By Debbie Strickland

Special To BioWorld Financial Watch

Many biotechnology companies talk about resurrecting failed drugs in new indications, but Celgene Corp. has actually succeeded in that difficult endeavor, bringing back perhaps the century's most notorious pharmaceutical, thalidomide, while also using the compound as a springboard to building a pipeline of analogues and distant analogues with potential for treating chronic and life-threatening diseases without the risk of birth defects that accompanies the original product.

The thalidomide analogues are called IMiDs (immunomodulatory drugs) and the more distant relations make up a group of immunotherapeutic pharmaceutical compounds called SelCIDs (selective cytokine inhibitory drugs). These two classes of compounds are orally administered small molecules that suppress excess tumor necrosis factor-alpha production and have anti-angiogenic properties. They are intended to treat chronic inflammatory diseases, cancer and other disorders. The lead SelCID, CDC 801, is in a Phase II trial for Crohn's disease.

Celgene will likely seek a second FDA clearance in the first half of 2000 by filing a new drug application (NDA) for Attenade (d-methylphenidate), a chirally pure version of Ritalin (dl-methylphenidate), for the treatment of attention-deficit disorder(ADD). In two pivotal trials, the chiral version increased duration of action by a statistically significant amount. Market potential is high, given that an estimated 1 million to 2 million U.S. children are now being treated for ADD, generating drug sales of more than $500 million per year.

While the Attenade NDA process probably won't be easy (it seldom is), it couldn't be tougher than the one for thalidomide, which Celgene has branded as Thalomid. The compound was linked to 12,000 incidents of birth defects when it was introduced in Europe and Canada as a sedative in the 1950s. Celgene won FDA approval last year to market the product as a treatment for cutaneous manifestations of moderate-to-severe erythema nodosum leprosum (ENL), a condition associated with leprosy. And more, potentially much broader, indications are in the works including cancer and inflammatory conditions.

"There really is nothing similar to thalidomide, given its past history," said John Jackson, chairman and CEO of Warren, N.J.-based Celgene. A longtime executive at such pharma and chemical powerhouses as Merck and American Cyanamid, Jackson joined Celgene in early 1996 to help spearhead the fledgling biotech's efforts to win approval for its infamous lead drug candidate. "I thought that the potential for thalidomide coming back to the market to treat serious, debilitating, life-threatening diseases would be a very worthwhile project," he said. "At the same time, it was a tremendous challenge, working with the FDA and other interested parties."

"It was very clear when we started working with the drug that not only the FDA but a lot of other folks with loud voices had very serious misgivings," said Bruce Williams, vice president of marketing. Groups like the March of Dimes doubted any level of precaution could prevent the drug from being mistakenly prescribed or dispensed to a pregnant woman, but on the other side were activists pushing for the drug's approval, particularly AIDS activists, who were impressed with the drug's efficacy data for treating AIDS-related aphthous ulcers. "Celgene spent a fair amount of time three, four, five years ago beginning to work the political market," said Williams.

The FDA, whose caution fortunately stalled thalidomide's launch in the United States back in the 1950s, made it clear from the outset that the drug was a special case. "At one point," said Williams, "the FDA even as much as said to us, [the approval decision] will depend as much on the nature of distribution controls as on the quality of scientific package." The agency advised Celgene to begin by taking a look at Nutley, N.J.-based Hoffmann-La Roche Inc.'s handling of Accutane (isotretinoin), a powerful acne drug that can cause birth defects.

In response to the FDA's concerns, Celgene created the S.T.E.P.S. program the System for Thalidomide Education and Prescribing Safety. In order for a doctor's prescription to be honored or a pharmacy to receive the drug, both have to register and certify that they will follow procedures for safe dispensing. Each order is shipped directly, and every prescription has to be verified with the company.

Female patients of childbearing age are required to use two forms of contraception and must take pregnancy tests periodically. All patients must give informed consent and participate in a confidential outcomes registry managed on Celgene's behalf by an academic epidemiology research group. Dispensing pharmacies must register, confirm that prescribing physicians are registered, and make sure that patients sign informed-consent forms. Automatic refills are not permitted, and prescriptions may not exceed four weeks.

"There are many compounds, especially oncology drugs, that happen to cause birth defects, but we are being extra careful with this drug," said Sol Barer, Celgene's president. "The FDA was excellent in terms of understanding what we were trying to do and rigorous in terms of making sure the distribution system would meet public health needs," he said. "We found interaction with them to be quite good."

