Celgene (CELG) Misses on Earnings & Revenues, Keeps View

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Celgene CorporationCELG reported fourth-quarter 2016 earnings of $1.41 per share (including share-based compensation expense and tax adjustments), missing the Zacks Consensus Estimate of $1.43 but up from $1.02 per share in the year-ago quarter.

Celgene's share price movement shows that the stock has outperformed the Zacks classified Medical-Biomedical and Genetics industry in the past year. Specifically, the stock has gained 16.7% during this period, compared with a decline of 12.8% for the industry.

Excluding share-based compensation expense, Celgene's earnings climbed approximately 36.4% year over year to $1.61 in the reported quarter.

Total revenue soared 16.3% to $2.98 billion in the fourth quarter of 2016. Revenues were boosted by a consistently strong performance by the company's key growth driver, Revlimid. However, revenues were below the Zacks Consensus Estimate of $3.0 billion.

Revlimid Continues to Shine

Net product sales increased 17.2% year over year to $2.98 billion, including a 0.3% negative impact from currency movement.

Net sales of Revlimid came in at $1.8 billion, reflecting a year-over-year increase of 15.9%. The drug did well in the U.S. (up 24.2%). Growth in the reported quarter was driven by new patient market share gains and longer duration.

Net sales of another cancer drug, Abraxane, declined 1.4% to $266.1 million. Sales of oncology drug, Pomalyst/Imnovid, came in at $377.9 million, up 28.6%. Sales were driven by increased volume from duration gains.

Newly launched Otezla reported sales of $305 million in the reported quarter, up 67%. Sales benefited from increased contribution from early launch in European countries.

All other product sales (including Istodax, Thalomid, Vidaza and an authorized generic version of Vidaza in the U.S.) totaled $220 million in the fourth quarter, down 4.8%.

Adjusted research and development expenses increased approximately 3.7% to $673 million, while adjusted selling, general and administrative expenses were roughly flat at $534 million.

2017 Outlook

For 2017, Celgene expects earnings around $7.10 to $7.25 per share. The Zacks Consensus Estimate for earnings stands at $6.55. Net product sales are expected around $13.0-$13.4 billion.

Revlimid sales are projected between $8 billion - $8.3 billion. Abraxane sales are still estimated to be around $1 billion.

The guidance maintained was in line with the one issued with the preliminary results released earlier in the month.

Delina Acquisition

Concurrent with the results, Celgene Corporation announced that it will acquire privately-held biotechnology company Delinia, Inc. The transaction will expand Celgene's Inflammation and Immunology pipeline with the addition of Delinia's lead program, DEL106 along with other second generation programs.

As per the terms of the agreement, Celgene will make an initial payment of $300 million and amilestone payments of $475 million as and when they accrue. The transaction is anticipated to close in the first quarter of 2017.

Celgene Corporation Price and Consensus

Celgene Corporation Price and Consensus | Celgene Corporation Quote

Our Take

Celgene's fourth-quarter results were disappointing, with the company missing on both the top line and the bottom line. Nevertheless, Revlimid continued to outperform in the quarter. Other key products - Pomalyst/Imnovid, Abraxane and Otezla - also performed well. The company's outlook for 2017 was encouraging. Meanwhile, the company continues to progress with its label expansion efforts and pipeline development.

Zacks Rank & Key Stocks

Celgene is a Zacks Rank #3 (Hold) stock. Some better-ranked stocks in the health care sector include Sucampo Pharmaceuticals SCMP , Anika Therapeutics ANIK and Suness Pharmaceuticals SNSS . You can see the complete list of today's Zacks #1 Rank stocks here .

Sunesis' loss estimates narrowed 5.06% and 8.80% for 2016 and 2017, respectively, over the past 60 days. The company recorded a positive earnings surprise in three of the last four quarters, the average being 0.54%.

Anika's earnings estimates for 2016 and 2017 were up 3.9% and 0.5%, respectively, over the last 60 days. The company recorded a positive earnings surprise in each of the last four quarters, the average being 33.1%. Its share price was up 37.2% in the past one year.

Sucmapo's earnings estimates were stable at $1.22 for 2016 but have increased from $1.58 to $1.74 for 2017 over the last 60 days. The company posted a positive earnings surprise in all of the four trailing quarters with an average beat of 35.5%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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