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Sales Rise at Celgene - Analyst Blog

By: Zacks.com
Posted: 1/24/2013 3:48:00 PM
Referenced Stocks: CELG;MDVN;MM;TRGT;VRX

Celgene Corporation 's ( CELG ) fourth quarter 2012 earnings (excluding special items but including stock-based compensation expense) of $1.18 per share beat the year-ago earnings by 26.9%. Higher revenues drove earnings in the reported quarter. The Zacks Consensus Estimate was $1.18 per share.

Quarter in Details

Total revenue climbed 12.7% to $1.45 billion in the fourth quarter of 2012. Revenues were boosted by the impressive performance of Celgene's cancer drugs Revlimid, Abraxane and Vidaza. Revenues were just shy of the Zacks Consensus Estimate of $1.46 billion. Net product sales climbed 13.9% to $1.42 billion.

Net sales of Revlimid, the key growth driver at Celgene, came in at $1 billion, reflecting an increase of 17% over the year-ago period. The drug did well both in the US (up 18%) and international markets (up 16%). Market share gains and increased duration of therapy drove sales in the final quarter of 2012.

Net sales of Vidaza spiked 14% to $216 million. Sales in international markets climbed 23% to $128 million. US sales of Vidaza increased 3% to $88 million, despite the loss of exclusivity in 2011.

Net sales of another cancer drug, Abraxane, climbed 3% to $106 million. The drug performed poorly in the US with sales declining 9% to $84 million. However, strong sales of Abraxane in international markets more than offset the weak US performance. Sales in international markets jumped 90% to $22 million.

Net sales of another cancer drug, Thalomid, continued to decline due to the availability of better alternatives. Thalomid sales were $73 million, down 12%.

Research and development (R&D) expenses (excluding stock-based compensation and other special items) declined 8.9% to $318 million in the final quarter of 2012. The year-over-year decrease was attributable to the presence of more collaboration milestone payments in 2011.

Selling, general and administrative expenses (excluding stock-based compensation and other special items) in the quarter increased 22.3% to $340 million. Costs associated with the pre-launch activities of Abraxane in the non-small cell lung cancer indication and Pomalyst, primarily led to the rise in SG&A expenses.

Annual Results

For full-year 2012, Celgene earned (excluding special items but including stock-based compensation expense) $4.38 per share, up 31.9%. The Zacks Consensus Estimate for 2012 is $4.44. In 2012, total revenues climbed 14% to $5.5 billion, in line with the Zacks Consensus Estimate. Revlimid sales increased 17% to approximately $3.77 billion.

Outlook for 2013 Backed

Apart from announcing financial results, Celgene maintained its guidance for 2013 provided on Jan 7, 2013. Celgene continues to expect adjusted earnings for 2013 in the range of $5.50-$5.60 per share, up 13% year over year. The Zacks Consensus Estimate for 2013 currently stands at $5.04 per share.

Celgene continues to expect 2013 net product sales of $6 billion, up 11%. The Zacks Consensus Estimate for 2013 currently stands at approximately $6.1 billion. Revlimid will continue performing well with sales projected in the range of $4.1-$4.2 billion, up 10% year over year.

Our View

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, Pomalyst. 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 Feb 10, 2013 (action date). Moreover, Celgene is highly optimistic on the potential of apremilast, which is being developed for multiple indications such as moderate-to-severe psoriasis andpsoriatic arthritis among others.

Celgene carries a Zacks Rank #2 (Buy) in the short run. Pharma stocks, which appear to be more favorably placed, include Targacept Inc. ( TRGT ), Valeant Pharma ( VRX ) and Medivation, Inc. ( MDVN ). All three companies carry a Zacks Rank #1 (Strong Buy).



CELGENE CORP (CELG): Free Stock Analysis Report

MEDIVATION INC (MDVN): Free Stock Analysis Report

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