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This Drug May Become a Long-Term Growth Driver for Celgene

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AG-221’s growth prospects

In addition to its robust product portfolio, Celgene (CELG) is also involved in developing promising investigational drugs across multiple therapeutic areas. In accordance with its 2010 collaboration agreement, Celgene licensed enasidenib (or AG-221) from Agios Pharmaceuticals in June 2014.

Celgene expects to submit a new drug application (or NDA) to the FDA seeking approval for AG-221 for patients suffering from relapsed and refractory acute myeloid leukemia (or RR-AML) by end of 2016. The application will be based on data obtained from Phase 1 and 2 studies that evaluated AG-221 in patients suffering from advanced hematologic malignancies and the isocitrate dehydrogenase-2 (or IDH-2) mutation.

If the FDA approves AG-221 for the treatment of AML, it should have a positive impact on the share prices of Celgene and the iShares Core S&P 500 ETF (IVV). Celgene makes up ~0.47% of IVV’s total portfolio holdings.

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Significant unmet demand

The above diagram shows AML survival rates differentiated by patients’ ages. Due to limited existing treatment options, the average five-year survival rate is in the range of 20%–25%. However, AML mostly afflicts older adults with a median age of 68–72. In such a scenario, the five-year survival rate dips further to the range of 10%–20%, mainly due to the inability of older patients to tolerate intensive chemotherapy or bone marrow transplants.

Since IDH-2 mutations are witnessed by ~10%–15% of AML cases, AG-221 could prove to be an effective treatment option for these patients. The drug was well tolerated and effective in its clinical trials. Celgene is also exploring the drug in a front-line AML indication. It’s thus expected to enable the company to pose strong competition to other hematologic oncology players such as AbbVie (ABBV), Merck & Co. (MRK), and Amgen (AMGN).

In the next article, we’ll analyze growth prospects for Otezla in 2016.

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