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Celgene (CELG) Beats Q2 Earnings & Sales Estimates, Ups View

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Celgene Corporation (CELG - Free Report) reported better-than-expected results for the second quarter of 2018. 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 15.9% in the year so far, compared with the industry’s decline of 1.1%.

 

The company reported adjusted earnings of $2.16 per share, which beat the Zacks Consensus Estimate of $2.10, up from $1.87 in the year-ago quarter.

Total revenues grew 17% to $3.81 billion in the quarter and beat the Zacks Consensus Estimate of $3.68 billion. Revenues were boosted by consistent performance of the company’s key growth driver, Revlimid.

Celgene Corporation Price and Consensus

 

Celgene Corporation Price and Consensus | Celgene Corporation Quote

 

Revlimid Drives Growth

Net product sales increased 17% year over year to $3.8 billion. Net sales of Revlimid came in at $2.4 billion, reflecting 21% year-over-year growth. The drug performed well both in the United States (up 17%) and international markets (up 28%). Growth in the quarter was driven by increases in market share and extended treatment duration.

Net sales of another cancer drug, Abraxane, however, decreased 4% to $243 million. Pomalyst/Imnovid came in at $507 million, up 30%. Sales were driven by increase in market share and duration.

Otezla sales were $375 million in the quarter, up 5%. Sales in the United States declined.

All other product sales (including Istodax, Thalomid, Vidaza and an authorized generic version of Vidaza in the United States) totaled $230 million in the quarter, up from $222 million from the year-ago quarter.

Adjusted research and development expenses increased 37.4% to $948 million, driven by the inclusion of R&D expenses associated with the acquisition of Juno and regulatory submission-related work on multiple program, while adjusted selling, general and administrative expenses increased 26.3% to $672 million.

Pipeline Update

Celgene and partner Acceleron Pharma (XLRN - Free Report) recently reported positive results from two phase III studies on luspatercept — BELIEVE and MEDALIST. Luspatercept achieved all primary and key secondary endpoints in the phase III MEDALIST and BELIEVE trials in patients with low-to-intermediate risk myelodysplastic syndromes (MDS) and transfusion-dependent beta-thalassemia, respectively.

Data from both the studies will be submitted to a future medical meeting in 2018. Both the companies intend to submit regulatory applications for luspatercept in the United States and Europe, in the first half of 2019.

The phase III trial, AUGMENT, evaluating Revlimid in combination with rituximab (R2) in patients with relapsed and/or refractory follicular lymphoma and marginal zone lymphoma, met the primary endpoint of progression-free survival (PFS). Global regulatory submissions are planned for the first quarter of 2019.

2018 Outlook Updated

Celgene now anticipates earnings per share of $8.70-$8.75 in 2018, up from the previous estimate of $8.45. The Zacks Consensus Estimate for earnings is $8.54 per share. Net revenues are now estimated around $15.0 billion, up from the earlier projection of $14.8 billion, while the Zacks Consensus Estimate for the same is pegged at $14.9 billion.

Revlimid sales are now projected at $9.7 billion, up from $9.5 billion estimated earlier. Abraxane sales are estimated to be around $1 billion. Pomalyst’s revenues are projected at around $2.0 billion. Otezla sales continue to be projected at $1.5 billion.

Our Take

Celgene’s second-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 increase in annual guidance on the back of Revlimid sales was impressive as well and should boost investors’ sentiment, given the recent spate of pipeline setbacks.

The company suffered a setback, when a late-stage study on its lead cancer drug Revlimid in combination with Rituxan failed. 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).

Celgene was on the look-out for new deals and acquisitions, given a lacklustre 2017, and the Juno acquisition was on the same track. Earlier, Celgene announced a global collaboration with Prothena (PRTA - Free Report) 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.

The company also has development and co-promotion agreement with bluebird bio, Inc. (BLUE - Free Report) . Both companies entered into a deal to co-develop and co-promote bb2121, an experimental anti-B-cell maturation antigen chimeric antigen receptor (CAR) T cell therapy for the potential treatment of patients with relapsed/refractory multiple myeloma in the United States.

Zacks Rank

Celgene currently carries a Zacks Rank #4 (Sell).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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