JMP on Pomalyst (from Friday's initiation report) "4th Billion Dollar CELG Franchise. Myelofibrosis | CELG Message Board Posts

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Msg  175526 of 214221  at  2/9/2013 4:52:59 PM  by

Rob Cos

The following message was updated on 2/9/2013 5:44:19 PM.

Strong Buy

JMP on Pomalyst (from Friday's initiation report) "4th Billion Dollar CELG Franchise. Myelofibrosis (on top of MM) Significant & Overlooked Revenue Opportunity...will have a significant impact on the treatment paradigm."



Pomalyst (pomalidomide) is the latest IMiD to emerge from the CELG pipeline. The drug has shown activity in a number of settings, including relapsed/refractory multiple myeloma, myelofibrosis, systemic sclerosis, and sickle cell disease. As was the case with Revlimid, and Thalomid before it, Pomalyst isalso administered orally. Celgene filed Pomalyst for accelerated approval in R/R MM in 2Q12.  The PDUFA date for Pomalyst is February 10, 2013.  The relevant patents protecting Pomalyst are set to expire in ~2023, one year ahead of the relevant patents behind Revlimid’s patent protection in Europe (2024), and well ahead of the relevant patents for Revlimid in the U.S. (2027).  Given that Revlimid has longer patent protection and that Pomalyst has shown activity in patients whose disease is relapsed and refractory to Revlimid and Thalomid, we do not expect Pomalyst to cannibalize Revlimid revenues to a meaningful extent.

CELG’s Phase II MM-002 study is the basis of the company’s accelerated approval application.  Dr. Paul Richardson of Dana Farber, arguably the most influential thought leader in the multiple myeloma field, presented the pivotal Pomalyst data at ASH 2011.  The study evaluated 4mg of Pomalyst plus low-dose dexamethasone (LoDex) versus single-agent Pomalyst. Patients were required to meet a stringent definition of relapsed and refractory disease and must have received two cycles each of both Revlimid and Velcade. In fact, the patients in the study had received an average of five prior therapies and were particularly heavily treated. The “double refractory” group has a particularly bad prognosis. 

These patients typically have a survival outlook of seven to eleven months.  Despite the incredibly “beat up” nature of this patient population, the Pomalyst monotherapy group experienced a 13% overall response rate (ORR), while the pomalidomide plus LoDex arm produced a response rate of 34%. Only 10% and 6%, respectively, of the patients in each arm failed to achieve stable disease (SD) or better. 

The PFS and OS for the Pomalyst plus LoDex arm was 4.7months and 16.9 months, respectively.  The PFS and OS results for the Pomalyst monotherapy arm were 2.7 months and 14 months, respectively.  For the sake of comparison, Kyprolis (carfilzomib) (ONXX, MO), which was approved last year in a similar setting, demonstrated an ORR of ~23%, median PFS of 3.7mos, and median duration of response (DOR) of 6.5 months (by FDA assessment; 7.6 months by ONXX assessment) in its Phase II 003-A1 study.  We view the Pomalyst MM-002 results as in line with the Kyprolis data that was the basis of its approval last year.

FIGURE 14: PFS and OS Data from MM-002 at ASH 2011

Source: Richardson et al.,  (MM-002) at ASH 2011

Pomalyst’s profile has also been supported by data from the IFM 2009-02 study, presented by Dr. Xavier Leleu from Hospital Claude Huriez, in Lille, France at ASH 2011. Similar to patients in the MM-002 study, patients in this study were also heavily pre-treated, with an average of five prior therapies, and more than 40% of patients having six lines of therapy or more. More than three-quarters of patients were refractory to both Revlimid and Velcade, and nearly as many were refractory to their most recent therapy. Results were strikingly similar to those seen in Dr. Richardson’s trial: patients who received Pomalyst plus low-dose dexamethasone 21/28 days had an ORR of 34%, with one CR, one VGPR, and 13 PRs.

More recently, data from the Phase II MM-003 study which compared Pomalyst plus low-dose dexamethasone vs. high-dose dexamethasone in R/R MM was presented at ASH 2012.  Prior to the conference, CELG issued a press release announcing that the Drug Safety Monitoring Board (DSMB) for the MM-003 had determined that the study had met its primary endpoint (PFS), as well as a key secondary endpoint (OS).  The MM-003 enrolled 425 R/R patients who had progressed after prior therapy, including Revlimid, Velcade, and alkylator therapy.  Approximately 73% of patients enrolled in the study were “double refractory” (i.e., refractory to both Revlimid and Velcade).  As a result of the DSMB’s decision, all patients who had not yet progressed on the high-dose dexamethasone arm were crossed-over to the Pomalyst arm. 

The study specifically demonstrated the the Pomalyst arm demonstrated a PFS of 4.6 months vs. 2.6 months in the high-dose dexamethasone arm.  Although the Pomalyst arm has yet to reach a median OS, the results thus far indicate that final results will be no less than 11.1 months (Figure 16).

