) --


(CELG) - Get Report

shares continued to drop Tuesday despite what looked like

very positive results

from an important pivotal study of Revlimid in multiple myeloma. By late morning, the price had fallen 2.57% to $54.10, down from yesterday's closing price of $55.53. To understand the stock's reaction, it's important to remember the key question Wall Street wanted answered from the so-called MM-015 study:

How much Revlimid does a newly diagnosed multiple myeloma patient need?

The answer investors were hoping for (at least those who owned Celgene stock) was, "a lot of Revlimid." A good portion of the data presented from MM-015 certainly suggests that more Revlimid is better for multiple myeloma patients. But the study also suggests that perhaps patients could do just as well without Revlimid in the early stages of their treatment.

This might translate into less Revlimid use overall, and for investors looking at Celgene's lofty valuation -- a current price-to-earnings multiple of 21 times estimated 2010 earnings -- lower Revlimid sales isn't a good thing.

Investors expect Revlimid sales to grow from around $1.7 billion this year to well more than $3 billion in 2013-2014. To meet these expectations for high growth, however, the treatment duration of Revlimid therapy needs to grow longer, particularly for front-line multiple myeloma patients.

The positive data presented Monday at the American Society of Hematology meeting was fairly easy to understand: Newly diagnosed multiple myeloma patients treated with Revlimid plus chemotherapy followed by Revlimid "maintenance" (the so-called MPR-R arm) had a 50% reduction in the risk of disease progression or death compared to patients treated with chemotherapy alone (the MP arm.)

Patients treated with chemotherapy alone (the MP arm) lived an average of 13 months before their cancer progressed. The median progression-free survival of the Revlimid maintenance patients (MPR-R) wasn't reached in the study yet.

These results suggests strongly that treatment with more Revlimid is better and should probably be the standard of care for newly diagnosed multiple myeloma patients, which was the conclusion voiced by the presenter of the data Monday afternoon.

But the MM-015 study included a third group of multiple myeloma patients who were treated with a fixed, nine-month course of Revlimid and chemotherapy. This "MPR" arm is considered induction therapy only because Revlimid dosing is stopped after nine months, meaning no long-term, or maintenance, treatment.

Results from the Revlimid induction arm of the study weren't supposed to be ready for presentation Monday, but surprisingly, some of the data were made available -- and it's these data that raised questions about Revlimid and caused Celgene's stock to drop.

Again, the good news first: A comparison of the Revlimid maintenance (MPR-R) patients against the Revlimid induction (MPR) patients clearly showed that maintenance (more Revlimid) is superior. What's striking about these data was that the patients treated with Revlimid induction (MPR) lived an average of 13 months before their cancer progressed. And as stated above, the median progression-free survival of the Revlimid maintenance patients (MPR-R) was not reached.

When you see the graph, it's clear that the well-being of Revlimid induction patients begins to slide downhill rapidly at 10 months, right when dosing with Revlimid ends.

And here comes the troubling news, or at the least the uncertainty for Revlimid: The median progression-free survival for the chemotherapy-only patients (MP) and the Revlimid inducton patients (MPR) is the same at 13 months.

What this suggests is that patients may not need to be treated with Revlimid during the early or induction phase of treatment. Chemotherapy alone, or perhaps an induction regimen that includes the rival chemotherapy drug Velcade from


, could be used initially to receive equally good results.

Once a patient responds to treatment or his cancer starts growing again, Revlimid could be used as maintenance.

In this possible scenario, doctors would be treating patients with less Revlimid, which isn't a possibility Wall Street wanted to ponder Monday night. That's why Celgene shares fell 5% to $52.46 in the after-hours trading session.

To add more complexity to this already confusing set of Revlimid data, it's likely that the results presented Monday afternoon are going to change as the MM-015 study continues.

What's hoped, at least by Celgene and its supporters, is that the Revlimid induction (MPR) patients eventually outperform patients treated with chemotherapy alone (MP) as the study matures. This would increase confidence that more Revlimid -- both as induction and maintenance therapy -- is warranted for multiple myeloma patients.

One scrap of evidence from the data presented Monday to support this future, bullish outcome is that the overall response rate (i.e. tumor shrinkage rate) of MPR patients was superior to that of patients treated with MP.

But also worrisome Monday was the fact that an early peek at overall survival -- ultimately the most important data point from any cancer study -- showed virtually no difference at all between patients treated with Revlimid maintenance (MPR-R) and patients treated with chemotherapy (MP.)

As the study matures, it's more than likely that Revlimid patients will live longer, but investors were clearly spooked that not even a hint of a survival benefit in favor of Revlimid was showing up in the early study results.

The next look at Revlimid data from the MM-015 study is likely to come in June at the American Society of Clinical Oncology annual meeting.

-- Reported by Adam Feuerstein in Boston

Adam Feuerstein writes regularly for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;

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