ALTH Allos Therapeutics, Inc. (MM)

Recently, the US Food and Drug Administration (FDA) delivered a boost to Celgene Corporation (CELG) by approving its cancer drug Istodax (romidepsin) for an additional indication.

The US regulatory body granted accelerated approval to Istodax for treating patients suffering from peripheral t-cell lymphoma (PTCL). The patients were treated at least once for PTCL. Istodax is already approved for treating patients suffering from T-cell lymphoma who have received at least one systemic therapy. The successful label expansion would boost Celgene’s top line significantly.

We remind investors that Celgene filed a supplemental new drug application (sNDA) with the FDA, seeking to expand the label of Istodax to include the PTCL indication, in December 2010. The sNDA was based on safety and efficacy data from two mid-stage studies of Istodax in PTCL patients. The FDA, which reviewed the application on a priority basis, assigned a target date of June 17, 2011. The approval came before the target date.

We note that the US regulatory authority generally reviews those drugs on a priority basis which offer major advances in treating diseases having no adequate therapy. Applications for priority review designated drugs are reviewed by the FDA within six months of submission as against the usual ten months.

Istodax, on hitting the US market for the PTCL indication, will compete with Allos Therapeutics’ (ALTH) injectable treatment for PTCL − Folotyn − which was launched in 2009.

We remind investors that Istodax was added to Celgene’s already established cancer portfolio through the acquisition of privately-held Gloucester Pharmaceuticals early last year. Apart from the Gloucester acquisition, Celgene also took over Abraxis BioScience last year.

The Abraxis acquisition further bolstered Celgene’s cancer portfolio by adding cancer injection Abraxane. Abraxane is already available in the US and European markets as a second-line therapy for metastatic breast cancer. The drug is being developed for other indications such as skin, lung and pancreatic cancer. US approval of the drug for treating lung cancer is expected to be sought in the second half of 2011.

Our Recommendation

We have a Neutral stance on Celgene. The stock carries a Zacks #3 Rank (Hold rating) in the short run.

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