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Celgene 'surprised' by FDA rejection, but affirms 2020 sales expectations

In the wake of a U.S. rejection of a key late-stage drug, Celgene Corp. executives stressed that the company is still on track for future sales and pipeline developments.

The U.S. Food and Drug Administration issued a refusal-to-file letter for multiple sclerosis therapy ozanimod, citing a lack of nonclinical and clinical pharmacological information.

"The team is surprised by this finding," Chairman and CEO Mark Alles said on a call with investors after the news, adding that they believed they understood the FDA's position and what was needed going forward.

Celgene's shares were down more than 6% in post-market trading.

Ozanimod, which is also in phase 3 studies for ulcerative colitis, has been framed as one of the next big revenue drivers for the company, particularly after another experimental drug, GED-0301, failed a late-stage trial in Crohn's disease in October 2017.

Market intelligence company Evaluate projected in a report last year that ozanimod would make worldwide sales of more than $1.7 billion by 2022, while RBC Capital analysts had projected $5 billion in peak sales. Celgene's own Terrie Curran, president of global inflammation and immunology, said in the company's second-quarter earnings call that that it expects $2 billion to $3 billion apiece for its two targeted markets.

"We view ozanimod as one of the most, if not the most, important pipeline programs for [Celgene], though without additional info, it is difficult to know how material of a setback this is," RBC Capital analyst Brian Abrahams said in a research note.

Multiple sclerosis is a competitive market and expected generic versions of a top seller, Novartis AG's Gilenya, in 2020 could further curb ozanimod's expected revenues, Abrahams noted.

Celgene reaffirmed its $19 billion to $20 billion revenue guidance through 2020, which were both slashed last year after the GED-0301 failure.

The company is now re-evaluating its expected regulatory filings for multiple sclerosis globally, though it does not expect delays in the ulcerative colitis area, Alles said.

From FDA feedback so far, this is not related to core safety data and the company does not expect to do more pivotal clinical trials, said Jay Backstrom, chief medical officer and head of global regulatory affairs. "We believe that we have some ongoing clinical pharmacological studies that could help address it."

Executives on the call declined to share further details on the data the agency needed, with Alles saying that they would need to meet with the FDA before discussing those details with investors and analysts.