Celgene Corporation 's ( CELG )
third quarter 2012 earnings (excluding special items but including
stock-based compensation expense) of $1.14 per share beat the
year-ago earnings by approximately 27%. Higher revenues drove
earnings in the reported quarter. The Zacks Consensus Estimate was
$1.16 per share.
Quarter in Details
Total revenue climbed 13.6% to $1.42 billion in the second
quarter of 2012. Revenues were boosted by the impressive
performance of Celgene's cancer drugs Revlimid and Vidaza. Revenues
edged past the Zacks Consensus Estimate of $1.41 billion. Net
product sales climbed 16% to $1.34 billion.
Net sales of Revlimid, the key growth driver at Celgene, came in
at $970 million, reflecting an increase of 18% over the year-ago
period. The drug did well both in the US (up 17%) and international
markets (up 20%). Market share gains, increased duration of therapy
and geographic expansion helped drive sales.
Net sales of Vidaza spiked 15% to $220 million. Sales in
international markets climbed 16% to $137 million. US sales of
Vidaza jumped 13% to $83 million, despite the loss of exclusivity
Net sales of another cancer drug, Abraxane, declined 6% to $106
million. Reduced sales of the drug in the US were primarily
responsible for the decline. Sales of the drug in the US declined
14% to $81 million. Abraxane sales in international markets climbed
29% to $25 million. Sales of Abraxane in international markets were
aided by volume growth and distributor purchasing patterns.
Net sales of another cancer drug, Thalomid, continued to decline
due to the availability of better alternatives. Thalomid sales were
$75 million, down 10%.
Research and development (R&D) expenses (excluding
stock-based compensation and other special items) climbed 6.9% to
$328 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 17% to $323 million. Costs associated with
the marketing activities for Revlimid, Abraxane and pre-launch
activities for pomalidomide primarily led to the rise in SG&A
Earnings Outlook for 2012 Raised
Apart from announcing financial results, Celgene upped its
adjusted earnings guidance for 2012. Adjusted earnings (excluding
stock-based compensation expense and other special items) are
projected in the range of $4.85-$4.90 per share (old guidance:
$4.80-$4.85). The Zacks Consensus Estimate for 2012 currently
stands at $4.46 per share.
Celgene now expects 2012 revenues in the range of $5.45-$5.55
billion (previous guidance: $5.4-$5.6 billion). The Zacks Consensus
Estimate for 2012 currently stands at $5.5 billion. Revlimid will
continue performing well with sales projected in the range of
$3.75-$3.8 billion (previous guidance: $3.75 - $3.85 billion), up
18% year over year.
We are impressed by the strong oncology portfolio at Celgene.
Celgene's efforts to develop its pipeline are also encouraging.
Celgene has multiple pipeline events lined up in the coming
quarters. Positive pipeline related news would boost the stock.
An eagerly awaited event at Celgene concerns its oncology
candidate, pomalidomide. Celgene is seeking approval of the
candidate in combination with low-dose dexamethasone for the
treatment of relapsed and refractory multiple myeloma (MM)
patients, who have received at least two prior therapies. A final
decision from the US Food and Drug Administration is expected by
February 10, 2013 (action date).
The MM market has been in the spotlight this year. In July 2012,
the FDA cleared Onyx Pharmaceuticals, Inc .'s ( ONXX )
Kyprolis. Kyprolis was approved for use in treatment-experienced MM
patients (who have received at least two prior therapies, including
Takeda / Johnson & Johnson 's ( JNJ )
Velcade and an immunomodulatory agent). Moreover, the disease had
progressed on or within 60 days of completion of the last therapy
in those patients.
We currently have a Neutral recommendation on Celgene. The stock
carries a Zacks #4 Rank (Sell rating) in the short run.CELGENE CORP (CELG): Free Stock Analysis ReportJOHNSON & JOHNS (JNJ): Free Stock Analysis
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