The Worst News for Celgene


Celgene presented today at J.P. Morgan's Annual Healthcare Conference. What was the worst news? The company projects 2013 sales for Revlimid of $4.1 billion to $4.2 billion, while expectations were for $4.3 billion. The worst news was easy to find, though, because it presented about the only negative in a presentation full of good news. Here are the highlights.

More success for apremilast
Breaking news at the conference stemmed from Celgene's announcement that apremilast met primary and major secondary endpoints in two phase 3 studies for treatment of psoriasis. With these latest results, five successful late-stage trials for apremilast have been completed.

Earlier successful clinical studies with apremilast in treating psoriatic arthritis led Celgene to get the ball rolling for regulatory submission in the U.S. in the first quarter of 2013. The company now plans to also submit a New Drug Application for the drug for the treatment of psoriasis in the second half of 2013. Celgene intends to file a combined Marketing Authorization Application in Europe for both psoriatic arthritis and psoriasis in the second half of the year as well.

Ending 2012 on a high note
2012 was a good year for Celgene, with shares rising 16%. It looks like the last quarter of the year will conclude 2012 on a high note. The company said that adjusted diluted earnings per share are expected to come in at the high end and perhaps slightly higher than earlier guidance.

Total revenue for last year is projected to be $5.5 billion, a 14% increase compared to 2011. Fourth-quarter net product sales should exceed $1 billion, according to the company.

The long and rising road
Celgene also announced forecasts for this year and for the next few years. 2013 looks to be solid, with the company anticipating total net product sales of around $6 billion. That figure reflects an 11.4% increase compared to 2012. Adjusted earnings per share are expected to be between $5.50 and $5.60, in line with average analyst estimates of $5.56 per share.

The company reaffirmed its longer-term projections of $8 billion to $9 billion in net product sales, and adjusted diluted earnings per share of $8.00 to $9.00 by 2015. Celgene also stated that it expects net product sales in 2017 to reach $12 billion, with adjusted earnings per share of $13 to $14.

These projections translate to a compounded annual growth rate for net product sales of 19%. Apremilast and Abraxane are poised to be prime drivers for this solid growth.

Foolish take
In light of all of the good news, the worst news of the day for Celgene doesn't seem all that bad. The company's 2013 projections for Revlimid barely missed analyst estimates -- and that miss appears to be largely because of a negative foreign exchange impact. The market apparently placed heavier weight on the good news that Celgene presented. Shares were up around 3% in intraday trading.

I continue to be bullish about Celgene. While both Amgen and Threshold Pharmaceuticals experienced disappointments with their pancreatic cancer drugs, Celgene's Abraxane holds promise in treating the disease. Apremilast, as reinforced today, keeps on proving to be successful. Pomalyst could very well be another blockbuster along with Revlimid in treating multiple myeoloma.

While Celgene faces challenges, including Onyx Pharmaceuticals' Kyprolis in the multiple myeloma market, I expect the company to continue its winning ways. With a forward price-to-earnings multiple of only 15 and solid growth prospects, the worst news about Celgene for investors just might be that they didn't already buy shares.


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