Analyst: Celgene’s Drug Pipeline Will Be The Gift That Keeps On Giving

Published: Nov 10, 2014

Analyst: Celgene’s Drug Pipeline Will Be The Gift That Keeps On Giving

November 7, 2014

By Riley McDermid, Breaking News Sr. Editor

Celgene impressive earnings report for the third quarter and broad strength across its drug pipeline are setting the company up for continued success, Geoffrey Porges, a biotech analyst for Sanford Bernstein, on Friday.

Celgene reported an 18 percent increase in sales to $1.98 billion for the third quarter and its adjusted profit per share leapt 24 percent to $0.97. All of those metrics beat Wall Street consensus numbers. Additionally, Celgene raised its full-year profit forecast to $3.65 or $3.70 per share, up from a prior forecast of $3.60 to $3.65 per share—and more importantly, its second EPS raise of the year.

“Celgene has transformed itself from its origins as a chemical company spin-out commercializing thalidomide to a leading specialty biopharmaceutical company developing a slew of breakthrough and derivative products mostly targeting poorly treated cancer indications” wrote Porges in a note to investors.

He said much of the business’s strength has been built on the “dramatic” advances made in multiple myeloma, which still contributes 80 percent of the company's revenue and appears likely to grow sustainably in the 15 percent range for many years.

“Over the next three years, we expect Celgene to deliver around 30 percent EPS compound annual growth rate,” said Porges. “The acquisition of Abraxis has boosted the company's long term growth outlook and extends its position into solid tumor oncology.”

The most important component of its earnings numbers was that Celgene saw growth in almost every facet of its drugs platform, with cancer drug Abraxane shooting up 25 percent for sales to $212 million in revenue, blood cancer drug Revlimid leaping 19 percent to $1.3 billion during the quarter, and multiple myeloma drug Pomalyst/Imnovid doubling its revenue year-over-year to $181 million.

“Our forecasts incorporate a further doubling in Revlimid revenue through 2018, with even more upside possible from other indications such as lymphoma and leukemia; we remain confident that the company will enjoy continued patent protection in the US through the expiry of the polymorph ('800) patent exclusivity in the US in 2026,” said Porges.

He added that beyond its current indications of breast and lung cancer, Abraxane is likely to grow in pancreatic cancer and possibly other indications.

“Other important pipeline opportunities include oral azacitidine (Vidaza); we remain lukewarm about the potential of Otezla (apremilast) although the risk reward seems attractive for the launch given low expectations,” said Porges.

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