Japanese pharmaceutical company
said late Friday that the Food and Drug Administration approved Velcade for patients with previously untreated multiple myeloma. The approval was expected, although some on Wall Street were surprised by the broadness of the label for the drug, which will compete with
multiple myeloma drugs.
Velcade, previously approved for multiple myeloma patients who had tried another treatment unsuccessfully, won the expanded label of front-line use, or use in patients who are previously untreated. The drug was developed by Millennium Pharma, a
Celgene investors will be watching Velcade sales, as the drug will compete with Celgene's Thalomid and more so with its Revlimid, which is used but not yet approved as a front-line treatment in multiple myeloma.
Celgene could seek an expanded label for the front-line setting for Revlimid as early as the second half of 2008 or as late as the second half of 2009, depending on whether the company takes an accelerated approach and with which study data the supplemental new drug application is filed, according to Wall Street analysts.
The lack of a front-line label could remain an overhang on Celgene shares over the next few quarters, according to Cowen and Co. analyst Rachel McMinn who also has a neutral rating on the stock. "Nonetheless, feedback from thought leaders suggests Revlimid should split the market with Velcade and ultimately gain 50-60% market share, up from 20%+ today, suggesting plenty of long-term growth in the U.S. despite Velcade's head start," she wrote in a note to investors previewing the FDA's decision on the Millennium/Takeda drug.
However, Robert Baird analyst Christopher Raymond noted on Monday that Velcade's label, although anticipated, is surprisingly broad. Velcade was approved for both transplant eligible and ineligible patients. Also, the Vista trial, on which approval was based, looked at Velcade in combination with melphalan and prednisone, a regimen that's not used as often in the U.S. But the approved label doesn't specify which chemotherapy regimen with which Velcade must be used.
"Combining this label with what we think is a marked efficacy advantage and a significant cost advantage (a front-line Velcade regimen costs roughly half that of Revlimid), we think it's plausible that some private payers may begin to specify Velcade as the front-line agent of choice," wrote Raymond, who reiterated a neutral rating and $61 price target for the stock.
Analysts are looking for sales of $311 million, on average, from Revlimid in the second quarter, which ends June 30. In the first quarter, Revlimid sales totaled $286.8 million, surpassing analysts' expectations of $272 million, and helping total revenue rise 58% to $462.5 million. JPMorgan analyst Geoffrey Meacham, who has an overweight rating for Celgene, sees $1.35 billion in Revlimid sales for 2008.
Celgene shares were trading up 35 cents, or 0.6%, at $59.93 on Monday.
Millennium/Takeda's co-development partner,
Johnson & Johnson
has also filed a corresponding application for Velcade as a front-line treatment for multiple myeloma with the European Medicines Evaluation Agency (EMEA).