Celgen Corporation (CELG)

 Investigation of Celgen Corporation (CELG) verified my conclusion that a few elites with the entrepreneurship and leadership create major value for companies.
Established in 1986, Celgen had kept recording deficit until 2003, when it realized profit in the first time. From then on, this company had been growing with an enormous speed, now Celgen is the one of the top large Biopharmaceutical companies in the world.

So what make Celgen turn into profitable company after 17 years struggling and who is the main contributor for this success?

Let’s take a look into the drug sales history.

Before 2006, Thalomid (Thalidomide) is the major revenue driver for Celgen as shown below.

If you know a little about drug safety, you will recall Thalomid is a very famous drug, not for its efficacy, but for the horrible side effects. In the 1950s, this drug went to the European market to treat morning sickness in pregnant women. Years later, more than 10,000 babies with limb deformities were born and scientists found the cause is Thalomid.  This tragedy became typical case study for everyone in safety surveillance.

Who would have any interest or dare to think about apply this drug into clinical usage again? Unless he/she is crazy.

Sol Barer is such a crazy person. This brave contrarian thought about Thalomid in a different angle. He saw the application value of this drug in leprosy patients when most people were overwhelmed by the fear for the drug. He also saw the huge potential of this drug in treating blood cell cancers.

However, even though he had the deep insight, expertise, courage and perseverance to hold on, Celgen was at the brink of bankruptcy at that time in 1997. In one extreme case, the company only had the working capital for two weeks. The other great leader John Jackson, CEO of Celgen at that time, brought in the crucial capitalization, $18 million. The teamwork between two leaders helped Celgen hold on till next year, when the FDA approved Thalomid for treating leprosy.

Even though leprosy’s market is small, Sol Barer was aware of the huge potential of this drug because of its immunological regulating mechanism. Later on, the application on treating multiple myeloma was approved too. Sol also dedicated resources of the company to develop thalidomide analogs, with stronger immunological effect and fewer side effects. His endeavor led to the approval of Revlimid (lenalidomide) for the treatment of patients with transfusion-dependent anemia on December 27, 2005. And, the revenue jumped into explosion since 2006 (shown below).

The expiration date of this blockbuster Revimid is July 2016, there are five years that they still can collect considerable profits. And there are plenty of phase 3 clinical trials going on for Revimid, aiming to expand the application of this drug (shown below).

However, the management always thinks about what candidates to fill the pipeline once the blockbuster is gone.

Two products Vidaza (Azacitidine) and Abraxane (Paclitaxel Protein-Bound Particles For Injectable Suspension) aroused my attention. Both products were acquired. Vidaza from Pharmion Corporation after Vidaza was approved by the FDA for treating myelodysplastic syndromes (MDS) in 2007, and Abraxane from Abraxis Bioscience, Inc. with $2.9 Billion in October 2010.

Vidaza’s revenue was $206.7, $387.22, and $534.3 million in 2008, 2009, and 2010 respectively. While in the last 9 months in 2011, the total sales of Vidaza reached $516.14 million, increased 31.1% compared to the same time period in last year. However, the patent of Vidaza will be expired on May 19, 2011, when intense competition from generic makers will eat away its profit.

Abraxane was approved by the FDA in January 2005 for the treatment of metastatic breast cancer. The effective compound is paclitaxel, which has been used successfully to treat solid tumors for more than 20 years. Abraxane is a nano, albumin-bound paclitaxel, which make paclitaxel solvable and decrease the allergic reaction in tumor patients. With right price and marketing strategy, I think this drug could bring in considerable revenue for Celgen too. $314.5 total revenue was recorded in 2009 (before Celgen bought Abraxis), but Celgen recorded only $71.4 million revenue from Abraxane in 2010, indicating it might lack the right sales force to promote Abraxane. In the last 9 months of this year, $282.2 million was sold for Abraxane. To turn this drug into next blockbuster, Celgen need further marketing and sales promotion.

The pipeline of Abraxane is promising as shown below.

In summary, I admire Celgen’s great leaders, who held 17 years hardship till eventual victory.  And I am optimistic on the current operation performance as there are solid pipeline and 5 year patent protection for the blockbuster.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.