Celgene's Otezla, heading for selloff, nabs niche inflammation market all to itself

Ahead of an expected selloff, Celgene's Otezla has nabbed a third FDA nod in oral ulcers associated with Behçet’s Disease. (Celgene)

Celgene’s Otezla may be waiting for a buyer, but that doesn't mean it has stopped expanding. The immunology med just nabbed a go-ahead in a niche market as the first FDA-approved therapy. 

Set aside for selloff so that the $74 billion Bristol-Myers Squibb merger can move ahead, Otezla on Friday won a green light to treat oral ulcers associated with Behçet’s Disease, a rare inflammatory disorder that affects five in 100,000 people in the U.S. It's the drug's third indication on top of plaque psoriasis and psoriatic arthritis.

Unlike those crowded markets, Otezla has this indication all to itself. As Terrie Curran, Celgene’s president for inflammation and immunology, pointed out, it's the first med cleared for the condition. But Otezla will have to compete with much cheaper over-the-counter drugs for mouth ulcers like steroid and benzocaine products.

In the phase 3 Relief study, Otezla cut the pain of oral ulcers by a median 42.7 points on a patient-reported scale at week 12, compared with 18.7 points in the placebo arm. By a more objective standard, Otezla cleared oral ulcers in 52.9% of patients compared with 22.3% of those taking a placebo.

Otezla has been racking up data for more indications, too. Last year, the drug hit its marks in a phase 3 scalp psoriasis study and it's under late-stage testing in pediatric psoriasis, mild-to-moderate psoriasis and genital psoriasis, Celgene’s most recently quarterly filing shows.

RELATED: As filgotinib filing nears, Gilead should nab Celgene's Otezla, analysts say. Here's why

After a slower than expected start, Otezla has lately turned into one of Celgene's top growth drivers. In the first quarter, some five years after its launch, Otezla sales jumped 10.2% to $389 million, making it Celgene's third-best-selling drug behind multiple myeloma treatments Revlimid and Pomalyst. Analysts have said it could reach $2.5 billion at peak.

Bristol-Myers Squibb would surely benefit from Otezla's blockbuster cash flow, but the Federal Trade Commission has forced a sale to meet the agency’s antitrust standards. Analysts have tagged several companies as likely bidders, including top immunology and inflammation players Amgen and Johnson & Johnson.

But RBC Capital Markets has made a case for Gilead Sciences, which is inching closer to the market with an expected FDA filing for JAK inhibitor filgotinib in rheumatoid arthritis and a renewed 10-year immunology pact with Galapagos.