Celgene Corporation (NASDAQ:CELG) announced good news today about its blockbuster drug Revlimid. Did the stock jump as a result? Nope. Shares actually fell by more than 4%. Here’s what happened.
The U.S. Food and Drug Administration approved Revlimid as a treatment for patients with mantle cell lymphoma whose disease has relapsed or progressed after two prior therapies, one of which included Velcade, a drug marketed by Johnson & Johnson (NYSE:JNJ) and Takeda. Revlimid was previously approved in the U.S. as a second-line treatment for multiple myeloma and for treating myelodisplastic syndromes.
Mantle cell lymphoma is a type of non-Hodgkin’s lymphoma that is very rare, affecting only around 15,000 patients in the United States. Although a few treatments for the disease are available, Dr. Andre Goy with the Hackensack University Medical Center says that “there remains a tremendous unmet need” for patients who have not responded satisfactorily after previous treatments. FDA approval for Revlimid makes it the first oral therapy for mantle cell lymphoma.
… but old news?
You might think that approval of a new indication would cause some excitement for investors. So why did Celgene’s shares fall?
One reason is that the market most likely already baked this approval into the price of the stock. Celgene Corporation (NASDAQ:CELG) announced solid results from its phase 2 study of Revlimid in treating mantle cell lymphoma in late 2012. In February, the FDA granted priority review for the supplemental New Drug Application. Most investors fully expected the approval to come through.
The FDA announcement also came soon after Celgene Corporation (NASDAQ:CELG) announced some disappointing news related to Revlimid. The biotech presented results earlier this week at the American Society of Clinical Oncology, or ASCO, annual meeting from a phase 3 study of a Revlimid combined with melphalan and prednisone in treating newly diagnosed multiple myeloma. Unfortunately for Celgene, patients on the Revlmid combo had median progression-free survival and overall survival rates that were lower than patients taking a high-dose chemotherapy and a tandem autologous stem cell transplant regimen.
Then there’s the bigger picture. After a nice run in 2013, the markets seem to be taking a breather this week. Biotech stocks got hit even harder than the major indexes. Celgene Corporation (NASDAQ:CELG) is down 9% so far this week, but the iShares Nasdaq Biotechnology ETF isn’t too far behind. The biotech ETF is down more than 5% for the week.