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Celgene Corporation (CELG - Analyst Report) recently suffered a setback in its efforts to expand the label of its key growth driver, Revlimid. The company withdrew its marketing application in the EU where it was seeking approval for Revlimid as a front-line maintenance therapy for treating patients suffering from multiple myeloma (MM).

Celgene stated that it intends to re-submit the application in the EU only when it has more data at its disposal to provide the European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP) with more visibility on Revlimid’s risk-reward profile for the indication.

Celgene also pushed back its plans to seek approval of Revlimid for the additional indication in the US. The company now intends to seek approval from the US Food and Drug Administration (FDA) for the new indication in 2013 instead of the earlier target of 2012, announced while releasing its first quarter 2012 results. The news pertaining to the delay in filing marketing applications in the US and EU had a negative effect on the stock.

Celgene also intends to seek approval of Revlimid as a front-line maintenance therapy for treating MM patients in other markets such as Switzerland and Australia. We note that Celgene is already approved in many countries across the globe in combination with dexamethasone for treating MM patients who have received at least one prior therapy.

Revlimid is also available in many countries for treating transfusion-dependent anemia due to low- or intermediate-1-risk myelodysplastic syndrome (MDS) associated with a deletion 5q cytogenetic abnormality (with or without additional cytogenetic irregularities).

Celgene further stated that the FDA has accepted the new drug application (NDA) for pomalidomide for treating patients suffering from relapsed and refractory MM. A final decision from the FDA is expected by February 10, 2013. Celgene is also seeking European approval for pomalidomide for the same indication.

We note that the MM market has been in the spotlight of late. Recently, an advisory panel of the FDA recommended the approval of Onyx Pharmaceutical’s Kyprolis (carfilzomib) for treating patients with relapsed and refractory MM, who have received at least two prior therapies. A final decision from the FDA regarding the matter is expected by July 27, 2012.

2012 View Backed

Apart from providing updates regarding the label expansion efforts for Revlimid and the approval status of pomalidomide, Celgene reaffirmed its outlook for 2012, provided while releasing its first quarter 2012 earnings results. Adjusted earnings (excluding stock-based compensation expense and other special items) are projected in the range of $4.70-$4.80 per share. The Zacks Consensus Estimate is $4.50 per share. Adjusted revenues are projected in the range of $5.4-$5.6 billion, up 15%. Bulk of the revenues is expected to come from Revlimid, whose sales are projected in the range of $3.75 - $3.85 billion.

2015 Projection

Celgene expects adjusted earnings of $8.00-$9.00 per share on adjusted revenues of $8.0-$9.0 billion in 2015.
Our Recommendation

We currently have a Neutral recommendation on Celgene. The stock carries a Zacks #3 Rank (Hold rating) in the short run.

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