Celgene Corp., which is becoming one of Donald Trump’s biotech punching bags, just got a self-inflicted black eye.

The company’s shares slid more 1 than percent after partner Jounce Therapeutics Inc. reported disappointing data late Wednesday for a cancer drug. The Food and Drug Administration followed up with its own blow Thursday by putting it at the head of a new list of firms that impede generic competition. 

Celgene teamed up with Jounce Therapeutics Inc. in 2016 to license a cancer treatment known as JTX-2011, agreeing to pay $225 million up front and as much as $2.6 billion in total for a drug that hadn’t yet been tested in humans. Two years later, with some sets of human tests in the books (albeit early data from a few particularly sick patients), the results aren’t exciting.

When it comes to Celgene, there are two competing narratives: One holds that investors are criminally undervaluing one of the most interesting pipelines in biotech. Others think that the firm’s recent spate of research and development issues aren’t a fluke, which leaves the company entirely too dependent on its best-selling blood cancer drug, Revlimid. Jounce’s data and the FDA’s attention will likely nudge more people toward the latter interpretation. 

Of course, results may improve over time and the drug may do better in different patients. But this certainly wasn’t what Celgene wanted from a closely watched data debut. Jounce’s drug is by no means the biggest product in Celgene’s arsenal. But none of the firm’s other updates Wednesday were particularly exciting, either, and Celgene could have used a win.

It’s  another entry on a list of setbacks that have investors questioning the firm’s dealmaking and drug decisions. Celgene licenses drugs from smaller biotechs at a rate that surpasses larger and better-funded peers, but the strategy doesn’t appear to be working in its favor. 

Celgene’s pipeline is heavily scrutinized because 63 percent of its revenue comes from Revlimid, which will see generic competition in the U.S. by 2022. The company’s many efforts to delay generic competitors while significantly hiking the price of the drug have drawn the ire of the Trump administration as it tries to lower drug prices. Health and Human Services Secretary Alex Azar hasn’t directly criticized the company, but he left neon breadcrumbs in a drug-pricing speech that lead directly to Celgene and Revlimid.

The administration’s drug pricing plan specifically calls out the practice of using FDA safety rules in order to delay competition, a Celgene specialty.  On Thursday, FDA Commissioner Scott Gottlieb released a database of drugs that generic drugmakers have had a hard time getting samples of as they try to develop cheaper copies, a clear effort at naming and shaming obstructive firms. Celgene was the most frequently cited offender, and Revlimid the second most cited drug. 

It’s unclear if the administration can or will make changes that will bring Revlimid competitors to market faster.  But it seem like it wants to try, and that it will at the very least make it increasingly awkward for Celgene to keep raising prices.

The last thing Celgene needed as it attempts to regain investor trust was more questions about its pipeline and Revlimid’s longevity. This week, it’s getting both. 

To contact the author of this story: Max Nisen at mnisen@bloomberg.net

To contact the editor responsible for this story: Beth Williams at bewilliams@bloomberg.net

Celgene also acquired opt-in rights to up to four additional early stage programs

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