SAN DIEGO -- Institutional biotech investors crowded into a hotel room here Sunday night to hear Celgene ( CELG) detail -- some would say defend -- the efficacy and safety of the company's experimental drug Revlimid.

In light of recent reports of excessive patient deaths, Dr. Alan List of the H. Lee Moffitt Cancer Center in Tampa, Fla., defended Revlimid's safety Sunday evening at the American Society of Hematology conference. List cited statistics from medical literature that these patients would be expected to have a 10% annual death rate; therefore, the 9% death rate in the Revlimid study is reasonable, especially since he claimed only two patient deaths were tied to the drug.

"There is nothing out of the ordinary," List said, referring to the death rate in the study and the observed toxicities of the drug. List is the lead investigator in Celgene's phase II trial of Revlimid as a treatment for so-called 5 q minus, or low-risk, myelodysplastic syndrome study (MDS), a cancer-like bone marrow disease.

But such assurances of Revlimid's safety did not necessarily gibe with some of the other data presented Sunday, nor did they assuage critics who believe the company is glossing over Revlimid's safety problem and hiding the fact that more of the deaths in the study are being caused by the toxic effects of the drug.

"Celgene is not telling us the full story about Revlimid," said one hedge fund manager who is short the stock. "Nothing I heard tonight convinces me that the Food and Drug Administration will approve this drug. In fact, the drug is causing more deaths than I previously thought."

Celgene plans to use this 5 q minus MDS study to seek marketing approval for Revlimid from the FDA during the first quarter of 2005. Despite the drug's compelling efficacy, this plan could be delayed or derailed entirely if Revlimid is deemed too toxic for patients with the 5 q minus form of MDS.

Deaths Acknowledged

On Nov. 17, TheStreet.com reported exclusively that there were 11 patient deaths in the phase II Revlimid study, developments which raised questions about the drug's safety. At that time, the cause of the deaths was not known. The deaths were particularly concerning because the patients in the study are all diagnosed with a low-grade form of MDS, a disease which progresses slowly and generally does not present a near-term risk of death.

For the first time, Celgene acknowledged Sunday night that 14 patients died in the study, but only two of these deaths were caused by Revlimid, the company claimed. The other 12 patients died as a result of their disease. With 148 patients enrolled in the study, the overall death rate was just over 9%, with a drug-related mortality rate a bit more than 1%, according to the firm.

The two patients in the study whose deaths were tied to Revlimid died because the drug caused a drastic reduction in their white blood cells (neutropenia), red blood cells (anemia) and platelets (thrombocytopenia). This so-called pancytopenic condition left the patients vulnerable to infections, including pneumonia. For these patients, the pneumonia was so severe that they died.

Serious adverse events reported in the study overall, according to Celgene, included 12 patients with pneumonia, eight patients with neutropenia and six patients with thrombocytopenia. Another six patients suffered from neutropenia with fever, a very serious sign of infection that forces sufferers to be hospitalized.

But while Celgene said that the other 12 deaths in the study were not related to Revlimid, company executives acknowledged that some of these deaths were also caused by pneumonia (they wouldn't disclose an exact number). Given that Revlimid lowers blood counts and makes patients susceptible to serious infection, Celgene critics question how only two deaths are being tied to the drug. If more of the patient deaths resulted from serious infections, Revlimid's toxicity was at least partially responsible, critics charge.

The question over how many patients in the study died because of Revlimid is further muddled by the fact that Celgene and a few of its investigators, including List, were charged with characterizing the patient deaths. There was no external and/or independent panel of doctors used to determine the cause of the patient deaths.

The best way to measure the efficacy and safety of any drug is to conduct a large, randomized and controlled study in which some patients receive the drug and others receive a placebo. However, this is something that Celgene chose not to do with Revlimid in these low-grade, 5 q minus MDS patients.

As recently as last week, at an advisory panel meeting held to review two cancer drugs, FDA officials reiterated their strong preference for controlled drug studies and expressed frustration that an increasing number of drug companies are seeking drug approvals based on uncontrolled studies.

Sometime next year, it will be the FDA that will ultimately decide whether Revlimid is an approvable drug for MDS patients. Until then, Celgene bulls and bears will stick to their guns, which could have the effect of keeping Celgene's stock price in a fairly tight trading range.

Safety data were priority No. 1 Sunday night, but Celgene also presented strong efficacy data: Patients enrolling in this study required regular blood transfusions to keep their MDS under control. But after taking Revlimid, approximately 64% of patients no longer required blood transfusions.

A final thought: Celgene is also developing Revlimid as a treatment for multiple myeloma, a cancer affecting plasma cells in the bone marrow. One fund manager at the confab here said the Revlimid-MDS dust-up is just noise compared with the big commercial opportunity if/when the drug is approved for multiple myeloma. That's why he said he owns Celgene and is willing to weather any short-term volatility to see it through. Celgene is running phase III trials of Revlimid in multiple myeloma, with data expected next year.

Adam Feuerstein writes regularly for RealMoney.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to adam.feuerstein@thestreet.com.

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