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Celgene Corporation (CELG - Analyst Report) recently announced positive top-line results on its candidate apremilast from a phase III study (PALACE-1: n~500), which is evaluating patients suffering from psoriatic arthritis at 20 mg and 30 mg dosages. We note that psoriatic arthritis refers to a painful, chronic inflammatory disease, associated with psoriasis (a skin-related disorder).

Top-line results from the randomized, placebo-controlled, pivotal study revealed that patients treated with apremilast achieved the primary endpoint defined by the American College of Rheumatology criteria for 20% improvement (ACR20) compared to baseline at week 16.

Top-line data also revealed that treatment with apremilast resulted in significant improvements in arthritis-related endpoints (including ACR50 and ACR70) through week 24 across the evaluated dosages.

Moreover, apremilast also resulted in improvements in various measures of physical function. Furthermore, treatment with the candidate was found to be safe. Celgene stated that the extension phase of the study will remain blinded until all patients have completed week 52.

We note that apart from the PALACE-1 study, the PALACE program consists of two more phase III studies (PALACE 2 and PALACE 3). Celgene intends to present top-line data from both studies in the third quarter of 2012. Celgene intends to seek US approval for apremilast in the psoriatic arthritis indication based on data from the PALACE program in the first half of 2013.

Celgene is also evaluating apremilast in patients suffering from moderate-to-severe psoriasis. Data from two ongoing phase III studies (ESTEEM 1 and 2) evaluating apremilast in patients suffering from moderate-to-severe psoriasis are expected by year end. Celgene intends to seek US approval for apremilast in the psoriasis indication in the second half of 2013.

European approval is expected to be sought in the second half of 2013. Other indications for which apremilast is being studied include rheumatoid arthritis and ankylosing spondylitis. Successful development of apremilast would boost the stock. Apremilast, on approval, would compete with drugs such as Amgen/Pfizer’s (AMGN - Analyst Report)/(PFE - Analyst Report) Enbrel in the market for inflammatory diseases.

Our Recommendation

We currently have a Neutral recommendation on Celgene. The stock carries a Zacks #3 Rank (Hold rating) in the short-run.

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