) fourth quarter 2011 earnings (excluding special items but
including stock-based compensation expense) of 93 cents per share
was below the Zacks Consensus Estimate by 2 cents but above the
year-ago earnings by 31 cents.
Quarter in Details
Total revenue climbed approximately 20% to $1.28 billion in the
final quarter of 2011. Revenues were boosted by the impressive
performance of Celgene's cancer products Revlimid and Vidaza.
Revenues for the quarter were just shy of the Zacks Consensus
Estimate of $1.29 billion.
Revlimid net sales came in at $855 million, reflecting an
increase of 20% over the year-ago period. The drug did well both in
the US and also in the international markets.
Vidaza continued to perform impressively. Net sales of the drug
for the reported quarter came in at $189 million, an increase of
34% over the fourth quarter of 2010. Bulk of the revenues came from
international markets. Sales in the international markets climbed
51% to $104 million. Vidaza lost exclusivity in the US in May 2011.
In spite of the development, Vidaza sales climbed 19% in the US
during the fourth quarter of 2011.
However, net sales of another cancer drug, Thalomid, continued
to decline due to the availability of better alternatives. Thalomid
sales were $82 million, down 12%. Net sales of Abraxane, added to
the portfolio with the October 2010 acquisition of Abraxis
BioScience, were $104 million in the fourth quarter of 2011, down
Research and development (R&D) expenses (excluding
stock-based compensation and other special items) climbed 17.1% to
$349 million in the reported quarter. The increase was primarily
attributable to Celgene's efforts to expand its pipeline.
Selling, general and administrative expenses (excluding
stock-based compensation and other special items) in the quarter
increased approximately 10.3% year-over-year to $278 million. Costs
associated with the launch of cancer drugs Revlimid in Japan,
Istodax in the US and Abraxane in the European Union and US
primarily led to the rise in SG&A expenses. Acquisition related
costs were also responsible for the increase.
For the full year 2011, Celgene earned (excluding special items
but including stock-based compensation expense) $3.31 per share (up
38%). The Zacks Consensus Estimate for 2011 is $3.33. In 2011,
total revenue came in at $4.84 billion, just above of the Zacks
Consensus Estimate of $4.83 billion. Revlimid sales increased 30%
to approximately $3.21 billion.
Apart from announcing financial results, Celgene reaffirmed the
bright outlook for 2012, which it had provided while announcing
preliminary results earlier this month. Adjusted earnings
(excluding stock-based compensation expense and other special
items) are projected in the range of $4.70-$4.80 per share, up 25%.
Including the impact of stock-based compensation expense, 2012
earnings are expected in the range of $4.17-$4.32 per share. The
Zacks Consensus Estimate for 2012 is $4.13 per share.
Adjusted revenues are projected in the range of $5.4-$5.6
billion, up 15%. The Zacks Consensus Estimate is $5.5 billion,
within the guidance range provided by the company. Revlimid is
expected to continue its strong performance. Sales of the drug are
projected in the range of $3.75 - $3.85 billion, up 19%.
Celgene to buy Avila Therapeutics
In a bid to further strengthen its pipeline, Celgene announced
that it will purchase privately held biotechnology company Avila
Therapeutics, Inc. for $350 million in cash.
Per the terms of the deal, expected to close by March 31, 2012,
Celgene will have to further shell out up to $195 million in
milestone payments depending on the development and regulatory
approval of AVL-292, Avila's lead pipeline candidate. AVL-292 is
being developed for treating cancer and autoimmune diseases.
Moreover, Celgene is eligible to pay Avila up to an additional $380
million subject to the development and approval of candidates
developed with the help of the latter's technology. Celgene expects
the deal to be neutral to its 2012 projected adjusted earnings.
We have an Outperform recommendation on Celgene. Despite the
narrow miss in the final quarter of 2011, we believe that Celgene,
driven by its impressive oncology portfolio, expansion efforts,
strong balance sheet and robust pipeline, will outperform the
broader market in the coming quarters.
Our optimism is justified by the Zacks #2 Rank (Buy rating)
carried by the stock in the short run.
CELGENE CORP (
): Free Stock Analysis Report
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