Celgene's Fastest-Growing Drugs

By Todd Campbell Markets Fool.com

Celgene Corp (NASDAQ: CELG) is best known for Revlimid, a widely prescribed multiple myeloma therapy that saw sales jump 20% last year to $7 billion. That's impressive growth for a drug that's already a megablockbuster, but Revlimid isn't the company's fastest-growing medicine. Both Otezla and Pomalyst sales grew more quickly than Revlimid last year, and management thinks that's going to be the case again this year, too.

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Image source: Celgene.

Soaring sales

Celgene began selling Otezla for use in psoriatic arthritis back in March 2014. However, it wasn't until later that year, when the FDA approved the tablet's use in the much larger psoriasis indication, that sales really took off.

Since then, rising adoption of Otezla has made its sales trajectory one of the steepest on record in the indication.

Otezla revenue clocked in at $1.02 billion last year, up 116% from 2015, and this year, management thinks Otezla's sales could reach between $1.5 billion and $1.7 billion, an increase of at least 47% from 2016.

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Why the rapid climb? A growing number of prescribing doctors in the U.S., plus recent launches for the first time abroad, including in key European markets, are key reasons behind its growth.

Data source: Celgene. Chart by author.

What Otezla's peak sales potential may be is anyone's guess, but I think they could eclipse the $2 billion mark in a couple years. Why? Because Celgene's plans include launches inseveral major European markets and Japan soon, plus the potential to win regulatory nods in Eastern Europe, Asia, and Latin America, too.

Improving outcomes

Revlimid may be the most prescribed first- and second-line therapy in multiple myeloma, but Pomalyst has carved out an important niche for use in patients that have seen their disease return, or who have failed to respond to Revlimid.

Approved for use in the third-line setting, Pomalyst is increasingly being relied upon by a larger and longer-living patient population. The combination of a bigger addressable market, and patients remaining on Pomalyst for a longer period of time, led to Pomalyst's sales growing 33% year over year to $1.31 billion in 2016.

In Q4, Pomalyst's U.S. sales totaled $218.6 million and its international sales totaled $159.3 million,which works out to growth of between 28% to 29% worldwide. In 2017, ongoing trends toward more widespread use have Celgene forecasting Pomalyst revenue of $1.6 billion, up 22% from 2016. With fourth-quarter global revenue of $378 million, it appears Pomalyst is already well on its way to delivering on that guidance.

Looking ahead

Otezla's and Pomalyst's success have only strengthened Celgene's reputation as one of the industry's best developers of increasingly effective, top-selling medicine.

Opportunities to expand the use of Otezla and Pomalyst to more patients include trials evaluating Otezla in ulcerative colitis and Pomalyst in the second-line setting. If those trials -- and others -- prove these drugs are effective in more indications, it could lead to double-digit sales growth for years to come. Perhaps that's one big reason why Celgene thinks it can grow its total sales from $11.2 billion last year to more than $21 billion in 2020.

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Todd Campbell owns shares of Celgene.His clients may have positions in the companies mentioned.The Motley Fool owns shares of and recommends Celgene. The Motley Fool has a disclosure policy.