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Celgene (CELG) Q1 Earnings Beat Estimates on Revlimid Sales

Zacks Equity Research

Celgene Corporation CELG reported better-than-expected results for the first quarter of 2019 on strong sales of Revlimid.

The company’s stock has gained 31.7% in the past six months against the industry’s decline of 2.6%.

 

Celgene reported adjusted earnings of $2.55 per share, which beat the Zacks Consensus Estimate of $2.49 and increased from $2.05 in the year-ago quarter.

Total revenues grew 13.7% year over year to $4.025 billion in the quarter and beat the Zacks Consensus Estimate of $4.01 billion.

Otezla & Revlimid Drive Growth

Net sales of Revlimid came in at $2.6 billion, reflecting 15% year-over-year increase. The drug performed well both in the United States (up 13%) and international markets (up 19%). Growth in the quarter was driven by increase in market share and extended treatment duration.

Net sales of another cancer drug, Abraxane, increased 9% in a year to $286 million. Pomalyst/Imnovid sales came in at $557 million, up 23% year over year. Sales were driven by increase in market share and extended duration.

Sales of psoriasis drug, Otezla, were up 10% year over year to $389 million but missed the Zacks Consensus Estimate of $418 million.

All other product sales (including Istodax, Thalomid, Vidaza and an authorized generic version of Vidaza in the United States) totaled $215 million in the quarter, down from $229 million in the year-ago quarter.

Adjusted research and development expenses increased 25.9% to $874 million. Adjusted selling, general and administrative expenses decreased 2.6% to $671 million.

Business Update

Earlier in the month, the stockholders of Celgene voted in favor of the proposed merger with Bristol-Myers Squibb Company BMY. The transaction will close in the third quarter of 2019.

Pipeline Update

The company announced top-line results from the phase III ROBUST trial evaluating Revlimid plus rituximab, cyclophosphamide, doxorubicin, vincristine and prednisone (R-CHOP) chemotherapy (R2-CHOP) in patients with previously-untreated, activated B-cell (ABC) subtype diffuse large B-cell lymphoma (DLBCL). The trial did not meet the primary endpoint of demonstrating superiority in progression-free survival (PFS) compared to placebo plus R-CHOP.

Celgene announced that the Committee for Medicinal Products for Human Use (CHMP) adopted positive opinions for Revlimid in combination with bortezomib and dexamethasone (RVd) in adult patients with previously-untreated multiple myeloma, who are not eligible for transplant, and for Pomalyst/Imnovid in combination with bortezomib and dexamethasone (PVd) for the treatment of adult patients with multiple myeloma, who have received at least one prior treatment regimen, including Revlimid.

Last month, Celgene submitted a New Drug Application (NDA) to the FDA for ozanimod in patients with relapsing forms of multiple sclerosis (RMS).

The FDA granted Priority Review designation to the NDA for fedratinib in patients with myelofibrosis, with a target action date of Sep 3, 2019.

In April, Celgene and Acceleron Pharma XLRN submitted a BLA to the FDA for luspatercept for the treatment of adult patients with very low to intermediate-risk myelodysplastic syndromes (MDS)-associated anemia, who have ring sideroblasts and require red blood cell (RBC) transfusions, and for the treatment of adult patients with beta-thalassemia-associated anemia, who require RBC transfusions.

The company is also working to expand Revlimid’s label. The FDA granted Priority Review designation to the supplemental New Drug Application (sNDA) for Revlimid in combination with rituximab (R²) in patients with relapsed and/or refractory indolent NHL. A decision from the FDA is expected by Jun 27, 2019.

Roche’s RHHBY Tecentriq in combination with Abraxane for the treatment of adult patients with unresectable locally advanced or metastatic triple-negative breast cancer (TNBC) was granted accelerated approval in the United States.

2019 Outlook Reiterated

Celgene expects earnings per share of $10.60-$10.80 in 2019. Net revenues are estimated to be $17.0-$17.2 billion. Revlimid sales are projected to be $10.8 billion and Abraxane sales to be around $1.1 billion. Pomalyst’s revenues are expected to be $2.4 billion, whereas Otezla sales are projected to be $1.9 billion.

Our Take

Celgene’s first-quarter results were strong as the company comfortably beat on both sales and earnings. The focus is on the merger announcement with large-cap pharma Bristol-Myers Squibb Co. BMY for a whopping $74 billion. Per the terms, Celgene shareholders will receive $50 plus one share of Bristol-Myers and one tradeable Contingent Value Right (CVR), which will entitle the holder to receive a cash payment of $9.00 upon the achievement of FDA approval of all three products (ozanimod, liso-cel and bb2121) within the specified time periods.

Zacks Rank

Celgene currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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