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Thalidomide's Surprising Act IV

By Amy Tsao Few drugs have had as checkered a history as thalidomide. Over the last 50 years, it has gone from a miracle drug used as frequently as aspirin to a headline-grabbing poison that deformed unborn babies to a source of relief for lepers and patients with other rare immune disorders. Now, new research suggests that it might be a viable treatment for certain forms of cancer.

Upon its approval in Europe and Canada in the mid-1950s, thalidomide, which was sold by a German drug company, became a widely used sleeping pill. It was also often prescribed to pregnant women for morning sickness -- until alarming revelations in the 1960s that many who took it gave birth to babies with serious skeletal birth defects. Thousands of children died in their first month of life. Thalidomide became notorious as one of the great debacles of modern medical history.

Today, the drug is manufactured by Warren (N.J.)-based Celgene (CELG) but is approved only for use in treating leprosy, under strict rules set by the U.S. Food & Drug Administration. But based on promising new cancer research, it now may serve as the progenitor for a new cancer-fighting drug, Revimid, that Celgene has in development.

PROFITS AHEAD? Revimid is the result of a decade of tweaking thalidomide's chemical structure. Laboratory and early clinical data indicate that the slightly altered experimental drug slows the progress of cancers and immune disorders, but lacks thalidomide's side effects: constipation, sleepiness, and tingling pain in the arms and legs. Most important: Celgene says Revimid has shown no evidence of causing birth defects in animal testing. It still has one serious side effect, however -- it seems to lower blood platelet counts -- but that's a common problem with cancer treatments.

Developing a treatment with thalidomide's anticancer benefits without its scariest consequences has long been Celgene's goal. "The board had the vision that thalidomide could be used for severe diseases and then felt we could develop better versions," says Chief Executive John Jackson. And it could be a big seller if regulators approve it. Celgene says some 92% of thalidomide's $119 million in sales last year came from its off-label use as a cancer treatment. The remaining 8% come from leprosy and a myriad of other off-label uses, including treatment of HIV and lupus.

In fact, thalidomide sales in 2003 should make Celgene profitable for the first time in its 17-year history. Wall Street expects earnings per share of 14 cents in 2003, up from a 15-cent loss last year. And Celgene figures that in the coming years Revimid would replace thalidomide and eventually eclipse it, hitting peak annual sales of $1 billion.

"OPEN THE CURTAIN." Such an estimate might be on the high side -- only a handful of cancer drugs have ever had that kind of blockbuster success. And at the moment, thalidomide can be sold only under the most rigid precautionary guidelines. Even so, it has already become a standard part of treatment for people with a blood cancer known as multiple myeloma.

"If you can come up with [an altered] version that's less regulated, that has the makings of a very big market," says Jim Reddoch, a biotech analyst at Friedman, Billings, Ramsey. (The firm has no banking relationship with Celgene, and Reddoch doesn't own shares.) He expects Revimid to reach the market in 2005 and bring in sales of $330 million in 2007. Using what he calls conservative estimates, Reddoch sees Revimid at $1 billion in peak sales a decade after it's approved.

As is often the case with pharmaceuticals, Celgene doesn't know all of the underlying mechanisms that make thalidomide and Revimid fight cancer. It suspects that they block inflammation and stall the growth of blood vessels that feed cancer cells. The drugs also seem to increase the immune system's disease-fighting cells. David Stirling, Celgene's chief scientific officer, says the drugs "impact the killing process by using the immune system in a more natural way." Cancer evades detection by the body's defenses. Revimid and thalidomide, he says, help to "open the curtain" for the immune system.

FDA FAST-TRACK. Several large trials are ongoing for Revimid, in multiple myeloma, metastatic melanoma, and in a condition called myodysplastic syndrome (MDS), a pre-leukemic disorder where the bone marrow doesn't produce enough blood cells. So far, Phase II data showed that the drug was effective in lowering or stabilizing the cancer in multiple myeloma patients who have relapsed. It worked as well as thalidomide but without that drug's side effects.

Revimid may hold the most promise for MDS, for which there are no approved drugs. It's now treated with blood transfusions and chemotherapy. In a Phase 2 trial of Revimid in 25 MDS patients, 11 no longer needed blood transfusions, and four found their need for transfusions reduced by half.

That's "remarkable," says Dr. Stephen Nimer, head of hematologic oncology at Memorial Sloan Kettering Cancer Center. As a result, the FDA has given Celgene "fast-track" status for the disorder, which means the agency would speed review of an application by months since the drug would serve an unmet clinical need. (Nimer has worked on trials for both Revimid and thalidomide.)

CANCER COMPETITION. For Revimid to be a blockbuster, says Reddoch, Celgene will have to prove that the drug works as effectively in multiple myeloma and other cancers. Celgene should be able to charge substantially more for the new drug than thalidomide since it will have approval specifically for cancer use and be easier for doctors to prescribe.

In treating some other cancers, however, it will face competition. This year, the FDA O.K.'d Millennium's Velcade for multiple myeloma patients where previous therapies haven't worked. Millennium has an advantage in being first to market, notes David Nikodem, an analyst with Blumberg Capital Management, but Celgene may still win the day because Revimid appears to have fewer side effects. (Neither Nikodem nor his firm owns shares in either company.)

Revimid won't be effective with all cancers, and like many treatments, it may prove to be most effective in tandem with other drugs and therapies. But if it does prove to be a safer, more effective alternative to thalidomide, Revimid may earn its own place in medical history. Tsao covers biotechnology issues for BusinessWeek Online. Follow her Biotech Beat column only on BusinessWeek Online

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