January 13, 2015
By Riley McDermid, BioSpace.com Breaking News Sr. Editor
Rumors are buzzing Tuesday that biotech darling Celgene could be a potential takeover target in 2015, after the company said Monday it projects a tripling of its earnings by 2020 and has more depth to its hematology pipeline than previously thought.
The company also said it will be announcing more cocktail combinations of its cancer drugs with other immunotherapies. Jackie Fouse, president of Celgene’s hematology and oncology segment, told attendees at the “Super Bowl of Biotech,” the J.P. Morgan Healthcare Conference in San Francisco, that the company’s hematology business will grow by more than $14.8 billion.
All of that news could make Celgene a rip target in coming months, said George Budwell, a columnist at The Motley Fool, Tuesday.
“With Celgene‘s overwhelming focus on oncology, I think the obvious candidates for a buyout are Bristol-Myers Squibb Company and Pfizer Inc. . Both of these companies in recent years have dramatically reorganized their internal business segments to focus more heavily on developing cancer drugs,” he said. “Moreover, Bristol and Pfizer both desperately need new blockbuster drugs to replace their aging star products. A Celgene acquisition would go a long way toward achieving these goals.”
Celgene had already given Wall Street a surprise Monday, when it said in a conference presentation that it can sketch out its financial guidance all the way into 2020, when it expects the company to reach $20 billion in net sales and adjusted earnings per share of $12.50, and that it will fast-track a study of Crohn’s drug GED-301.
The additional news about possible drug combinations increasing and the specifics about it’s the depth of its hematology pipeline were an additional, welcome surprise. The company plans to report fourth quarter earnings on Jan. 29.
Celgene made the announcement at the J.P. Morgan Healthcare Conference which began Monday in San Francisco and is the oldest and largest conference of its type. It includes 300 of the largest biotech, healthcare and biopharma companies presenting their top-line data and estimates to a sea of eager bankers, analysts, institutional investors, hedge funds and journalists
CEO Bob Hugin said Celgene expects to meet or exceed previous 2017 guidance, but did not officially raise its guidance, and he provided numbers the above numbers for 2020.
Budwell said that Gilead Sciences could be a “dark-horse candidate,” but doesn’t have the cash to execute such a massive buyout.
“Such a megamerger might sound far-fetched, but these types of deals are fairly common in biopharma,” said Budwell. “As a reminder, Pfizer joined forces with Warner-Lambert in 2000 for similar reasons, and the modern version of GlaxoSmithKline is itself a product of megamerger. As such, a Celgene-Gilead hookup certainly isn’t out of the realm of possibility.”
Celgene on Monday also stayed largely within projected estimates from analysts, narrowing its forecast for total net product sales to a closer span of $9 to $9.5 billion from $8.5 to $9.5 billion, which is right in line with the market’s current consensus estimate of $9.3 billion. Traders remained sanguine about the news in midday trading, leaving Celgene shares flat after an earlier boost in the morning.
Some of that caution may be related to the fact that although Celgene released numbers for its prize drug candidate Revlimid, it didn’t say much about a possible American launch of other marquee name drug Otezla, was mum on new Crohn’s data on for closely watched experimental therapy GED-0301.
Celgene was upbeat about the always-hot category of CAR-T therapies, which it is currently investigating via partnerships with with Bluebird and Agios Pharma‘s cancer metabolism drug AG-221. Hugin said Acceleron Pharma and Agios were “the most important addition” to the company’s pipeline and 2014.
As such, Hugin said Celgene is hoping to fast-track a Phase III study of GED-301, which could be a major competitor to other injectables from AbbVie or similar products.
Hugin did give analysts something to chew on, saying Revlimid will rake in net sales of $5.6 to $5.7 billion for 2015, which is down from the general consensus of $5.8 billion, an unsurprising gambit considering Celgene traditionally downplays its estimates at J.P Morgan so it can enjoy a boost later. Those numbers will be music to a suitor’s ears, said Budwell.
“Whether the pursuer turns out be Gilead or one of the Big Pharmas, though, my bet is that Celgene‘s days are numbered,” he said. “The history of the industry is one of consolidation, and high-growth companies like Celgene tend be the first to get gobbled up.”
