Business, Drug Development

Celgene’s disclosures about ozanimod this week spur analysts’ fears of a lengthy delay for a key drug

Researchers for Celgene $CELG turned up at the American Academy of Neurology meeting this week with some news about the multiple sclerosis drug ozanimod that quickly captured analysts’ attention.

In a presentation on ozanimod Phase III data, an investigator spotlighted an active metabolite produced by the drug, spurring an ah-ha moment for analysts who have been puzzling out why the FDA recently issued a stunning refuse-to-file notice on the drug.

Jefferies’ Michael Yee noted this morning:

We and many observers believe the issue relates to this metabolite that hasn’t been sufficiently characterized by CELG and may not have sufficient information and safety data to permit FDA to fully review the drug for approval which is a problem.

There’s two ways to look at this, he adds, depending on whether you’re a bull or a bear on the suffering stock. The bull argument would pose that a presentation at a conference like this would mean that Celgene couldn’t be all that concerned by the metabolite issue, while the bear view would be: 

(I)nsufficient tox coverage for this metabolite which is the actual active moiety, FDA guidance suggests needs 1-2 years more preclinical studies, brings big uncertainty even if NDA filing – whether Ozanimod would actually get approved and/or now has hair on it.

Investors now want to know if the company plans to re-file soon or will look to go back to the drawing board with new, and potentially damaging, delays to disclose. But there’s no sign of an early reaction on the stock price, which is slightly in the green in pre-market trading. The stock is down 18%, though, from the beginning of the year.

Mark Alles

The biotech reported at the end of February that the RTF came through because the FDA determined “that the nonclinical and clinical pharmacology sections in the NDA were insufficient to permit a complete review” for multiple sclerosis, leaving plenty of unanswered questions about a drug that Celgene execs had confidently predicted would bring in $4 billion to $6 billion a year. Coming on the heels of the implosion of its $710 million cash roll of the dice on the inflammatory bowel disease drug mongersen (GED-301), investors started wondering why the company was suddenly lurching from disaster to disaster.

CEO Mark Alles followed up with a management shakeup that left him with wider direct control over operations at the company.

I’ve sent out a message to Celgene, but the company isn’t noted for quick transparency.

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