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Celgene (CELG) Tops Q3 Earnings & Sales Estimates, Ups View

Celgene CorporationCELG reported better-than-expected results for the third quarter of 2018, propelled by a jump in psoriasis drug Otezla. Lead drug, Revlimid too maintained momentum for the company. Consequently, the company raised its annual guidance.

After a string of setbacks in early 2018, the company's performance picked up, giving investors something to cheer about. The company's shares were up in pre-market trading .

Celgene's stock has lost 28.4% in the year so far compared with the industry 's decline of 20.2%.

The company reported adjusted earnings of $2.29 per share, which beat the Zacks Consensus Estimate of $2.25, up from $1.91 in the year-ago quarter.

Total revenues grew 18.4% to $3.89 billion in the reported quarter and beat the Zacks Consensus Estimate of $3.83 billion.

Revlimid Drives Growth

Net product sales increased 18% year over year to $3.89 billion. Net sales of Revlimid were $2.4 billion, reflecting 18% year-over-year increase. The drug performed well both in the United States (up 22%) and international markets (up 9%). Growth in the reported quarter was driven by increases in market share and extended treatment duration.

Net sales of another cancer drug, Abraxane, increased 15% to $288 million, owing to increases in demand and customer buying patterns. Pomalyst/Imnovid came in at $513 million, up 23%. Sales were driven by increase in market share and duration.

Sales of psoriasis drug, Otezla surged 40% in the reported quarter to $432 million and surpassed the Zacks Consensus Estimate of $372 million. Sales in the United States were driven by increases in demand, with continued benefit from expanded market access and higher channel inventory levels.

All other product sales (including Istodax, Thalomid, Vidaza and an authorized generic version of Vidaza in the United States) totaled $208 million in the quarter under review, down from $226 million in the year-ago quarter.

Adjusted research and development expenses increased 35.8% to $948 million, driven by the inclusion of R&D expenses associated with the acquisition of Juno and regulatory submission-related work on multiple programs. Adjusted selling, general and administrative expenses increased 23.2% to $642 million.

Pipeline Update

Celgene is evaluating bb2121 in collaboration with bluebird bio BLUE for the treatment of multiple myeloma. The program is advancing well with the phase II MM-002 and phase III MM-003 trials.

Celgene and partner Acceleron Pharma XLRN earlier reported positive results from two phase III studies on luspatercept - BELIEVE and MEDALIST. Luspatercept achieved all primary and key secondary endpoints in the phase III MEDALIST and BELIEVE trials in patients with low-to-intermediate risk myelodysplastic syndromes (MDS) and transfusion-dependent beta-thalassemia, respectively. The company will present these data at the 2018 American Society of Hematology (ASH) annual meeting in December.

The phase III COMMANDS front-line trial, evaluating luspatercept in erythropoiesis-stimulating agent (ESA)-naïve, very low, low or intermediate risk MDS patients, was initiated in the third quarter.

2018 Outlook Updated

Celgene now anticipates earnings per share of $8.75-$8.80 in 2018, up from the previous estimate of $8.70-$8.75. The Zacks Consensus Estimate for earnings is $8.79. Net revenues are now estimated around $15.2 billion, up from the earlier projection of $15 billion, while the Zacks Consensus Estimate for the same is pegged at $15.1 billion.

Revlimid sales are projected at $9.7 billion and Abraxane sales at around $1 billion. Pomalyst's revenues are expected to be $2.0 billion, whereas Otezla sales are projected at $1.6 billion, up from $1.5 billion projected earlier.

Our Take

Celgene's third-quarter results were strong as the company comfortably beat on both sales and earnings. Otezla led the performance in the third quarter. Revlimid sales were impressive as well. The increase in annual guidance on the back of impressive Otezla sales should boost investors' confidence.

Celgene's efforts to develop its pipeline is encouraging as well. The company was on the look-out for new deals and acquisitions, given a lacklustre 2017, and the Juno acquisition was a step toward that direction. Earlier, Celgene announced a global collaboration with Prothena PRTA to develop new therapies for a broad range of neurodegenerative diseases, primarily focused on three proteins implicated in the pathogenesis of several neurodegenerative diseases, including tau, TDP-43 and an undisclosed target.

Zacks Rank

Celgene currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

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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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