Threshold Pharmaceuticals ( THLD), Clovis Oncology ( CLVS) and Newlink Genetics ( NLNK) are among Celgene's competitors pursuing development of their own pancreatic cancer drugs. Celgene's ongoing phase III study compares the combination of Abraxane and gemcitabine versus gemcitabine and a placebo with a primary endpoint of overall survival. The study is being led by a pancreatic cancer Dream Team of oncologists and some doctors are already prescribing Abraxane off label to pancreatic cancer patients, according to reports posted on various patient advocacy web sites. The results reported by some of these patients is anecdotal, of course, but does appear to be consistent with the strong results reported in the Abraxane phase II studies. Make no mistake, the outcome of the Abraxane phase III study in pancreatic cancer remains high risk. But what I like most about the Celgene CVR at $TK is that the market is hardly pricing in success at all. Each holder of the Celgene CVR receives a pro-rata share of $300 million in cash, paid if FDA approves Abraxane for pancreatic cancer with a survival claim in the label. If the approval occurs before April 1, 2013, Celgene pays an additional $100 million. Additionally, Celgene CVR holders will receive an ongoing royalty tied to Abraxane sales that starts at 2.5 % for annualized sales of $1 billion and scales higher. Abraxane sales today are annualizing at about $450 million, but pancreatic cancer sales, alone, could exceed $1 billion. Some investors may prefer to play the Abraxane pancreatic cancer trial event by owning Celgene itself. I own the Celgene CVR because of the favorable risk-reward. I would expect the CVR to trade closer to $7.50 (from $TK today) if Abraxane improves overall survival in the pancreatic cancer trial. The risk is the CVR could become almost worthless if the pancreatic cancer trial fails. Results from the study are expected late this year or early next. Silverman is long Celgene CVR.