Investors had reduced expectations for Celgene's (CELG) - Get Celgene Corporation Report experimental pill for Crohn's disease, which makes the new clinical data released Sunday night look all right, although doubts will persist.
In Celgene's small mid-stage study, investigators used an endoscope to examine the colon and bowel of Crohn's patients treated with the drug, known as GED-0301 or mongersen. The result: in 37% of patients, there was an improvement in ulcer healing of 25% or more after 12 weeks.
Celgene called this 37% endoscopic response to GED-0301 "meaningful," but the bar for success was set low. Doctors who treat Crohn's patients typically like to see a 50% improvement in ulcer healing before calling treatment an endoscopic response.
The study enrolled 63 patients with moderate-to-severe Crohn's disease. The patients were split into three groups and treated with same daily dose of GED-0301 for four, eight and 12 weeks. The endoscopic exams on 52 patients were conducted after 12 weeks. There was no difference in endoscopic response between the three treatment groups, Celgene said.
Patient-reported outcomes were also collected. Among the Crohn's patients treated with 12 weeks of GED-0301, the clinical remission rate was 48%. Celgene did not disclose remissions rates for patients treated with four or eight weeks of GED-0301. The study didn't employ a placebo-only arm of patients to compare against GED-0301 results.
The rates of adverse events and serious adverse events were low and similar across treatment groups. There were no new safety signals for GED-0301, Celgene said.
Investors are paying close attention to GED-0301 because it is one of three drugs -- Otezla and ozanimod are the others -- which form the core of Celgene's burgeoning immunology and inflammation franchise. Today, Celgene's blood cancer drugs, mainly the multiple myeloma drug Revlimid, account for a majority of the company's revenue and profit. But in the next four to five years, Celgene is counting on "I&I" drugs like GED-0301 to diversify and extend the company's prodigious growth projections.
Celgene paid $710 million in 2014 to acquire the company that was developing GED-0301. At that time, expectations for the pill's potential were sky-high because early study results showed Crohn's remission rates superior to those seen by approved injectable drugs like AbbVie's (ABBV) - Get AbbVie, Inc. Report Humira or Johnson & Johnson's (JNJ) - Get Johnson & Johnson (JNJ) Report Remicade.
Two years later, as more clinical data have been disclosed, the activity of GED-0301 in Crohn's looks more modest -- comparable or perhaps slightly inferior to the blockbuster injectable drugs already on the market.
Celgene is also contending with competitors like Gilead Sciences (GILD) - Get Gilead Sciences, Inc. (GILD) Report , which is developing its own Crohn's disease pill in partnership with the Dutch pharma company Galapagos. The Gilead pill, filgotinib, has demonstrated efficacy in Crohn's patients on par with or better than Celgene's GED-0301.
Expectations for GED-0301 have come way down -- and so has Celgene's stock price -- so Sunday's new data could actually have investors feeling more confident about the drug's ability to reach the market. Celgene is in the midst of conducting a large placebo-controlled phase III study of GED-0301. Results are expected next year.
Celgene has already proven that a moderately effective and safe pill for a chronic inflammatory disease, usually treated with injectable drugs, can become a blockbuster. Celgene's Otezla is a pill approved for psoriasis that is expected to deliver nearly $1 billion in sales this year and $2 billion by 2018, according to estimates.
Celgene bulls will argue that the new GED-0301 data disclosed Sunday, while not spectacular, make the drug look a lot like Otezla, and that's good enough.
Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.