Celgene (CELG) Q1 Earnings & Sales Beat on Revlimid Strength

Celgene Corporation CELG reported encouraging first-quarter 2018 results wherein both earnings and sales topped expectations.

The company reported adjusted earnings of $2.05 per share which beat the Zacks Consensus Estimate of $2.00, up from $1.67 in the year-ago quarter.

Celgene Corporation Price, Consensus and EPS Surprise

 

Celgene Corporation Price, Consensus and EPS Surprise | Celgene Corporation Quote

Total revenues grew 19.4% to $3.54 billion in the quarter and beat the Zacks Consensus Estimate of $3.50 billion. Revenues were boosted by consistent performance of the company’s key growth driver, Revlimid.

Revlimid — Key Catalyst

Net product sales increased 20% year over year to $3.5 billion. Net sales of Revlimid came in at $2.2 billion, reflecting 19% year-over-year growth. The drug performed well both in the United States (up 21%) and international markets (up 15%). Growth in the quarter was driven by increased volume as a result of increases in duration of treatment and market share.

Net sales of another cancer drug, Abraxane increased 11% to $262 million as sales benefited from buying patterns.  Pomalyst/Imnovid came in at $453 million, up 24%. Sales were driven by increased volume due to increase in market share and duration.

Otezla sales were $353 million in the quarter, up 46%. Sales in the United States were primarily volume-driven due to increasing demand and improved access pull-through in contracted health plans while sales in international markets were driven primarily by increasing adoption in key ex-U.S. markets.

All other product sales (including Istodax, Thalomid, Vidaza and an authorized generic version of Vidaza in the United States) totaled $229 million in the quarter, up from $226 million from the year-ago quarter.

Adjusted research and development expenses increased 16.6% to $694 million due to higher spending related to drug discovery and clinical trial activity while adjusted selling, general and administrative expenses decreased 24.5% to $671 million.

Pipeline Update

Celgene acquired acquire Juno Therapeutics, Inc. for approximately $9 billion in March 2018. In February 2018, the company also acquired Impact Biomedicines and added a late stage candidate, fedratinib, a highly selective JAK2 kinase inhibitor, to its pipeline.

Celgene announced a global collaboration with Prothena PRTA in March 2018 to develop new therapies for a broad range of neurodegenerative diseases primarily focused on three proteins implicated in the pathogenesis of several neurodegenerative diseases, including tau, TDP-43 and an undisclosed target.

Celgene's partner bluebird bio BLUE opted to co-develop and co-promote bb2121, an experimental anti-BCMA CAR T cell therapy for the treatment of patients with RRMM in the United States in March 2018. Both companies had originally entered into a broad, global strategic research collaboration in 2013 to discover, develop and commercialize novel therapies in oncology, which included bb2121. The agreement was amended in 2015.

However, Celgene suffered a setback when it received a Refusal To File letter from the FDA regarding the New Drug Application (NDA) for ozanimod in relapsing multiple sclerosis (RMS). Celegne now plans to resubmit the NDA in the first quarter of 2019 following a Type A meeting with the FDA in early April. The company also plans to submit a Marketing Authorization Application (“MAA”) for ozanimod in RMS in the first quarter of 2019.

2018 Outlook Updated

Celgene now anticipates earnings per share of $8.45 in 2018 compared to the earlier estimate of $8.70-$8.90. The Zacks Consensus Estimate for earnings is $8.44 per share.  Net revenues are now estimated around $14.8 billion, at the high end of the previously projected range of $14.4-$14.8 billion, while the Zacks Consensus Estimate for the same is pegged at $14.84 billion. The numbers include the impact of dilution from the Juno acquisition.

Revlimid sales are now projected at $9.5 billion, up from $9.4 billion estimated earlier. Abraxane sales are estimated to be around $1 billion. Pomalyst’s revenues are now projected at around $2.0 billion (previous projection: $1.9 billion). Otezla sales continued to be projected at $1.5 billion.

Our Take

Celgene’s first-quarter results were encouraging as the company beat on both sales and earnings. Revlimid sales were impressive yet again along with Pomalyst and Otezla.

The results come as a breather for investors who bore the brunt of the decline in share price due to series of setbacks over the last few months.

 

Celgene’s stock has lost 16% in the last six months compared with the industry’s decline of 12.6%. Nevertheless, shares of the company are up in the pre-market trading due to an earnings beat.

Celgene suffered a series of setbacks over the last few months. The company suffered a setback when a late stage study on its lead cancer drug Revlimid in combination with Rituxan failed. The threat of generic competition is also looming large on Revlimid which loses patent protection in 2022 forcing Celgene to look for acquisitions. The stock was hit earlier after a phase III trial, REVOLVE, (CD-002) on pipeline candidate GED-0301 in Crohn’s disease and the extension trial, SUSTAIN (CD-004) was discontinued. The company also suffered a setback with its RMS candidate, ozanimod.

Celgene was on the look-out of new deals and acquisitions given a lacklustre 2017 and the Juno acquisition was on the same track. We note that the slowdown in mature products compelled prominent biotechs to acquire smaller ones with promising pipelines. Gilead Sciences GILD acquired Kite Pharma and subsequently obtained FDA approval of Yescarta (axicabtagene ciloleucel), the latter’s chimeric CAR-T therapy candidate.

Zacks Rank

Celgene is a Zacks Rank #2 (Buy) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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