Celgene (CELG) Tops On Q1 Earnings, Sales Miss, Raises View
Zacks Investment Research | Apr 26, 2017 11:11PM ET
Celgene Corporation (NASDAQ:CELG) reported first-quarter 2017 earnings of $1.53 per share (including share-based compensation expense and tax adjustments), beating the Zacks Consensus Estimate of $1.47 but up from $1.18 per share in the year-ago quarter.
Celgene’s share price movement shows that the stock outperformed the Zacks classified Medical-Biomedical and Genetics industry in the past year. Specifically, the stock gained 13.8.% during this period, compared with a decline of 8.6% for the industry.
Excluding share-based compensation expense, Celgene’s earnings climbed approximately 27.3% year over year to $1.68 in the reported quarter.
Total revenue grew 17.8% to $2.96 billion in first-quarter 2017. Revenues were boosted by consistently strong performance of the company’s key growth driver, Revlimid. However, revenues were below the Zacks Consensus Estimate of $3.04 billion.
Revlimid Continues to Shine
Net product sales increased 18.2% year over year to $2.95 billion. Net sales of Revlimid came in at $1.9 billion, reflecting a year-over-year increase of 19.7%. The drug did well in the U.S. (up 23.8%). Growth in the reported quarter was driven by increased volume as a result of increases in duration and market share.
Net sales of another cancer drug, Abraxane increased 4.9% to $236 million as sales in the U.S. declined 1.4% but increased 16% internationally. Sales of oncology drug, Pomalyst/Imnovid, came in at $364 million, up 32.8%. Sales were driven by increased volume from duration gains.
Newly launched Otezla reported sales of $242 million in the reported quarter, up 23.5% driven by market share gains in the U.S. and continued launches in international markets.
All other product sales (including Istodax, Thalomid, Vidaza and an authorized generic version of Vidaza in the U.S.) totaled $224 million in the reported quarter, roughly flat.
Adjusted research and development expenses inched up 0.7% to $595 million, while adjusted selling, general and administrative expenses increased 15.2% at $539 million.
2017 Outlook Updated
For 2017, Celgene now expects earnings around $7.15–$7.30, compared to the earlier forecast of $7.10–$7.25 per share. The Zacks Consensus Estimate for earnings is $6.59. Net product sales are still expected around $13.0–$13.4 billion.
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Revlimid sales are projected between $8 billion–$8.3 billion. Abraxane sales are estimated to be around $1 billion. While Pomalyst’s revenues are projected around $1.6 billion, the same for Otezla are estimated around $1.5 billion– $1.7 billion.
Our Take
Celgene’s first-quarter results were mixed, with the company beating on earnings but missing on sales. Nevertheless, Revlimid continued to outperform in the quarter. Other key products – Pomalyst/Imnovid, Abraxane and Otezla – also performed well. The increase in earnings guidance for 2017 was encouraging.
Meanwhile, the company continues to progress with its label expansion efforts and pipeline development. Revlimid was approved as a single agent for maintenance therapy in adult patients with newly diagnosed multiple myeloma (NDMM) following autologous stem-cell transplantation (ASCT) both in the U.S. and EU.
Celgene submitted a New Drug Application (NDA) to the FDA for Idhifa (enasidenib) in relapsed and/or refractory acute myeloid leukemia (AML) with isocitrate dehydrogenase 2 (IDH2) mutation. The NDA was granted Priority Review with a Prescription Drug User Fee Act (PDUFA) action date of Aug 30, 2017. Celgene has a collaboration agreement with Agios Pharmaceuticals, Inc (NASDAQ:AGIO) for the candidate.
Zacks Rank & Key Picks
Celgene is a Zacks Rank #3 (Hold) stock.
Better-ranked stocks in the health care sector include Grifols, S.A. (NASDAQ:GRFS) and Infinity Pharmaceuticals, Inc. (NASDAQ:INFI) . Both Grifols and Infinity sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Grifols' earnings estimates increased 10.6% for 2017 over the last 60 days. The company’s shares have appreciated 31.4% so far this year.
Shares of Infinity have gained 58.5% this year so far, while the company’s loss estimates for 2017 narrowed almost 6% in the past 60 days.
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