Celgene Corporation Continues to Get It Done

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Celgene (NASDAQ: CELG) continues to grow revenue with its top-three drugs all experiencing sales growth of at least 20% year over year in the second quarter. The solid quarter allowed management to increase its 2017 earnings guidance.

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Celgene results: The raw numbers

Metric

Q2 2017

Q2 2016

Year-Over-Year Change

Revenue

$3.27 billion

$2.75 billion

18.7%

Income from operations

$1.31 billion

$823 million

59%

Earnings per share

$1.31

$0.75

75%

What happened with Celgene this quarter?

  • Both of Celgene's major blood-cancer drugs continued to produce substantial revenue growth. Revlimid sales were up 20%, driven by U.S. sales, which increased 26% as the drug was used by more patients who are also being treated longer. Pomalyst sales increased 23% as patients stayed on the drug longer.
  • Sales growth for Otezla, which treats auto-immune diseases, rebounded after a slow first quarter, with second-quarter sales up 49% year over year. Management noted that it's seen accelerating growth in the plans where the company traded lower prices for increased potential volume because patients could take the drug earlier in their disease development.
  • The only real soft spot was sales of solid-cancer drug Abraxane, which only increased 2% year over year, but the drug has been growing slowly for awhile and has become a smaller portion of sales as the top-three drugs continue to grow.
  • Celgene presented positive results for the RADIANCE phase III trial testing ozanimod in relapsing multiple sclerosis.
  • Earlier this month, Celgene acquired the rights to BeiGene's PD-1 antibody BGB-A317 that's being developed for solid-tumor cancers.

What management had to say 

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Michael Pehl, Celgene's president of hematology and oncology, doesn't see sales of Pomalyst slowing down anytime soon thanks to Johnson & Johnson's (NYSE: JNJ) Darzalex (daratumumab): "We believe that the recent FDA [Food and Drug Administration] approval of Pomalyst in combination with daratumumab for relapsed refractory myeloma will be a key driver for our Pomalyst performance."

Celgene has a CAR-T therapy, bb2121, targeting a protein called BCMA, that it's developing with bluebird bio (NASDAQ: BLUE), as well as a bi-specific antibody that targets BCMA, but Bluebird's investors will be glad to know that Celgene doesn't see them in competition with each other:

Our bi-specific antibody is really complementary to this effort for a couple of occasions. You need bridging therapy for CAR-T patients. You need to bring the initial cell count down before you can go CAR-T. You may not achieve a CR but only a PR, and then you can use bi-specific antibodies. So these different assets are very complementary, and they don't exclude themselves.

Looking forward

As noted above, management raised adjusted earnings guidance to a range of $7.25 to $7.35 per share, up from a previous range of $7.15 to $7.30 per share.

Beyond revenue and earnings in the second half of the year, investors can look forward to some regulatory and clinical-trial news. The FDA should rule on the approval of Idhifa, which treats acute myeloid leukemia, by the end of August. Considering the positive data, an approval seems likely.

Management is guiding for submitting the phase III data for ozanimod by the end of the year, putting Celgene on track for another potential approval next year. And on the clinical-trial front, two trials, called AUGMENT and RELEVANCE, testing Revlimid in additional blood cancers, will read out by the end of the year. A third trial, called ROBUST, is expected to produce data in 2018.

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Brian Orelli has no position in any stocks mentioned. The Motley Fool owns shares of and recommends bluebird bio, Celgene, and Johnson & Johnson. The Motley Fool has a disclosure policy.