Celgene eyes 2020 sales of $21bn with Receptos buy

Celgene continues to stride down the acquisition trail with its latest $7.2 billion deal to buy Receptos, which emphasises the company's desire to broaden its current focus on cancer.

The acquisition is firmly fixated on ozanimod, an oral sphingosine-1-phosphate (S1P) agonist which recently started phase III trials in relapsing multiple sclerosis (MS) and ulcerative colitis and has been tipped by Celgene to become a $4 billion-$6 billion product at peak.

This is not the first time that Celgene has strayed out of its core cancer focus, having licensed antisense-based Crohn's disease treatment mongersen from Irish drugmaker Nogra Pharma in a $2.6 billion deal last year, including $710 million upfront.

It is, however, by far the largest non-cancer deal in the company's history and, according to Celgene's chief executive Bob Hugin, "is aligned with our strategic imperative of building a leading immunology and inflammation franchise" that is being led at present by recently-approved oral psoriasis/psoriatic arthritis drug Otezla (apremilast).

Hugin told investors this week that adding ozanimod will help the company meet its objective of swelling sales from $7.5 billion last year to $21 billion in 2020.

Unlike Celgene's recent $1 billion development deal with Juno for early-stage immuno-oncology products based on its CAR-T technology, analysts seem fairly happy with the price being paid, given that ozanimod has passed key clinical hurdles. However, some have noted that ozanimod is facing fairly significant competition in its lead indications.

Novartis' already-marketed oral MS drug Gilenya (fingolimod) is badged as an S1P receptor modulator and has already made significant headway in MS with sales of almost $3 billion last year. Meanwhile, Actelion has another S1P-targeting drug in phase III trials – called ponesimod – while Arena Pharmaceuticals recently completed a phase I trial of its APD334 candidate.

Data suggests ozanimod may have broader efficacy and a cleaner toxicity profile in MS than Gilenya, particularly with regard to cardiovascular safety, according to Bank of America Merrill Lynch analysts.

However, this may not be enough to support Celgene's high sales expectations for the drug, particularly as ponesimod also seems to share these characteristics, and both drugs will face stiff competition in MS from Biogen's orally-active rival Tecfidera (dimethyl glutamate), another $3 billion product. Meanwhile Gilenya will go off-patent in the US in 2019.

Observers have suggested that Celgene could benefit from forging a partnership with an established MS player to make it easier to break into the sector.

Similarly, in ulcerative colitis ozanimod is entering a market where new products such as Takeda's already-approved Entyvio (vedolizumab) and Pfizer's oral JAK inhibitor Xeljanz (tofacitinib) – approved for rheumatoid arthritis and in late-stage testing for ulcerative colitis – are predicted to drive growth in the coming years.

The entry of low-cost biosimilars of tumour necrosis factor (TNF) inhibitors such as Johnson & Johnson's Remicade (infliximab), which are quite widely used for serious cases of ulcerative colitis, will also disrupt the market.

On the whole, however, analysts seemed happy with the transaction, with shares in both companies surging upwards after the deal was announced on 14 July.

Celgene's head of inflammation and immunology Scott Smith told investors this week that Otezla, mongersen (also known as GED-0301) and ozanimod are all expected to become blockbusters by the end of the decade, with the latter making good headway in ulcerative colitis thanks to its oral dosing.

"With the addition of Receptos programmes we now have three molecules... in phase III development spanning four unique indications and by year-end we will have nine phase II programmes in a variety of important indications ongoing," he added.

"We are very encouraged by the breadth, depth and potential of this evolving pipeline."