R&D per­for­mance is con­sis­tent with the per­for­mance of Cel­gene’s stock, and po­ten­tial­ly ex­plains the low val­ue ac­cord­ed to the com­pa­ny’s port­fo­lio of de­vel­op­ment stage pro­grams, de­spite their com­mer­cial prospects, com­pet­i­tive ad­van­tages and tech­ni­cal promise.

Ge­of­frey Porges, Leerink

Look­ing over the past 5 years, says Porges, you’ll find on­ly two drugs — Ote­zla and Id­hi­fa — that came through the pipeline. Fo­cus on 2013-2015, and you’ll see half of the ex­per­i­men­tal drugs list­ed in the pipeline have dis­ap­peared.

As a re­sult, Cel­gene re­mains heav­i­ly overde­pen­dent on Revlim­id, a sit­u­a­tion that drew some high-lev­el anger in the Trump ad­min­is­tra­tion af­ter the com­pa­ny was called out for rais­ing the price 20% over the past year — pur­su­ing a strat­e­gy that Wall Street en­cour­ages and law­mak­ers hate.

In­stead of get­ting bet­ter, the pipeline turnover rate is get­ting worse, says Porges.

Cel­gene has brought 15 and 11 new drug can­di­dates to its pipeline in 2016 and 2017, re­spec­tive­ly, com­pared to 2-6 can­di­dates per year in 2013-2015. These new adds ex­pand­ed Cel­gene’s pipeline by 71% and 38%, re­spec­tive­ly, from the pre­vi­ous years. At the same time, pri­or pipeline as­sets al­so dis­ap­peared, with 7 can­di­dates de-em­pha­sized (pre­sum­ably ter­mi­nat­ed) in each of 2016 and 2017, while this num­ber was more mod­er­ate at 1-3 per year in 2013-2015. These pro­grams orig­i­nal­ly ac­count­ed for one-fourth to one-third of the pipeline ros­ter of com­pounds in the pre­vi­ous years. In to­tal, Cel­gene has in­tro­duced 40 drug can­di­dates to its pipeline since Q1 2013, and re­moved 20 can­di­dates from its pipeline from Q1 2013 to Q1 2018.

Out of the 20 drugs that have dis­ap­peared from their pipeline (al­most cer­tain­ly ef­fec­tive­ly dis­con­tin­ued though not for­mal­ly de­fined as such), 11 (55%) were dropped at phase 1, 5 (25%) at phase 2, and 4 (20%) at phase 3. It is un­der­stand­able that phase 1 as­sets are typ­i­cal­ly riski­er and are there­fore like­ly to fail more fre­quent­ly, but the dropout of phase 3 as­sets is con­cern­ing.

No won­der the stock is down 24% year to date and down 42% since the fail­ure of mon­gersen last Oc­to­ber. Porges points to the poor pipeline per­for­mance as a good cause for the de­cline in faith in the big cap stock.

One thing is cer­tain: Un­less Cel­gene finds a way to fire up its rev­enue again with­out an­ger­ing elect­ed of­fi­cials, the pres­sure will con­tin­ue to grow on Alles to prove he can meet the chal­lenge. So far, he’s shak­en up man­age­ment and tak­en on more re­spon­si­bil­i­ty, as long­time in­sid­er George Golumbes­ki qui­et­ly ex­it­ed. And the spot­light is square­ly on the CEO.

Michel Vounatsos, Biogen CEO (via YouTube)

UP­DAT­ED: Bio­gen scores a pri­or­i­ty re­view for its Alzheimer's drug ad­u­canum­ab, mov­ing one gi­ant leap for­ward in its con­tro­ver­sial quest

Biogen scored a big win at the FDA today as regulators accepted their application for the controversial Alzheimer’s drug aducanumab and gave it a priority review.

The PDUFA date is March 7, 2021.

Significantly, Biogen says it did not use its priority review voucher to win special treatment at the FDA. The agency handed that out gratis.

That’s the ideal scenario Biogen was looking for as disappointed analysts wondered aloud about the delayed application earlier in the year.

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Moncef Slaoui, Getty Images

When will it end? Big Phar­ma's top vac­cine ex­pert at OWS of­fers a speedy time­line for a Covid-19 vac­cine — ei­ther be­fore or right af­ter the elec­tion

Moncef Slaoui hasn’t started making plans for his summer vacation next year. But he offers high odds that all Americans will be able to do that in the not too distant future.

In an interview with a pair of sympathetic podcasters at the conservative American Enterprise Institute, Slaoui provides an education to listeners on how any drug or vaccine can be sped through trials. And he leaves the door wide open to the notion that the leading vaccine developers can demonstrate efficacy and safety in a compelling fashion as early as October — or as late as the end of this year.

