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.

Hal Barron, GSK

Break­ing the death spi­ral: Hal Bar­ron talks about trans­form­ing the mori­bund R&D cul­ture at GSK in a crit­i­cal year for the late-stage pipeline

Just ahead of GlaxoSmithKline’s Q2 update on Wednesday, science chief Hal Barron is making the rounds to talk up the pharma giant’s late-stage strategy as the top execs continue to woo back a deeply skeptical investor group while pushing through a whole new R&D culture.

And that’s not easy, Barron is quick to note. He told the Financial Times:

I think that culture, to some extent, is as hard, in fact even harder, than doing the science.

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Aca­dia is mak­ing the best of it, but their lat­est PhI­II Nu­plazid study is a bust

Acadia’s late-stage program to widen the commercial prospects for Nuplazid has hit a wall. The biotech reported that their Phase III ENHANCE trial flat failed. And while they $ACAD did their best to cherry pick positive data wherever they can be found, this is a clear setback for the biotech.

With close to 400 patients enrolled, researchers said the drug flunked the primary endpoint as an adjunctive therapy for patients with an inadequate response to antipsychotic therapy. The p-value was an ugly 0.0940 on the Positive and Negative Syndrome Scale, which the company called out as a positive trend.

Some Big Phar­mas stepped up their game on da­ta trans­paren­cy — but which flunked the test?

The nonprofit Bioethics International has come out with their latest scorecard on data transparency among the big biopharmas in the industry — flagging a few standouts while spotlighting some laggards who are continuing to underperform.

Now in its third year, the nonprofit created a new set of standards with Yale School of Medicine and Stanford Law School to evaluate the track record on trial registration, results reporting, publication and data-sharing practice.

Busy Gilead crew throws strug­gling biotech a life­line, with some cash up­front and hun­dreds of mil­lions in biobucks for HIV deal

Durect $DRRX got a badly needed shot in the arm Monday morning as Gilead’s busy BD team lined up access to its extended-release platform tech for HIV and hepatitis B.

Gilead, a leader in the HIV sector, is paying a modest $25 million in cash for the right to jump on the platform at Durect, which has been using its technology to come up with an extended-release version of bupivacaine. The FDA rejected that in 2014, but Durect has been working on a comeback.

In­tec blitzed by PhI­II flop as lead pro­gram fails to beat Mer­ck­'s stan­dard com­bo for Parkin­son’s

Intec Pharma’s $NTEC lead drug slammed into a brick wall Monday morning. The small-cap Israeli biotech reported that its lead program — coming off a platform designed to produce a safer, more effective oral drug for Parkinson’s — failed the Phase III at the primary endpoint.

Researchers at Intec, which has already seen its share price collapse over the past few months, says that its Accordion Pill-Carbidopa/Levodopa failed to prove superior to Sinemet in reducing daily ‘off’ time. 

Cel­gene racks up third Ote­zla ap­proval, heat­ing up talks about who Bris­tol-My­ers will sell to

Whoever is taking Otezla off Bristol-Myers Squibb’s hands will have one more revenue stream to boast.

The drug — a rising star in Celgene’s pipeline that generated global sales of $1.6 billion last year — is now OK’d to treat oral ulcers associated with Behçet’s disease, a common symptom for a rare inflammatory disorder. This marks the third FDA approval for the PDE4 inhibitor since 2014, when it was greenlighted for plaque psoriasis and psoriatic arthritis.

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Francesco De Rubertis

Medicxi is rolling out its biggest fund ever to back Eu­rope's top 'sci­en­tists with strange ideas'

Francesco De Rubertis built Medicxi to be the kind of biotech venture player he would have liked to have known back when he was a full time scientist.

“When I was a scientist 20 years ago I would have loved Medicxi,’ the co-founder tells me. It’s the kind of place run by and for investigators, what the Medicxi partner calls “scientists with strange ideas — a platform for the drug hunter and scientific entrepreneur. That’s what I wanted when I was a scientist.”

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Af­ter a decade, Vi­iV CSO John Pot­tage says it's time to step down — and he's hand­ing the job to long­time col­league Kim Smith

ViiV Healthcare has always been something unique in the global drug industry.

Owned by GlaxoSmithKline and Pfizer — with GSK in the lead as majority owner — it was created 10 years ago in a time of deep turmoil for the field as something independent of the pharma giants, but with access to lots of infrastructural support on demand. While R&D at the mother ship inside GSK was souring, a razor-focused ViiV provided a rare bright spot, challenging Gilead on a lucrative front in delivering new combinations that require fewer therapies with a more easily tolerated regimen.

They kept a massive number of people alive who would otherwise have been facing a death sentence. And they made money.

And throughout, John Pottage has been the chief scientific and chief medical officer.

Until now.

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Vlad Coric (Biohaven)

In an­oth­er dis­ap­point­ment for in­vestors, FDA slaps down Bio­haven’s re­vised ver­sion of an old ALS drug

Biohaven is at risk of making a habit of disappointing its investors.

Late Friday the biotech $BHVN reported that the FDA had rejected its application for riluzole, an old drug that they had made over into a sublingual formulation that dissolves under the tongue. According to Biohaven, the FDA had a problem with the active ingredient used in a bioequivalence study back in 2017, which they got from the Canadian drugmaker Apotex.

Apotex, though, has been a disaster ground. The manufacturer voluntarily yanked the ANDAs on 31 drugs — in late 2017 — after the FDA came across serious manufacturing deficiencies at their plants in India. A few days ago, the FDA made it official.

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