Wide-Ranging Growth So, although Celgene will remain a growth story based on existing usage in the near term, the extent and longevity of that growth is unclear. Not that 2010 is in question. Estimates for Celgene have earnings increasing 35% this year, to $2.82 per share, on a 34% jump in sales.
Imperfect but Effective Expecting Celgene's setback to be temporary is not unreasonable and not just because concerns that the secondary cancers in the control group of the American Society of Hematology's study may have been underreported. The bottom line of this disappointing study is that patients taking Revlimid had only a 50% reduction in the risk of the disease progressing instead of 60%. That's still an impressive risk reduction compared to present treatments for myeloma, which is an accumulation or malfunctioning of cancerous plasma cells. And regarding the other study finding that Revlimid didn't help overly much when used to treat acute myeloid leukemia: The fact is that Revlimid is being tested for efficacy in over 100 clinical trials. It cannot possibly produce positive results in all these trials. In any case, the biggest deal for Celgene will be if Revlimid gains frontline approval for the indications for which it is already in use. For those focused on the downside risk of Celgene's stock, its shares now trade for just over 20x the low-end EPS forecast for 2011. That's not cheap for a stock that would have no growth if that scenario plays out, but it's hardly a stratospheric valuation unless Revlimid suddenly became dead in the water with future growth prospects as well. That seems unlikely based solely on the geographical expansion that the drug is seeing under current indications. More likely is that the bullish duo of Celgene insiders expects their firm's 2011 to perform more in line with the average or upper end of expectations. So do I, and I'm following the execs into the firm's stock.