JPM17: How Celgene Wowed Yet Again

Published: Jan 11, 2017

JPM17: How Celgene Wowed Yet Again January 10, 2017
By Mark Terry, Breaking News Staff

At the opening of the JP Morgan Healthcare Conference held in San Francisco, Summit, NJ-based Celgene once again demonstrated why it’s such a powerhouse.

From a financial perspective, the key word appears to be “overperformance.” Over the last five years, the company has shown compound annual growth rates (CAGR) for revenue of 20 percent and 25 percent for adjusted diluted earnings per share. In three out of five years, the company’s performance outstripped its guidance.

Although it’s possible the figures presented will change some, because they were based on 2016 unaudited results, most expect it to be close to what was presented. Sales increased about 22 percent year over year and earnings rose 26 percent from 2015 to 2016.

The company’s chief executive officer, Mark Alles, indicated that Celgene expects 18 percent revenue growth in 2017, ranging from $13 billion to $13.4 billion. Its adjusted earnings for 2017 are projected at $7.10 to $7.25 earnings per share, with a year-over-year increase of 21 percent. The Wall Street earnings consensus estimate is $7.04 per share.

Celgene’s blood cancer drug Revlimid has expected year-over-year sales growth of 17 percent. Its Pomalyst/Imnovid drugs are projected to grow 22 percent in 2017 compared to 2016. And its fastest-growing product, the same as last year, is expected to be Otezla for autoimmune diseases. Its projected year-over-year sales is a whopping 57 percent.

On the downside, Celgene’s Abraxane, an oncology medicine, is projected to grow only 3 percent this year. Alles indicated they plan to investigate partnerships to test the drug in combination with checkpoint inhibitors.

Celgene still projects total revenue in 2020 of over $21 billion with adjusted diluted earnings per share over $13. That’s a 17 percent CAGR for revenue and 22 percent for earnings.

Keith Speights, writing for The Motley Fool, says, “What I really like about Celgene is that the biotech doesn’t just provide goals. It also says how those goals will be achieved. Between now and the end of 2018, Celgene expects 18 late-stage data readouts and nine products advancing to pivotal clinical trials.”

Top of the list is ozanimod for multiple sclerosis (MS). The company hopes to file for regulatory approval by the end of this year.

Speights writes, “Despite the difficulties for another of Celgene’s partners, Juno Therapeutics , with one of its CAR T candidates, Alles remained optimistic about the prospects for JCAR017. Juno sidelined JCAR015 after patients died in clinical trials. Celgene and Juno, though, are advancing JCAR017 to a pivotal clinical study in 2017. Although both are CD19-directed CAR T cell therapies, the safety profile for JCAR017 could be better than JCAR015.”

Although the week is likely to be filled with interesting stories coming out of the JP Morgan conference, Speights believes Celgene is probably going to be the best. “The company has solid growth engines currently with Revlimid, Pomalyst, and Otezla. Celgene’s pipeline is very strong. Celgene plans to grow at an impressive rate through 2020 and beyond—and has a clear path for achieving this goal.”

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