Thalomid's distribution restrictions presented a unique marketing challenge the company couldn't exactly give doctors boxes of free samples to hand out. In some cases, pharmacists or doctors who knew they would have demand for Thalomid contacted the company when they heard the drug had been approved, and, in other cases, Celgene made the first move, contacting pharmacies that were dispensing drugs for ENL.

The distribution precautions are reflected in the drug's average wholesale price of $7.50 per 50 mg. capsule (dose schedules range from one capsule per day to as high as 10 per day). Cancer patients, for whom the drug is prescribed off-label, constitute the bulk of users and typically take between 200 and 400 mg. per day, said Williams. Crohn's disease patients, another off-label group, take 50 to 100 mg. per day.

Sales of the product hit $5.3 million in the second quarter, a 51 percent increase over the first quarter.

"I feel that Thalomid sales are at an inflection point," said U.S. Bancorp Piper Jaffray analyst Peter Ginsberg, who picked up research coverage of Celgene in late September. "There are two major cancer conferences coming up at which the drug will be highlighted. The fourth quarter could be very strong." The Minneapolis-based analyst expects the drug's sales to hit $23 million this year, $53 million in 2000 and $82 million in 2001.

"The key here," said Ginsberg, "is that this is the first drug on the market that is an angiogenesis inhibitor. As a result, we believe it has a three-year head start versus all other angiogenesis inhibitors."

Ginsberg added that he was also "very impressed" with Attenade and believes that the company's SelCIDs and IMiDs programs could ultimately generate sales higher than those of Thalomid.

Cancer, Inflammatory Indications Under Development

Thalomid's approved indication is narrow, comprising only several thousand patients. Williams estimates that some 70 percent to 80 percent of usage is in cancer, and the next NDA filing for the product may be for multiple myeloma.

Researchers in early September reported data from a Phase II open-label multiple myeloma study conducted at Cedars-Sinai Comprehensive Cancer Center in Los Angeles. In the trial, Thalomid shrank tumor burden by 50 percent or more in 30 percent of patients. Celgene expects to launch a Phase III trial in that indication by the end of the year.

The cancer program, largely funded by the National Cancer Institute, is testing Thalomid in a variety of malignancies, including glioblastoma and head and neck cancers. Phase II trials in various cancers will identify the most promising indications for Phase III studies.

"Because the purported mechanism of action interferes with angiogenesis, there is reason to believe that the application could be very broad," said Williams.

Celgene late last year sealed up rights to the cancer indications by licensing Rockville, Md.-based EntreMed Inc.'s thalidomide cancer patents and is paying EntreMed royalties on sales.

The drug also looks promising as a therapy for various autoimmune conditions, most notably Crohn's disease, for which a Phase III trial is expected to begin in the first half of 2000. The drug appears to work in autoimmune/inflammatory diseases by inhibiting tumor necrosis factor-alpha, which points toward its potential as a therapy for rheumatoid arthritis. Phase II monotherapy trials in RA, however, were "somewhat marginal," Williams said, with more encouraging responses emerging from a combination therapy trial with methotrexate.

The drug also has reached Phase III testing for recurrent aphthous ulcers in HIV patients.

As for attracting investors to the company, "originally it was more of a challenge than it is now," said Barer. "Early on, there was a knee-jerk reaction to thalidomide. But we emphasized the fact that it was only to be used for very serious indications and used only in a program to maximize the context in which it could be used safely. The investment community became very comfortable with it."

Celgene sought and won U.S. approval for Thalomid as a solo act but is seeking partners elsewhere for the product, including Europe and Canada, where the drug was originally marketed.

In July, the firm drew $15 million in a debt financing convertible to common stock at $19 per share beginning in July 2000. In recent weeks, the company's shares (NASDAQ:CELG) have traded at $25 to $30, closing Thursday at $28, an 82 percent gain for the year to date.

Chemistry origins filling pipeline

Celgene has its origins as a chemical company spinoff of Hoechst Celanese. The original mission centered on making chemicals via biocatalysis, but as the firm became more involved in making chiral intermediates, the focus shifted to pharmaceuticals. The lead product from the chiral program is Attenade.

The company picked up rights to thalidomide in the 1990s, after the drug underwent some early-stage research at Rockefeller University, and in addition to developing the compound itself, began generating analogues and distant analogues with much higher levels of activity and no teratogenic effects. *