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Epigenetics (Part II): The Biopharmaceutical at the Epicenter

Monday - 1/7/2013, 3:43pm  ET

Part I (Epigenetics: A 21st Century Science with Huge Investment & Medical Implications) explains epigenetics in simplified terms and lists some of the major players.

This article’s focus is Celgene , as it owns two of the four FDA-approved epigenetic drugs. Before we hone in on the epigenetic drugs, let’s look at the bigger picture.

Celgene is a biopharmaceutical company primarily engaged in the discovery, development and commercialization of therapies to treat cancer and immune-inflammatory related diseases. It’s a $34.5 billion market cap company that’s well-established (founded in 1986, publicly traded since 1987).

Its drugs include: Revlimid, Thalomid, Vidaza, Abraxane, and Isodax. Abraxane is used to treat breast and lung cancers, while the others treat various blood cancers. Revlimid is its blockbuster drug, accounting for 68% of revenue in its most recent quarter

Additionally, it has an FDA-registered service called LifebankUSA. Parents can bank their babies' umbilical cord blood, as well as stem cells from the umbilical cord and the placenta.

Celgene also has various partnerships with other drug companies.

Celgene has a robust pipeline, including a strong late-stage pipeline, as it's conducting over 25 Phase III trials. Foolish writer Keith Speights wrote a great summary of Celgene's 2012 highlights and what's coming in 2013.

Approved Epigenetic Drugs: Two out of Four is...Darn Good

While Meatloaf considered two out of three ain't bad, I'd say Celgene's two out of four is darn good.              

  

Company

  
  

Target

  
  

Agent

  
  

Indications

  
  

Approval Date

  

Merk

HDAC

Zolinza (vorinostat)

Cutaneous T-cell lymphoma (CTCL)

FDA approved Oct. 2006

Celgene

HDAC

Istodax (romidepsin)

CTCL

 

Peripheral T-cell lymphoma (PTCL)

FDA approved Nov. 2009

FDA approved June 2011

Celgene

DNMT

Vidaza (5-azacitidine)

Myelodysplastic syndromes (MDS)

Higher-risk MDS

FDA approved May 2004

FDA approved (expanded)  Aug. 2008

Eisai; sublicensed to Johnson & Johnson

DNMT

Dacogen (decitabine)

MDS

 

MDS

FDA approved May 2006

FDA approved (expanded) Mar. 2010

Source: Nature Biotechnology (original FDA approval data) and Drug.com (used to update)

Note: Table includes FDA (US) approvals only. EU approvals may differ. For instance, Dacogen failed to gain FDA approval for the treatment of acute myeloid leukemia (AML) in early 2012, but was approved by the European Commission in September to treat AML.

While the two Celgene epigenetic drugs are not blockbusters, the fact that Celgene acquired both through acquisitions shows good foresight. Vidaza, the very first approved epigenetic drug, is no slouch -- it's number 2 by revenue in Celgene's drug lineup. Vidaza sales increased 15% last quarter, and accounted for about 16% of total revenue. Isodax is currently contributing little to Celgene's top line. However, in a promising independent Mayo Clinic lab study, Isodax used together with Eisai's/JNJ's Dacogen killed multiple cell lines of kidney and breast cancer.

Of course, there is always the risk that epigenetic drugs in the pipeline might not live up to the promise some believe they have. Additionally, epigenetics as a drug discovery tool might fall short of expectations.  

Is Celgene Among the Quantitatively "Fittest"?

Qualitative info -- epigenetics -- led me to Celgene. Now it's time to run Celgene through some basic quantitative analysis. I primarily selected other larger biotechs to provide context. JNJ is the odd company out, as it's not a larger biotech like the others, but a huge diversified health care company. I included it because it is involved in epigenetic drugs, and is considered by Yahoo! Finance to be a direct competitor.   

Stock Price

First, let's check how Celgene's stock has performed over a 5-year period...

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