Although the following is pure supposition on my behalf, I thought that it may be worth opening this week with a discussion on Celgene and what they may do, following the expiration of their option on the group's ex-Japan rights for GvHD and Crohn's disease, later on this month. MSB's share price is below Celgene's entry price of $3.82 in spite of a raft of clinical news from MSB and the approval for the commercialisation of JR-031 for treatment of GvHD by the Japanese Ministry for Health. (As an aside, I believe there remains a significant short position in MSB, equivalent to around 3 months worth of average daily volumes, presumably because those shorters don't believe stem cells work, or that MSB will need to issue equity at a lower price in the near future.)
My understanding is that JR-031 is expected to see first revenues in early 2016 and that MSB's marketing partner, JCR Pharmaceuticals has the capacity to produce enough product to adequately cover Asian demand and it would therefore be no surprise if they wanted to widen their geographical base.
Which of course, brings us back to Celgene and their intentions. It is believed that Celgene wants to expand its' oncology franchise, witness the initial investment and option over MSB's work in this area. A few years back, the US Govt and the FDA introduced a scheme to incentivise drug development in the neglected orphan drug market for tropical diseases and for children. This scheme allows for the owner of a drug, which is cleared for use in a market of less than 200,000 people, and in children under 18, to have its drugs reviewed under a priority review pathway. Patently, Celgene would be well aware that clearance by the FDA of the GvHD indication could generate a Rare Paediatric Disease Review Voucher. Any company which applies and receives this voucher can monetise it by either using it on its other non-orphan pipeline drugs (accelerating the path to market) or sell it to another company. As a point of reference, United Therapeutics sold a voucher to AbbVie for $350m in August and Sanofi purchased a voucher from Asklepion Pharma in May this year for $245m.
Who knows what the eventual outcome may be but I see plenty of reasons for Celgene to still want to play.
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