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Celgene (CELG) Q4 Earnings Beat Estimates, Revenues Up Y/Y

Zacks Equity Research

Celgene Corporation CELG reported better-than-expected results for the fourth quarter of 2018, led by an increase in psoriasis drug, Otezla. Lead drug, Revlimid too maintained momentum for the company.

Celgene’s stock has lost 2.3% in the past six months compared with the industry’s decline of 14.1%.

 

The company reported adjusted earnings of $2.39 per share, which beat the Zacks Consensus Estimate of $2.32, up from $2.00 in the year-ago quarter.

Total revenues grew 16% year over year to $4.037 billion in the quarter and beat the Zacks Consensus Estimate of $3.98 billion.

Otezla, Revlimid Drive Growth

Net product sales increased 16% year over year to $4.036 billion. Net sales of Revlimid came in at $2.5 billion, reflecting 16% year-over-year increase. The drug performed well both in the United States (up 17%) and international markets (up 15%). Growth in the quarter was driven by increase in market share and extended treatment duration.

Net sales of another cancer drug, Abraxane increased 7% in a year to $269 million. Pomalyst/Imnovid sales came in at $567 million, up 28% year over year. Sales were driven by increase in market share and extended duration.

Sales of psoriasis drug, Otezla surged 21% in a year to $448 million and surpassed the Zacks Consensus Estimate of $443 million. Sales in the United States were driven by increase in demand, while international sales were driven by launch uptake in key ex-U.S. markets, including Japan.

All other product sales (including Istodax, Thalomid, Vidaza and an authorized generic version of Vidaza in the United States) totaled $203 million in the quarter, down from $227 million in the year-ago quarter.

Adjusted research and development expenses increased 20% to $919 million, driven by the inclusion of R&D expenses associated with the acquisition of Juno and regulatory submission-related work on multiple programs. Adjusted selling, general and administrative expenses increased 10.9% to $762 million.

Pipeline Update

Celgene and partner bluebird bio BLUE announced the completion of enrollment in the KarMMa pivotal trial, evaluating bb2121 in patients with relapsed and/or refractory multiple myeloma (RRMM).

Celgene and partner Acceleron Pharma XLRN are evaluating luspatercept in two phase III studies — BELIEVE and MEDALIST. Both the companies intend to submit regulatory applications for the drug in the United States and Europe in 2019.

Celgene submitted a New Drug Application (NDA) to the FDA for fedratinib, to treat patients with myelofibrosis. The company plans to submit a Marketing Authorization Application (MAA) with the European Medicines Agency (EMA) in the first half of 2019. In addition, the phase III myelofibrosis program (FREEDOM and FREEDOM-2 trials) evaluating fedratinib in patients resistant or intolerant to ruxolitinib is initiating.

Celgene is also working to expand Revlimid’s label. A supplemental NDA (sNDA) was submitted to the FDA for Revlimid in combination with Rituxan for the treatment of patients with relapsed and/or refractory indolent NHL. A decision is expected in the second half of 2019.

2019 Outlook

Celgene expects earnings per share of $10.60-$10.80 in 2019. The Zacks Consensus Estimate for earnings is $10.37. Net revenues are estimated around $17.0- $17.2 billion, while the Zacks Consensus Estimate for the same is pegged at $17.1 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 fourth-quarter results were strong as the company comfortably beat on both sales and earnings, led by robust performance by Otezla. Revlimid sales were impressive as well.

The focus is on the recent 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 specified time periods.

Zacks Rank

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

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