Photographer: Martin Leissl/Bloomberg

Celgene Pins Future on Decoding Successful Cancer Treatment

Updated on
  • Drugmaker hopes its grasp of Revlimid will result in more hits
  • Thalidomide, infamous for birth defects, gets another chance

Thalidomide was infamous for causing birth defects when Celgene Corp. transformed it into a blood-cancer treatment that brings in $7 billion a year.

Trouble was, Celgene didn’t know exactly how the drug, Revlimid, worked.

“We just knew it killed myeloma cells like a gangbuster,” said Robert Hershberg, Celgene’s chief scientific officer.

Now the company says it’s finally figured out how Revlimid plays a key role in helping the body dispose of certain proteins. If Celgene can harness that discovery, the company says it could lead to new treatments for other cancers, autoimmune disorders and even neurodegenerative diseases like Alzheimer’s -- not to mention piles of profit.

It’s far from a done deal. If the company’s scientists fail, the drugmaker will look like it’s stuck in the past, unable to let go of the drug that made it great. Celgene, whose shares are down as much as 4.8 percent today on President-elect Donald Trump’s vow to lower drug prices, will also be left with a gap to fill. Patent protection for Revlimid expires in the next decade, and its revenue is expected to fall off a cliff in 2026. Given the years it takes to develop a drug from lab to market, Celgene is under pressure to show investors its pipeline can feed the company’s growth.

Future Medicine

The stakes are big, not only for Celgene and its bottom line but for millions of patients for whom treatments can be elusive. It’s also a test for a new protocol called “precision medicine,” which aims to match patients with drugs based on factors such as genetics. Understanding exactly how a drug works in an individual patient’s body is critical in successful prescribing.

“The medicine of the future is not using sledgehammer approaches,” said Celgene board member Gilla Kaplan. “It’s going to be the ability to identify the groups of patients that respond best and minimize the toxic effects. What Celgene is trying to do is stay on top of the crest.”

Kaplan worked on thalidomide, Revlimid’s predecessor, in the 1980s and ‘90s, originally developing it as a leprosy treatment. At the time, thalidomide was tainted. In 1961 it was taken off the market after being linked to thousands of children born with flipper-like limbs after their mothers took the drug as an anti-nausea medication during pregnancy.

In 1991, Kaplan and fellow researchers at Rockefeller University showed that thalidomide inhibited a molecule that could make it a warrior against AIDS. But the side effects were a major hurdle, and other companies brought AIDS drugs to market first. Nobody wanted the drug, but Celgene was paying attention. The drugmaker bought it. After years of work to remove its toxic effects, Revlimid became available in 2005.

Sales of Revlimid and its cousin, Pomalyst, another thalidomide derivative, have increased steadily. Pomalyst is also used to fight multiple myeloma, and has been successful for patients who relapsed after taking Revlimid.

But how do the drugs work? The answer lies in the garbage-disposal system of cells.

All living cells are constantly manufacturing proteins to watch out for viruses, carry messages around the body or help repair damaged cells. But cells also need a way to discard unwanted proteins. The trash man in this case is a molecule group called the E3 ligase. The E3 ligase has a molecule called cereblon that sticks out like a hook and grabs onto a matching protein. When the E3 ligase gets hold of the protein, it “tags” it for a trip to the dump.

Thalidomide, Revlimid and Pomalyst work by modifying the shape of the hook. That way, the hook can tag different types of proteins for the garbage heap.

Three Drugs

Now that Celgene understands this, it’s working on redesigning the shape of the hook so it can tag different proteins. In theory, Celgene could modify the drug to “snag and tag” all sorts of unwanted proteins for destruction.

The Summit, New Jersey-based company has said publicly that it has three drugs currently in the pipeline: CC-122 for diffuse large B-cell lymphoma, CC-220 for lupus, and CC-90009 for acute myeloid leukemia. Hershberg said the company also has another myeloma drug in the works and more potential treatments the company hasn’t revealed.

Celgene investors and observers have shown different levels of excitement over the next-generation Revlimids.

“Celgene is doing everything right,” said Jeff Ross, a radiologist and founder of Vailshire Capital Management LLC, a family fund with about $6 million under management. He said Revlimid and its next-generation successors will continue to be Celgene’s golden goose. “They have collaborative partnerships and internal research and development to cement their leadership into the next decade.”

Scathing Note

More skeptical is Cowen & Co. analyst Eric Schmidt, who wrote a scathing note after attending a September Celgene presentation.

“Why is cereblon an optimal target within this pathway?” he wrote. “What is the connection between cereblon and a specific disease state? In other words, other than the fact that cereblon turned out to be the molecular target of two great myeloma drugs (Revlimid and Pomalyst) why should investors believe the target has utility in any other indication?”

Celgene is “still shooting in the dark when it comes to how to apply this class of compounds to drug development,” Schmidt wrote.

Not so, said Mark Alles, Celgene’s chief executive officer.

“I would say we’re in a room that’s dark but there are several night lights on that give us insights into what our future can be,” Alles said in an interview. “We feel like we’re in a much better position, as opposed to the serendipity of the past.”

Schmidt still has an outperform rating, equivalent to a buy recommendation, for Celgene. He’s more convinced by Celgene’s other bets -- partnerships with smaller biotechnology firms and acquisitions of outside assets that it’s made over the years.

So Celgene will still have a business, even if Revlimid’s next generation fails. But Alles says Revlimid remains the heart and soul of the company.

“Without a doubt it’s the cornerstone therapeutic, it’s who we are today,” Alles said. Understanding protein creation and destruction “is the sun in the solar system we’re building. That’s our strategic future.”

— With assistance by Chloe Whiteaker

    Before it's here, it's on the Bloomberg Terminal.