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Celgene Earnings Grow Year over Year, View Upped

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Celgene Corporation (CELG - Free Report) reported third quarter 2013 earnings (excluding special items but including stock-based compensation expense) of $1.34 per share, beating the year-ago earnings by 17.5%. Higher revenues drove earnings in the reported quarter. The Zacks Consensus Estimate was $1.38 per share.

Quarter in Details

Total revenues climbed 17.7% to $1.67 billion in the third quarter of 2013. Revenues were boosted by the impressive performance of cancer drugs Revlimid and Abraxane. Net product sales climbed 18% to $1.64 billion. Revenues surpassed the Zacks Consensus Estimate of $1.64 billion.
Net sales of Revlimid, the key growth driver at Celgene, came in at $1.09 billion, reflecting an increase of 12% over the year-ago period. The drug did well both in the U.S. (up 16%) and international markets (up 8%). Market share gains and increased duration of therapy drove sales in the third quarter of 2013.

Net sales of another cancer drug, Abraxane, climbed 60% to $170 million. The drug did well both in the U.S. (up 64%) and international markets (up 47%). Sales in the U.S. were boosted by the label expansion of the drug into the non-small cell lung cancer indication in the final quarter of 2012.

In Sep 2013, the drug was approved in the U.S. as a first-line therapy in patients suffering from metastatic adenocarcinoma of the pancreas in combination with Eli Lilly and Company’s (LLY - Free Report) Gemzar. Approval for the pancreatic cancer indication also boosted the drug’s sales in the quarter.

Net sales of Vidaza came in flat year over year at $220 million. Soft U.S. sales (down 6%) due to generic competition hurt results during the quarter. We note that Dr. Reddy's Laboratories Ltd. (RDY - Free Report) gained U.S. approval to market its generic version of the drug last month. Sales of Vidaza climbed 4% to $143 million in the third quarter of 2013.

U.S. sales of Pomalyst, approved by the U.S. Food and Drug Administration (FDA) in Feb 2013 in combination with low-dose dexamethasone for the treatment of relapsed and refractory multiple myeloma patients, who have received at least two prior therapies, came in at $77 million in the third quarter of 2013, up 33% sequentially.

The approval of the drug (trade name: Imnovid) in the EU in Aug 2013 has further boosted its sales potential. Sales of the drug in international markets were $13 million in the third quarter of 2013.

Net sales of another cancer drug, Thalomid, continued to decline due to the availability of better alternatives. Thalomid sales were $60 million, down 20%.

Research and development (R&D) expenses (excluding stock-based compensation and other special items) climbed 13.4% to $372 million. The increase was due to Celgene’s efforts to develop its pipeline. Selling, general and administrative expenses (excluding stock-based compensation and other special items) in the quarter increased 25.4% to $405 million. Costs associated with the launches of Abraxane in the pancreatic cancer indication and Imnovid primarily led to the rise in SG&A expenses.

Outlook for 2013 Raised

Apart from announcing financial results, Celgene upped its guidance for 2013. Celgene now expects adjusted earnings for 2013 in the range of $5.90–$5.95 per share (old guidance: $5.80–$5.90 per share).

Celgene now expects 2013 net product sales in excess of $6.2 billion. The company had previously forecasted 2013 net sales to be $6.2 billion Revlimid will continue performing well with sales now projected in the mid-to-upper end of the previously guided range of $4.2-$4.3 billion. The pre-earnings Zacks Consensus Estimate hinted at 2013 earnings of $5.39 per share on revenues of $6.37 billion.

Celgene, a biopharmaceutical company, carries a Zacks Rank #3 (Hold). Actelion Ltd. appears to be more attractive in the biopharma space with a Zacks Rank #1 (Strong Buy).

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