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Celgene Provides 2017 Preliminary Results & 2018 View

Zacks

Celgene Corporation CELG provided preliminary results for 2017 and guidance for 2018 at the 36th Annual J.P. Morgan Healthcare Conference.

The company expects earnings per share (EPS) of around $7.44 in 2017, up 25% year over year. Operating margin is anticipated around 58.1%. For the fourth quarter, EPS is anticipated around $2.00, a 24% increase year over year. Operating margin is expected around 55.3%. The Zacks Consensus Estimate for earnings in the fourth quarter is $1.92 and $7.34 for 2017.

Total revenues are expected around $3.5 billion in the fourth quarter of 2017 and $13.0 billion in 2017. The Zacks Consensus Estimate for revenues in the fourth quarter is $3.45 billion and $13 billion for 2017. Revlimid revenues are expected around $2.2 billion in the fourth quarter of 2017 and $8.2 billion for 2017.

Pomalyst revenues are expected around $442 million and $1.6 billion in 2017. Otezla revenues are expected around $371 million in the fourth quarter and $1.3 billion in 2017. Abraxane revenues are around $251 million in the fourth quarter and $992 million in 2017.


Guidance for 2018

Total revenues are expected to be around $14.4-$14.8 billion while the Zacks Consensus Estimate is $14.98 billion. Revlimid net sales are projected around $9.4 billion while Otezla net sales are projected around $1.5 billion. The company expects to submit a sNDA to the FDA for Revlimid in combination with bortezomib and dexamethasone in patients with newly diagnosed multiple myeloma in 2018. The company also plans to submit a NDA to the FDA for fedratinib in myelofibrosis.

Abraxane net sales are projected around $1.0 billion. EPS is projected around $8.70- $8.90.

The company has also planned to initiate a few trials — CC-122 in non-Hodgkin lymphoma, BGB-A317 (tislelizumab) in non-small cell lung cancer, a phase III trial with bb2121 in third-line plus multiple myeloma in collaboration with bluebird bio BLUE, a phase III trial with JCAR017 in transplant-eligible second-line diffuse large B-cell lymphoma (DLBCL) in collaboration with Juno Therapeutics JUNO among others.

Long Term Target

In the long run, revenues are expected around $19.0-$20.0 billion (by 2020).

Celgene’s stock has declined 20.1% in the last six months compared with the industry’s loss of 2.9%.

Celgene suffered a series of setbacks over the last few months. The company suffered a setback last week when a late stage study on its lead cancer drug Revlimid in combination with Rituxan failed.

The study evaluated Revlimid plus Rituxan (R2) followed by R2 maintenance compared with the standard of care featuring Rituxan plus chemotherapy (R-CHOP, R-bendamustine or R-VN CVP) followed by Rituxan maintenance for previously untreated follicular lymphoma.

Celgene’s key growth engine is Revlimid. In 2016, the drug’s worldwide sales increased 20% to $7.0 billion and contributed almost 62.1% of the total revenues. Revlimid, an oral immunomodulatory drug, is currently approved for several indications including MM, myelodysplastic syndromes and mantle cell lymphoma.

The failure of the study is disappointing. The drug’s label expansion would have boosted its sales potential.

To boost its oncology portfolio, Celgene announced that it will acquire Impact Biomedicines for an upfront amount of $1.1 billion.

Per the terms of agreement, Impact Biomedicines’ shareholders will receive contingent payments based on regulatory approval and sales-based milestones. The maximum aggregate amount payable for such milestone payments is $1.4 billion. The aggregate tiered sales-based milestone payments could total to a maximum of $4.5 billion if global annual net sales exceed $5.0 billion.

The acquisition will add a late-stage candidate, fedratinib, a highly selective JAK2 kinase inhibitor, to Celgene’s pipeline. The candidate is being developed for the treatment of myelofibrosis (MF) and polycythemia vera. Fedratinib demonstrated statistically significant improvements in the primary and secondary endpoints of splenic response and total symptom score, respectively in a randomized, placebo-controlled, phase III pivotal trial (JAKARTA-1) for treatment-naïve MF.

In August 2017, the company obtained an FDA approval for Idhifa for treatment of relapsed and/or refractory acute myeloid leukemia with isocitrate dehydrogenase 2 (IDH2) mutation. The drug was developed in partnership with Agios Pharmaceuticals, Inc AGIO.

Zacks Rank

Celgene currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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