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Celgene (CELG) Q3 Earnings Beat, Otezla, Revlimid Sales Rise

Zacks Equity Research

Celgene Corporation CELG reported adjusted earnings of $2.99 per share in third-quarter 2019, which beat the Zacks Consensus Estimate of $2.73 and increased from $2.29 a year ago.

Moreover, total revenues grew 16.1% year over year to $4.5 billion in the reported quarter, beating the Zacks Consensus Estimate of $4.4 billion.

Shares of Celgene have soared 67.2% so far this year against the industry's decline of 0.9%.


Quarter in Detail

Net sales of Revlimid came in at $2.8 billion, reflecting a 13% year-over-year increase. The drug performed well, both in the United States (up 14%) and international markets (up 11%). The growth was driven by the adoption of a triplet therapy for myeloma, which increased treatment duration and market share.

Net sales of Abraxane grew 10% year over year to $318 million, driven primarily by higher demand owing to immuno-oncology combinations in non-small cell lung cancer and triple-negative breast cancer. Also, Pomalyst/Imnovid sales came in at $664 million, up 29% year over year.

Sales of psoriasis drug, Otezla, were up 27% year over year to $547 million. The drug performed well in the United States (up 28%), driven by higher demand, and the international markets (up 21%), owing to continued expansion in the key markets.

All other product sales (including Istodax, Idhifa, Thalomid, Vidaza and an authorized generic version of Vidaza in the United States) totaled $219 million in the reported quarter, up from $208 million in the year-ago quarter.

Adjusted research and development expenses dropped 2.1% to $928 million, while adjusted selling, general and administrative expenses increased to $700 million from $642 million in the year-ago quarter.

Business Update

Celgene has been in news for its impending merger with Bristol-Myers Squibb Company BMY. In January, Bristol-Myers had announced that it will acquire Celgene for approximately $74 billion.

In June, Bristol-Myers announced the planned divestiture of Otezla in light of concerns raised by the U.S. Federal Trade Commission. Thereafter, in August, Celgene inked an agreement with Amgen AMGN, whereby the latter would acquire Otezla for $13.4 billion in cash. The transaction is expected to close by the end of 2019, subject to the FTC’s acceptance of a consent order and the satisfaction of customary closing conditions

Pipeline Update

The pipeline progress in the third quarter has been impressive. In August, the FDA approved Inrebic for the treatment of adult patients with intermediate-2 or high-risk primary or secondary (post-polycythemia vera or post-essential thrombocythemia) myelofibrosis.

In September, Celgene announced that the phase III QUAZAR AML-001 study evaluating CC-486 as maintenance therapy in patients with newly diagnosed acute myeloid leukemia AML, who achieved first complete response (CR) or CR with incomplete blood count recovery with induction chemotherapy, met the primary endpoint of prolonged overall survival. Celgene plans regulatory submissions beginning in the first half of 2020.

The BLA submission for liso-cel in patients with relapsed or refractory large B-cell lymphoma after at least two prior therapies is on track for the fourth quarter of 2019.

Our Take

Celgene’s third-quarter results were strong as it comfortably beat on both sales and earnings. Investors’ are focusing on the closure of the acquisition by Bristol-Myers.

Zacks Rank & A Key Pick

Celgene currently carries a Zacks Rank #4 (Sell).

A better-ranked stock in the biotech space is Vertex Pharmaceuticals Inc. VRTX, which currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Vertex’s earnings estimates have increased to $4.67 from $4.58 in the past 30 days.

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