Johnson & Johnson

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Surprise: Johnson & Johnson Just Did Celgene Corporation a Huge Favor






Johnson & Johnson Does Celgene a Favor


Preface
In early June of this year, Johnson & Johnson (NYSE:JNJ) released the results of a Phase 3 trial for its Multiple Myeloma drug, called Daratumumab. But, while the results were quite good, the surprise came from somewhere else.

The drug was tested in combination with another compound called Lenalidomide. Though you wouldn't know it from the JNJ press release, the trade name for Lenalidomide is actually Revlimid, which is the number one selling oncology drug in the world, owned and patented by none other than Celgene Corporation (NASDAQ:CELG). JNJ did Celgene a huge favor.

JNJ Stipulates - Celgene Wins
Not only is Revlimid the best-selling oncology drug in the world, it's also the crown jewel for Celgene Corporation. Here is the chart of projected sales for all oncology drugs.



We can see Celgene's Revlimid at the top. As of today, the drug generates over $6.5 billion in sales for Celgene Corporation (NASDAQ:CELG) and is expected to grow 20% next year. With such a dominant position, it's an automatic that competition will come around.

Johnson & Johnson (NYSE:JNJ) is by far the largest pharmaceutical company in the world, so when news broke that JNJ was making progress with its own oncology treatment, it naturally posed a threat to Celgene. It appears that JNJ has capitulated as its rather impressive Phase 3 trial results rely on a cocktail of drugs with Celgene's Revlimid as the center piece.

Johnson & Johnson Just Did Celgene Corporation a Huge Favor
So it comes down to the reality that as the largest pharmaceutical company in the world now has a great oncology cocktail which it may bring to market, the massive sales force will in fact also be pushing Celgene's crown jewel. Not only has competition, in this one case, been thwarted, but it has been turned on its ear into a winner for Celgene.

In what does read as a little bit of misdirection, JNJ calls Lenalidomide " standard-of-care treatment," yet never once mentions Celgene or the trade name Revlimid. In fact, to find these results, a Google search won't work unless you know to use the compound name rather than search for "Celgene Corporation" or "Revlimid."

It's this reality that has kept Celgene out of the news, while JNJ gets the spotlight. The mainstream media is bit behind on this one. You should not be.

The author is long shares of Celgene Corporation (CELG).

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