Healthcare Jefferies on Biotechnology: Celgene Corporation (NASDAQ:CELG)

Jefferies on Biotechnology: Celgene Corporation (NASDAQ:CELG)

Published By News Desk at March 14, 2017 12:38 pm The results were favorable for the up and coming drug with a differentiated MOA

Our US multiple myeloma (MM) doc survey highlights the impact Genmab/ JNJ’s Darzalex will have on the paradigm, also increasing durations and growing the mkt. Generic Vel may influence prescribing decisions, which could shift Revlimid use b/w lines but nets out to be reassuringly stable for Celgene Corporation (NASDAQ:CELG) and with likely maintained growth from duration/demographics; stable Pom use expected. Selinexor receptivity looks high, reinforcing our view KPTI is underappreciated.

 Nearly 90% of physicians reported having administered Darzalex in the last month, with most use in 3+L, but over half claiming to have used Darzalex in 2L, suggesting relatively rapid adoption in this setting. Use as monotherapy or in combination 3 yrs from now is expected to increase across all treatment settings, most markedly in 1L. We now forecast 25% peak 1L penetration (from 20%) with a more rapid ramp-up from 2018E, assuming interim Phase III ALCYONE 1L data are positive during 3Q17E, and have increased the speed of adoption in 2L, still assuming 30% at peak. We now forecast Darzalex WW peak sales in MM of $8.1bn (from $7bn). The majority of physicians reported that they would increase use if a subcut. formulation were available, mostly in the 2/3/4+L settings. We believe that the availability of subcut. Darzalex could be a potential “game-changer” particularly for long-term maintenance use and potential treatment of asymptomatic smoldering MM.

Three years from now surveyed physicians expect less 1L and greater 2L Revlimid use, with overall use relatively unchanged. While this suggests less potential for U.S. share growth for CELG, it provides reassurance Darzalex's emergence will not dramatically disrupt their core franchise, and we still expect add'l growth opportunities conferred by growing pt numbers, increasing duration/time until progression, and price. The myeloma docs also suggest that U.S. Pomalyst growth may be flatter than we are currently modeling. Incrementally adjusting our model to more closely mirror the current and future IMiD dynamics is net neutral to our CELG valuation.

The results were favorable for the up and coming drug with a differentiated MOA, and we believe it could translate to upside as KPTI's ongoing studies progress; benchmarking suggests selinexor sales will land somewhere below Pomalyst and above Ninlaro, with ~$500M WW sales 5-6yr into launch achievable in our view.



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