Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

You can't win them all. 

Celgene Corp. announced Thursday evening that it would discontinue a late-stage trial of its pipeline drug mongersen in treating Crohn's disease -- a signal that the $710 million the company spent to license the drug in 2014 may be a waste. Celgene shares fell more than 10 percent on Friday.  

This shouldn't have been such a shock, however. Celgene's R&D approach is all about taking multiple shots on goal, and misses are inevitable.

Good Chin
Even after a 10 percent drop related to a drug failure, Celgene shares are still looking healthy
Source: bloomberg

There are very good reasons for the investor backlash to the news. Celgene's pipeline is weighted toward earlier-stage programs with a longer timeline. Mongersen was one of the company's few medicines with a chance of FDA approval in the relative near term.

Celgene is hugely dependent on the blood-cancer drug Revlimid, which accounted for more than 60 percent of its sales in the second quarter. It would be worrisome if its efforts to find other revenue drivers are stalling. And investors seemed to interpret Thursday's news as a sign that some of Celgene's other investment choices may not have been wise. 

Celgene is going to be dependent on Revlimid for some time to come
Source: Bloomberg

But investors should have been at least somewhat prepared for this particular blow. Previous mongersen trial results in treating Crohn's, released in 2016, were both unimpressive and difficult-to-interpret. Analysts have been walking down expectations for the medicine for some time now. 

Walking it Down
Analysts have been reducing their expectations for Celgene's failed medicine for some time
Source: Bloomberg

And more broadly, Celgene has so many balls in the air that it's all but certain to let a few drop. It has done more than 30 licensing deals in addition to this one over the past four years, and has outright acquired a number of other firms. Celgene is also testing another Crohn's medicine called ozanimod and has a broad range of overlapping cancer drugs. When a company builds redundancy into its pipeline this way, it's a clear sign it's hedging risky bets.

Busy Bee
Celgene has done more drug-licensing deals in the past four years than many huge pharmaceutical companies
Source: Bloomberg

Celgene is now under added pressure to deliver some wins. Luckily, it will have many opportunities to do so. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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