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What's in Store for Celgene Corp. (CELG) Q3 Earnings?

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Celgene Corporation (CELG - Free Report) is scheduled to report third-quarter 2018 results on Oct 25, before the opening bell. In the last reported quarter, the company posted a positive earnings surprise of 2.86%.

Celgene’s track record has been excellent with the company beating earnings estimates in all of the trailing four quarters. Overall, the company has delivered an average positive surprise of 2.38%.

Celgene Corporation Price, Consensus and EPS Surprise

Celgene Corporation Price, Consensus and EPS Surprise | Celgene Corporation Quote

Let's see how things are shaping up at the company, ahead of this announcement.

Factors in Play

Along with second-quarter results, Celgene updated its outlook. The company expects earnings per share of $8.70-$8.75 in 2018. Net revenues are estimated around $15.0 billion.

Revlimid sales are now projected at $9.7 billion. Abraxane sales are estimated to be around $1 billion. Pomalyst’s revenues are projected at around $2.0 billion. Otezla sales are projected at $1.5 billion.

Celgene’s key product, Revlimid, should continue to act as the main growth driver in the second quarter. Revlimid, an oral immunomodulatory drug, is currently approved for several indications, including newly diagnosed multiple myeloma (MM), myelodysplastic syndromes (MDS) and mantle cell lymphoma (MCL). Market share gains in key markets and longer treatment duration are contributing to the drug’s growth.

Meanwhile, Celgene is working on expanding Revlimid’s label further. Revlimid received the FDA approval for use as a maintenance treatment in NDMM patients, after they receive an autologous stem-cell transplant. The drug was also approved in the EU for the same thing. NDMM market share continues to grow outside the United States, with a positive uptake both in the EU and Japan.

Currently, a broad phase III program evaluating Revlimid in non-Hodgkin lymphoma (NHL) is underway. The company recently reported positive data from the AUGMENT study, wherein Revlimid plus Rituxan (R2 regimen) achieved a highly statistically significant improvement in the primary endpoint of progression-free survival in patients with relapsed/refractory indolent lymphoma. In addition to achieving the primary endpoint of the study, a favorable trend was also observed for overall survival during this analysis, and follow-up will continue for the mature survival results.

Celgene plans to make regulatory submissions for the same in the first quarter of 2019.

The current Zacks Consensus Estimate for the third quarter for Revlimid sales is $2.5 billion.

Encouragingly, Celgene is also working on label expansion of drugs like Pomalyst/Imnovid, Abraxane and Otezla, among others. Pomalyst/Imnovid is being evaluated in multiple combination studies in relapsed/refractory MM. The drug’s label was updated in the United States and the EU to include data from a pooled pharmacokinetics analysis of patients with relapsed and/or refractory MM and impaired renal function.

Pomalyst combined with Darzalex and dexamethasone for relapsed/refractory myeloma was also approved by the FDA and should propel sales further. These growth drivers are likely to lead to share and duration gains for the company in future. Moreover, Abraxane is currently in various stages of evaluation for breast, pancreatic and non-small cell lung cancers (NSCLC).

Otezla is currently being evaluated in phase III studies for Behçet's disease, atopic dermatitis, and expanded indications in psoriatic arthritis and plaque psoriasis.

We also expect the company to throw more light on its promising candidates in the pipeline. Celgene and partner Acceleron Pharma (XLRN - Free Report) earlier reported positive results from two phase III studies on luspatercept — BELIEVE and MEDALIST. Both the companies intend to submit regulatory applications for luspatercept in the United States and Europe in the first half of 2019.

In the third-quarter call, investors are expected to gain more visibility on the company’s performance and label-expansion efforts along with updates on the pipeline.

Share Price Performance

Celgene’s stock lost 24% in the year so far compared with the industry’s  15.3% decline.


Earnings Whispers

Our proven model does not conclusively show that Celgene is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here, as elaborated below.

Earnings ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is pegged at -0.56%. This is because the Most Accurate estimate stands at $2.23 while the Zacks Consensus Estimate is $2.25. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Celgene currently carries a Zacks Rank #2 (Buy).  We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some other health care stocks you may want to consider as our model shows that they too have the right combination of elements to post an earnings beat this quarter.

Amgen Inc. (AMGN - Free Report) is scheduled to release its results on Oct 30. The company has an Earnings ESP of +0.56% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Regeneron Pharmaceuticals, Inc. (REGN - Free Report) is scheduled to release results on Nov 6. The company has an Earnings ESP of +2.68% and a Zacks Rank #3.

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