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New Data Improves Sales Outlook For Celgene's Apremilast

SUMMIT, NJ (TheStreet) -- Celgene's (CELG) strong stock performance this year started with the release of bullish, long-term (2017) guidance in early January. While Street estimates are generally close to Celgene's own forecasts, the biggest difference is with sales expectations for apremilast, the company's new oral drug for psoriasis and psoriatic arthritis.

Celgene's guidance implies about $1.5 to $2 billion in 2017 apremilast sales versus Street consensus of about $876 million. This discrepancy creates a lot of room for either Street estimates to increase or company guidance to decrease. Celgene has been fairly consistent on their guidance despite skepticism and has argued it has a more complete view of the data than investors. Celgene is presenting additional apremilast data this week at a rheumatology meeting in Europe, which should be quite positive.

The take-home point from the updated apremilast data will likely be that response rates increase over time with treatment. Early data put apremilast's efficacy in psoriatic arthritis clearly below the biologics -- Johnson & Johnson's (JNJ) Remicade, Amgen's (AMGN) Enbrel and Abbvie's (ABBV) Humira. However, Celgene believes apremilast will be positioned as a psoriatic arthritis therapy to be used after patients no longer respond to methotrexate and before biologics (which require injections) are prescribed. Importantly, Celgene is not positioning apremilast as a direct competitor to biologics.

Celgene believes there is a market for a safe, oral option with solid efficacy to be used before the injectable biologics. Obviously, the closer apremilast can get to the biologics in terms of efficacy, the greater the likelihood doctors will find it a useful option.

While there are a lot of data, I want to focus on results from the Palace-1 trial in psoriatic arthritis. In particular, for the 20 mg dose of apremilast, the ACR-20 score (a common measure of response) increased from 31 percent at 12 weeks to 38 percent at 24 weeks to 63 percent at 52 weeks. This increase in efficacy came without any increase in adverse events. The 30 mg apremilast dose saw a similar increase in ACR-20 response from 41 percent at 12 weeks to 47 percent at 24 weeks to 55 percent at 52 weeks.

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