Dive Brief:
- The approval prospects for Celgene Corp.'s highly anticipated multiple sclerosis drug ozanimod appear tied to a metabolite. Wall Street can't tell whether that's a good or bad thing.
- During a presentation at the American Academy of Neurology's annual meeting, Celgene disclosed that the metabolite, called CC112273, was the main reason for ozanimod's efficacy. In fact, emails from the biotech to sell side analysts noted that it was responsible for about 90% of the drug's clinical activity and safety profile observed in late-stage testing.
- Analysts are speculating that lack of information about this metabolite is the likely cause of a Refuse to File letter issued for ozanimod's approval application. The letter determined that nonclinical and clinical pharmacology sections of the application were insufficient.
Dive Insight:
Ozanmiod data is no small change to Celgene, which sees the treatment as a vital driver of near-term growth as well as a potential blockbuster. Investors are therefore watching the drug closely; In February, the big biotech's stock fell 6% after the Food and Drug Administration issued its RTF.
Now, the drug is at a kind of tipping point. Either Celgene quickly fixes up and refiles ozanimod, or it will have to collect more data, which could put resubmission off until 2019 or 2020. The latter would likely have harsh consequences.
"Another hiccup on ozanimod would continue to destroy value at the company and likely cause Street numbers to come down another leg," Mizuho analyst Salim Syed wrote in an April 26 note.
It looks as though this metabolite will be the difference maker, and something Celgene could very well elaborate on during its first quarter earnings review next week.
"Our read of the tea leaves here is it will be positive," Syed wrote.
"Some Street observers have noted that the RTF was [a] negligence issue, not a compound specific issue," he added. "We believe the metabolite news last night seems to support this notion that it was negligence, though some investors have questioned how much additional work this metabolite news will create for [Celgene] and if it will lead to further delays."
It's a fair question, given that the Food and Drug Administration explicitly said in 2016 guidance that development and marketing delays could arise if drug metabolites are found disproportionately in animal versus in-human testing. In the case of ozanimod, investigators found much higher levels of CC112273 in people treated with the drug than in animals. (Metabolites are a byproduct of the body breaking down an active ingredient like ozanimod.)
A worst-case scenario would strap Celgene with one to two years of additional pre-clinical work to prove the metabolite isn't toxic. Investment bank Jefferies estimates such an outcome poses a 5-10% hit to the company's stock, fueled by "big uncertainty" over whether the drug still has a shot at approval.
Yet the way Celgene unveiled its news hints at a rosier view.
Mizuho's Syed supposed the company would have put out a more formal statement if there was a material threat to ozanimod's future. "[I]n other words [Celgene] lawyers probably didn't feel compelled enough here to put out a press release ... arguably a good thing," he wrote.