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CELG ABBV > First Detailed Look at Celgene Crohn's Disease Pill Impresses

http://www.thestreet.com/story/12919382/1/first-detailed-look-at-celgene-crohns-disease-pill-impresses.html

The first look at Celgene's (CELG) experimental Crohn's disease drug GED-0301 is impressive and explains why company executives have been so upbeat on the drug since acquiring it last spring for big bucks. As a pill, GED-031 (also known as mongersen) has the potential to become a preferred Crohn's therapy over injectable drugs, most prominently, Abbvie's (ABBV) top-selling Humira.

In a phase II study of 160 patients with active Crohn's disease, a high dose of mongersen (160 mg/day) demonstrated a statistically significant remission rate of 65% compared to 9.5% for a placebo, measured after two weeks of treatment. Remission is defined as a Crohn's Disease Activity Index (CDAI) score of less than 150, maintained for at least two weeks. The response rate for the high dose of mongersen (CDAI reduction of at least 100 points after 28 days) was 72% compared to 17% for placebo, also statistically significant.

Mongersen safety profile looks relatively clean, with most adverse events related to complications of Crohn's disease.

This new data comes from an abstract, or summary, of the phase II study released Monday ahead of a presentation Tuesday during a meeting in Europe. The Mongersen remission rate observed in the study is higher than what's historically been recorded using injectable Crohn's drugs such as Johnson & Johnson's (JNJ) Remicade or Abbvie's Humira. Nonetheless, four-week remission rate data which is not yet available, will make for a better comparison, ISI Group analyst Mark Schoenebaum wrote in an email to clients Monday morning.

"We believe at peak GED-301 [mongersen] could reach $3 billion plus in peak worldwide sales," writes Schoenebaum. "Although sell-side consensus includes very little for the drug, we believe investor expectations are much, much higher than zero. Every $100MM in GED-301 unadjusted revenue contributes to approximately $0.10 EPS after 2020 or alternatively approximately $0.50 to our DCF valuation. This assumes the company does not spend against any additional earnings. Celgene is planning to start a broad phase 3 program by 2014 year-end, putting a potential launch in the 2017-18 timeframe."

Last April, Celgene purchased mongersen from a small Irish drug maker, paying $710 million upfront. Including future milestones and sales payouts, Celgene committed $2.6 billion to acquire rights to the drug. Celgene was aware of the phase II study data before making the deal.