FIGURE 15: MM-003 PFS Results - ITT

Source: Dimopoulous ASH 2012 16

FIGURE 16: MM-003 Results

Source: Dimopoulous ASH 2012

Myelofibrosis – Overlooked Data Provides a Potentially Significant Revenue Opportunity

In the myelofibrosis setting, investigators led by Ayalew Tefferi from the Mayo Clinic presented two-year follow-up data to a one-year study at ASH 2012 that was originally published in the Journal of Clinical Oncology showing that Pomalyst can ameliorate the anemia coincident with myelofibrosis. By way of background, myelofibrosis (also referred to as idiopathic myelofibrosis) is one of several myeloproliferative disorders such as polycythemia vera and essential thrombocythemia. Myelofibrosis is a condition in which scar-like (fibrotic) tissue forms in the bone marrow as a result of the abnormal production of red cells, white cells, and platelets. As a result of this scarring of the marrow, too few red blood cells are produced, resulting in anemia. In addition, typically too many white cells and megakaryocytes (the precursor cells to platelets) are produced. This, in turn, leads to an excess in the  number of platelets in the blood. The excess production of megakaryocytes also leads to the production of chemicals in the marrow that contributes to scarring. 

Myelofibrosis is relatively uncommon, with approximately 17,000 new cases of primary myelofibrosis diagnosed per year. The disease is often linked to mutations in the JAK gene, as well as to a mutation in the MPL gene (which codes for the TPO receptor). In a study published in JCO in September 2009, four groups of 84 patients were randomized in a Phase II trial of either Pomalyst at one of two doses (0.5 or 2.0mg), with or without prednisone, compared to prednisone alone. Patients were treated up to a total of twelve 28-day cycles. A total of 20 patients had an improvement in their anemia and 15 became transfusion independent. Higher response rates were associated with a greater number of cycles; these responses were durable, lasting between 3-17 months. Responses were also rapid and occurred at 1.8 months on average. Importantly, the drug was safe and well tolerated, with very low rates of >Grade 3 adverse events (5-16%). Updated data presented at ASH 2009 showed that 10 of 16 treatment responders at the end of the first year continued in remission of their anemia and were still receiving therapy with Pomalyst. Median time on treatment was 19 months and median response duration was 17 months. The side effect profile remained favorable, with no new side effects emerging between years one and two. Neither the presence nor absence of the JAK V617F mutation affected patient response.

Based on the above results CELG initiated the Phase III RESUME (MF-002) study of Pomalyst vs. placebo in patients with myelofibrosis.  The study, which completed enrollment (n=210) in 2012, is evaluating the proportion of the patients achieving red blood cell (RBC) transfusion independence with Pomalyst vs. placebo. Results from this study are expected in 1H13, and expected to lead to an NDA filing later in the year.  Given the strength of the results presented by Tefferi, we believe this trial is likely to read out positively. Further, given that the only approved treatment option for myelofibrosis is Jakafi  (ruxolitinib; Incyte, INCY), which only treats the splenomegaly (enlarged spleen) symptoms, and has no effect on the underlying anemia, we believe Pomalyst could have a significant impact on the treatment paradigm.  

Commercial Potential – Pomalyst Likely the Fourth Billion Dollar Franchise for Celgene

We forecast approval of Pomalyst in 1Q13 in the U.S., and a formal launch happening shortly thereafter.  As stated above, we forecast approval in Europe by late 2013/early 2014 at the latest, with reimbursement beginning in late 2014.  For myelofibrosis, we model in formal approval in the U.S. beginning in mid-2014 and for Europe in 2016.  For pricing, we assume pricing of $8,850 per month in the U.S. (after discounts and rebates) and $8,000 in Europe at the time of launch.  We have forecasted revenues through 2020, reaching sales of $343MM in 2015, growing to $1.2bn in 2020.  

FIGURE 17: Pomalyst Revenues by Geography and Indication

POMALIDOMIDE 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E

Pomalidomide Total Sales WW 60.7            156.7          342.9          599.0          802.3          966.2          1,114.2      1,215.2     

POMALIDOMIDE - US Sales 60.7 143.9 259.2 414.2 517.2 608.5 695.2 766.9

% Growth 137% 80% 60% 25% 18% 14% 10%

% Total Pomalidomide Sales 100% 92% 76% 69% 64% 63% 62% 63%

Multiple Myeloma 59.1 136.4 235.3 354.0 408.7 475.6 540.5 588.7

% Growth 131% 72% 50% 15% 16% 14% 9%

% of US Pomalidomide Sales 95% 91% 85% 79% 78% 78% 77%

Myelofibrosis 1.6 7.4 24.0 60.2 108.5 133.0 154.7 178.2

% Growth 355% 223% 151% 80% 23% 16% 15%

% of US Pomalidomide Sales 5% 9% 15% 21% 22% 22% 23%

POMALIDOMIDE - Ex-US Sales 0.0 12.8 83.6 184.7 285.2 357.7 419.0 448.2

% Growth 552.3% 120.9% 54.4% 25.4% 17.1% 7.0%

% Total Pomalidomide Sales 0.0% 8.2% 24.4% 30.8% 35.5% 37.0% 37.6% 36.9%

Multiple Myeloma 0.0 12.8 78.3 173.5 262.0 298.3 321.7 329.6

% Growth 510.6% 121.5% 51.1% 13.9% 7.8% 2.5%

% of Ex-US Pomalidomide Sales 100.0% 93.6% 93.9% 91.9% 83.4% 76.8% 73.5%

Myelofibrosis 0.0 0.0 5.3 11.3 23.2 59.3 97.3 118.7

% Growth 111.2% 105.0% 156.3% 64.0% 22.0%

% of Ex-US Pomalidomide Sales 0% 6% 6% 8% 17% 23% 26%

Source: JMP Securities LLC, Company reports 18

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