(Adds treatment price, details on how drug works, updates share price)
By Bill Berkrot
March 21 U.S. health regulators approved on Friday a Celgene Corp drug to treat psoriatic arthritis, a type of arthritis associated with the skin disease psoriasis that causes joint pain, stiffness and swelling.
The drug, a pill known chemically as apremilast, will be sold under the brand name Otezla. It is also being studied by the U.S. biotechnology company as a treatment for psoriasis and ankylosing spondylitis.
Celgene projects Otezla sales of $1.5 billion to $2 billion a year by 2017.
"We're cautious about achievability of management's guidance for this product," Sanford Bernstein analyst Geoffrey Porges said.
"It's a highly competitive category and there are a lot of drugs with greater efficacy," added Porges, who forecasts annual sales will reach $800 million by 2019.
Celgene has set a wholesale price of about $22,500 for a year of treatment. It expects to begin selling the medicine this month.
Both Porges and ISI Group analyst Mark Schoenebaum said the price was higher than they had expected even though it represents about a 25 percent discount to current biologic market leaders.
Otezla works by blocking an enzyme called PDE4, or phosphodiesterase 4, associated with inflammation. It offers the convenience of being a pill, while the current leading treatments are injected drugs.
"Relief of pain and inflammation and improving physical function are important treatment goals for patients with active psoriatic arthritis," Curtis Rosebraugh, director of the Food and Drug Administration Office of Drug Evaluation II, said in a statement.
"Otezla provides a new treatment option for patients suffering from this disease," he added.
The FDA is expected to make a decision by September on Otezla for psoriasis, a much larger market than psoriatic arthritis.
"We think that the psoriatic arthritis market will be a solid fit for Otezla given the dissatisfaction with current drugs," Cantor Fitzgerald analyst Mara Goldstein said in a research note. "We think the drug has a good chance of widespread use."
Current treatments for the condition include corticosteroids and a class of injected biotech medicines known as tumor necrosis factor (TNF) blockers, such as AbbVie Inc's Humira and Enbrel from Amgen Inc. The TNF blockers are highly effective but have more potentially serious side effects.
As a condition of approval, the FDA is requiring a registry of pregnant women who use the drug so it can assess the risks to them related to Otezla exposure, the agency said.
It also said Otezla patients should be monitored for potentially significant weight loss. If unexplained or clinically significant weight loss occurs, the weight loss should be evaluated and discontinuation of treatment should be considered, the FDA said.
In clinical trials, the Celgene drug was also associated with an increase in reports of depression by a small percentage of patients.
Celgene shares, which had been off as much as 4.6 percent amid a wider biotech selloff on Friday, recovered somewhat and closed down $5.61, or 3.7 percent, at $144.40 on Nasdaq. (Reporting by Bill Berkrot; Editing by Tom Brown, Marguerita Choy and Peter Galloway)