Celgene Corporation ( CELG - Analyst Report ) announced that it has received approval from the US Food and Drug Administration (FDA) for a label expansion of its cancer drug, Abraxane.

Celgene gained approval to use Abraxane as a first-line combination therapy for treating patients suffering from locally advanced or metastatic non-small cell lung cancer (NSCLC). Curative surgery or radiation therapy is not applicable for those patients.

The FDA approval of Abraxane for the additional indication was based on positive results from a phase III study (CA-031). We note that Abraxane is already available in the US as a second-line therapy for metastatic breast cancer. Approval for the new indication has boosted Abraxane’s sales potential.

The NSCLC market is highly crowded and includes players, such as Sanofi ( SNY - Analyst Report ) , Roche ( RHHBY ) and Eli Lilly and Company ( LLY - Analyst Report ) .

We note that Celgene is also seeking approval for the NSCLC indication in Japan, Australia and New Zealand. The regulatory authorities in those countries are expected to decide on the matter in 2013.

Moreover, Abraxane is being developed for other indications, such as metastatic pancreatic cancer (phase III MPACT study, data expected by year-end/the first quarter of 2013).

We note that an eagerly awaited event at Celgene concerns its oncology candidate, pomalidomide. Celgene is seeking approval of the candidate in combination with low-dose dexamethasone for the treatment of relapsed and refractory multiple myeloma patients, who have received at least two prior therapies. A final decision from the FDA is expected by February 10, 2013 (action date).

Our Recommendation

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