Why Is Celgene (CELG) Up 1.4% Since Last Earnings Report?

A month has gone by since the last earnings report for Celgene (CELG). Shares have added about 1.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Celgene due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Celgene Q1 Earnings Beat Estimates on Revlimid Sales

Celgene reported better-than-expected results for the first quarter of 2019 on strong sales of Revlimid.

Celgene reported adjusted earnings of $2.55 per share, which beat the Zacks Consensus Estimate of $2.49 and increased from $2.05 in the year-ago quarter.

Total revenues grew 13.7% year over year to $4.025 billion in the quarter and beat the Zacks Consensus Estimate of $4.01 billion.

Otezla & Revlimid Drive Growth

Net sales of Revlimid came in at $2.6 billion, reflecting 15% year-over-year increase. The drug performed well both in the United States (up 13%) and international markets (up 19%). Growth in the quarter was driven by increase in market share and extended treatment duration.

Net sales of another cancer drug, Abraxane, increased 9% in a year to $286 million. Pomalyst/Imnovid sales came in at $557 million, up 23% year over year. Sales were driven by increase in market share and extended duration.

Sales of psoriasis drug, Otezla, were up 10% year over year to $389 million but missed the Zacks Consensus Estimate of $418 million.

All other product sales (including Istodax, Thalomid, Vidaza and an authorized generic version of Vidaza in the United States) totaled $215 million in the quarter, down from $229 million in the year-ago quarter.

Adjusted research and development expenses increased 25.9% to $874 million. Adjusted selling, general and administrative expenses decreased 2.6% to $671 million.

Business Update

Earlier in the month, the stockholders of Celgene voted in favor of the proposed merger with Bristol-Myers Squibb Company . The transaction will close in the third quarter of 2019.

Pipeline Update

The company announced top-line results from the phase III ROBUST trial evaluating Revlimid plus rituximab, cyclophosphamide, doxorubicin, vincristine and prednisone (R-CHOP) chemotherapy (R2-CHOP) in patients with previously-untreated, activated B-cell (ABC) subtype diffuse large B-cell lymphoma (DLBCL). The trial did not meet the primary endpoint of demonstrating superiority in progression-free survival (PFS) compared to placebo plus R-CHOP.

Celgene announced that the Committee for Medicinal Products for Human Use (CHMP) adopted positive opinions for Revlimid in combination with bortezomib and dexamethasone (RVd) in adult patients with previously-untreated multiple myeloma, who are not eligible for transplant, and for Pomalyst/Imnovid in combination with bortezomib and dexamethasone (PVd) for the treatment of adult patients with multiple myeloma, who have received at least one prior treatment regimen, including Revlimid.

Last month, Celgene submitted a New Drug Application (NDA) to the FDA for ozanimod in patients with relapsing forms of multiple sclerosis (RMS).

The FDA granted Priority Review designation to the NDA for fedratinib in patients with myelofibrosis, with a target action date of Sep 3, 2019.

In April, Celgene and Acceleron Pharma submitted a BLA to the FDA for luspatercept for the treatment of adult patients with very low to intermediate-risk myelodysplastic syndromes (MDS)-associated anemia, who have ring sideroblasts and require red blood cell (RBC) transfusions, and for the treatment of adult patients with beta-thalassemia-associated anemia, who require RBC transfusions.

The company is also working to expand Revlimid’s label. The FDA granted Priority Review designation to the supplemental New Drug Application (sNDA) for Revlimid in combination with rituximab (R²) in patients with relapsed and/or refractory indolent NHL. A decision from the FDA is expected by Jun 27, 2019.
Roche’s Tecentriq in combination with Abraxane for the treatment of adult patients with unresectable locally advanced or metastatic triple-negative breast cancer (TNBC) was granted accelerated approval in the United States.

 

2019 Outlook Reiterated

Celgene expects earnings per share of $10.60-$10.80 in 2019. Net revenues are estimated to be $17.0-$17.2 billion. Revlimid sales are projected to be $10.8 billion and Abraxane sales to be around $1.1 billion. Pomalyst’s revenues are expected to be $2.4 billion, whereas Otezla sales are projected to be $1.9 billion.
                                                                    

How Have Estimates Been Moving Since Then?

Fresh estimates followed a downward path over the past two months.

VGM Scores

At this time, Celgene has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Celgene has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

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