We’ve revised Millennium’s/NASDAQ: MLNM target price from $15 to $17 based on Velcade sales reaccelerating in the late part of 2004 and low Integrilin expectations that are now priced into the stock. Millennium markets Velcade for the treatment of relapsed/refractory multiple myeloma, which represents 10% of all malignant blood cancers, and Integrilin, the leading GP IIb-IIIa inhibitor for patients with severe cardiovascular disease. The company also has a pipeline of 10 novel drug candidates in early stages of clinical development.
Velcade sales should be bolstered by increased second-line multiple myeloma penetration following the positive APEX data announced at the June 2004 ASCO. The trial was halted one year early after an independent data monitoring committee concluded in an interim analysis that Velcade showed a statistically significant improvement in time-to-disease progression compared to high-dose dexamethasone. Based on these results, Millennium is expected to file an sNDA with the FDA for an expanded label in second-line multiple myeloma shortly.
Millennium is also investigating the potential of Velcade as a front-line therapy for multiple myeloma and has reported promising early results showing a 50% response rate as a single-agent and a 75% response rate in combination with dexamethasone. The company plans to initiate three randomized Phase III trials of Velcade in first-line multiple myeloma in the fourth quarter or first quarter of 2005. While Velcade will become an increasingly important option in the second-line setting, we assume that Velcade will primarily be used in the refractory setting. However, we do believe that Velcade will prove to be highly active in first-line patients and there is potential for first-line Velcade use in combination with other agents such as Celgene’s Revlimid.
Millennium is developing Velcade for other indications including non-Hodgkin’s lymphoma (NHL), non-small cell lung cancer (NSCLC), and other solid tumors including ovarian, prostate and breast cancers. In total, the company expects to have 80 trials in progress by year-end. Although Velcade has the potential to become a broad-spectrum anticancer agent, Velcade’s strength lies in treating blood cancers. However, to expand Velcade use in other types of cancer, it needs to prove its full potential with additional data such as treating solid tumors. Potential other blood cancers include refractory follicular and mantle cell NHL. The company should decide to pursue a pivotal trial in NHL by early 2005 as well as a decision for a pivotal NSCLC trial by late 2004. While early efficacy signals in NHL and NSCLC were positive, results in colorectal cancer and chronic lymphocytic leukemia have been negative. In 2006, Millennium should have a clear path to profitability.
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