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Celgene Corporation’s (CELG - Analyst Report) marketed drug, Otezla, performed disappointingly in a phase III study (POSTURE) in the ankylosing spondylitis indication. Top-line results from the study revealed that ankylosing spondylitis patients on being treated with Otezla did not show statistically significant response compared to patients in the placebo arm at week 16, thus missing the trial’s primary end point.

Specifically, the primary objective of the study was to determine the proportion of patients who achieved at least 20% reduction in disease symptoms, according to the ASAS (Assessment of SpondyloArthritis International Society) criteria at week 16 in both the cohorts. Celgene said that it will present detailed safety and efficacy results from the study at a medical conference later.

Shares Rise Despite Missing Primary Goal

Despite not meeting the primary endpoint, it was not all bad news as far as the POSTURE study was concerned. Celgene said meaningful efficacy was observed following 24 weeks of Otezla treatment in early-stage patients. Moreover, the biopharmaceutical major stated that an independent data monitoring committee recommended the continuation of the study without making any changes. The recommendation was based on an evaluation of the safety and efficacy data at week 24.

Furthermore, Celgene will collect magnetic resonance imaging data in a subgroup of patients after 52 weeks of Otezla therapy (and at additional time points) as per protocol. Moreover, radiographs will be conducted on the study’s entire population after 104 weeks.

Celgene also intends to evaluate the candidate in another phase III study in the same indication after further analysis of data from the POSTURE trial. With Celgene still retaining hope for Otezla in the above indication, investors were not too concerned by the failure of the drug to meet the study’s primary objective. Shares of the company increased 2.1% to close the trading session on Jul 9 at $87.52 per share.

Key Action Date Coming Up for Otezla

Otezla is a new entrant to Celgene’s product portfolio. The drug was approved by the FDA for the active psoriatic arthritis indication in March this year. Celgene is seeking FDA approval for the moderate-to-severe plaque psoriasis indication (U.S. target date: Sep 23, 2014). We believe investor focus will remain on Otezla’s regulatory status in the moderate-to-severe plaque psoriasis indication.
 
In addition, Celgene is seeking EU approval for Otezla in the combined psoriasis and psoriatic arthritis indication, with an opinion from the European Medicines Agency’s Committee for Medicinal Products for Human Use expected by Dec 31, 2014.

Celgene carries a Zacks Rank #2 (Buy). Better-ranked stocks in the health care sector include Actelion (ALIOF), Biogen Idec (BIIB - Analyst Report) and The Medicines Company (MDCO - Analyst Report). All the three stocks sport a Zacks Rank #1 (Strong Buy).

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