Ryan Watts, Denali CEO

Bio­gen hands De­nali $1B-plus in cash, $1B-plus in mile­stones to part­ner on late-stage Parkin­son’s drug

Biogen is handing over more than a billion dollars cash to partner with the up-and-coming neurosciences crew at Denali on a new therapy for Parkinson’s. And the big biotech is ready to pile on more than a billion dollars more in milestones — if the alliance is a success.

For Biogen $BIIB, the move on Denali’s small molecule inhibitors of LRRK2 puts them in line to collaborate on a late-stage program for DNL151, which is scheduled to start next year.

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Per­cep­tive fields SPAC #3 as an­oth­er group of biotechs scoops up $364M in lat­est Nas­daq romp

There’s no sign that the windfall of cash dropping biotech’s way on Wall Street is abating. Three more biopharmas priced IPOs on Thursday and Friday morning, riding a historic boom with a $364 million payoff.

London-based biotech Freeline Therapeutics took home the lion’s share of the cash with $159 million after pricing 8,823,529 shares at $18 a pop. Checkmate Pharmaceuticals, of Cambridge, MA, raised $75 million with an offer of 5 million shares at $15 — right at the midpoint of its range. And Arya Sciences Acquisition Corp III, the third in a series from Perceptive, priced 13,000,000 shares at $10 per share.

Covid-19 roundup: Gates Foun­da­tion pours $150M in­to In­dia’s Serum In­sti­tute; Pfiz­er teams with Gilead on remde­sivir

By CEO and scion Adar Poonawalla’s estimation, the Serum Institute in India has already poured hundreds of millions of dollars into scaling up the unproven Covid-19 vaccine being developed by AstraZeneca and Oxford for use in low and middle income countries. It’s meant taking on a risk that other companies, including AstraZeneca, have mitigated with huge amounts of government funding.

Now, for the first time, Poonawalla is getting some outside help. The Gates Foundation has agreed to pay the institute $150 million to supply 100 million vaccines to India and other emerging economies next year, Reuters reported. That includes both the vaccine being developed by AstraZeneca and the one being developed by Novavax. Those vaccines will be available in 92 countries and be priced at $3 per dose.

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In sur­pris­ing set­back, com­bo of Roche’s Tecen­triq and chemo fails to help pa­tients with triple-neg­a­tive breast can­cer

Roche broke ground last year when they secured the first FDA approval for a checkpoint therapy in triple-negative breast cancer, a notoriously difficult-to-treat indication that has been passed over by the wave of targeted therapies.

Now, though, doctors are puzzling over why a combination of drugs meant to make that therapy more potent instead appeared to make it less effective.

Roche said Thursday that in a Phase III trial, combining their PD-1/L1 checkpoint therapy Tecentriq with the chemotherapy paclitaxel, did not significantly improve progression-free survival for patients with locally advanced or metastatic triple-negative breast cancer over giving those patients chemotherapy alone. In fact, patients on the Tecentriq-chemo arm had lower overall survival than patients on chemo, although the drugmaker cautioned that the trial was not powered for that endpoint and the data were immature.

Bio­haven adds near­ly $1B in Nurtec deals with Roy­al­ty Phar­ma, Sixth Street

Biohaven just added nearly $1 billion to their balance sheet.

On Friday morning, the neuroscience biotech announced a pair of creative agreements with Royalty Pharma and the investment firm Sixth Street to bolster the commercial launch of their new migraine drug, Nurtec. Biohaven will sell a sliver of its royalties on Nurtec and 3% of the royalties on their experimental migraine drug zavegepant to Royalty Pharma as part of a larger agreeement that will pay $450 million. At the same time, the company announced they took out a $500 million loan from Sixth Street.

Douglas Fambrough, Dicerna CEO (Boehringer Ingelheim via YouTube)

Roche-backed Dicer­na push­es in­to the pack rac­ing to­ward the block­buster hep B goal line, armed with PhI da­ta

Dicerna has lined up a set of proof-of-concept data from a small cohort of hepatitis B patients in a match-up against some heavyweight rivals which got out in front of this race. And right in the front row you’ll find a team from Roche, which paid $200 million in cash and offered another $1.5 billion in milestones to partner with Dicerna $DRNA on their RNAi program for hep B.

Right now it’s looking competitive, with lots of big challenges ahead.

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Lund­beck sounds taps on an­oth­er CNS drug, re­treat­ing from a mine field still oc­cu­pied by a Mer­ck team

Lundbeck has snipped another clinical-stage branch of its CNS research, dumping a schizophrenia program after determining that their therapy would have no positive influence on the disease.

Designed originally as a 240-patient study, researchers set out in early 2019 to see if a homegrown drug dubbed Lu AF11167 could make it through a proof-of-concept study. The drug is a PDE10Ai inhibitor, targeting an enzyme which it said at the time offered a new pathway to retuning the body’s neurotransmitter dopamine. The big idea was that by hitting their target, the drug would modulate “dopamine D1 and D2 receptor-mediated intraneuronal signaling without binding to these receptors,” influencing negative symptoms of schizophrenia.

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