Celgene Corporation Is Firing on All Cylinders

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Celgene (CELG) reported a solid quarter on Thursday, raising its 2016 guidance for the third consecutive quarter.

Celgene results: The raw numbers

Data source: Company press release. YOY = year over year.

What happened with Celgene this quarter?

• Top-selling Revlimid continues to produce stellar sales growth, with sales growing 30% year over year.
• The newcomers to Celgene's medicine bag are holding their own, too, with Pomalyst sales up 33% year over year and sales of Otezla nearly doubling year over year.
• Celgene's other big drug, Abraxane, continues to tread water, with sales up just 1% year over year as its U.S. market share in breast, lung, and pancreatic cancer have reached a plateau.
• Revenue benefited from a large $70 million order from Russia not seen in the year-ago quarter, but even backing that out, sales were up 25% year over year.

What management had to say

At a time when drugmakers are under the microscope due to some bad players increasing prices astronomically, it's nice to know that Celgene's revenue growth is mostly coming from selling more drugs rather than just by raising prices. "Consistent with prior periods, our growth was predominantly volume-driven, as product volume grew 25%," noted CFO Peter Kellogg.

Rather than competing with biologics directly, Otezla is being used as an earlier therapy as patients look for alternatives before starting biologics that have to be injected or infused. As Scott Smith, Celgene's president of global inflammation and immunology, explained, "Approximately 90% of patients are coming to Otezla therapy from something other than a biologic. So they're either switching off an oral, switching off topical, or coming onto Otezla from nothing at all, and only 10% are coming on from a biologic therapy."

Looking forward

With another solid quarter in the books, management raised 2016 guidance, with revenue expected to come in at $11.2 billion, up from $11 billion and adjusted earnings per share were increased to a range of $5.88 to $5.92 -- 31% to 35% higher than 2015 -- from a previous range of $5.70 to $5.75. Anytime a company raises guidance and the new range doesn't overlap with the old one, investors should be ecstatic -- even if Celgene's management is notorious for being conservative with its guidance.

In addition to higher sales in the fourth quarter, investors can look forward to the presentation of clinical trial data, especially the American Society of Hematology (ASH) in December. Look for data from trials testing Revlimid in diffuse large B-cell lymphoma, chronic lymphocytic leukemia, newly diagnosed multiple myeloma, and indolent non-Hodgkin lymphoma as well as data for its pipeline drug CC-122 in diffuse large B-cell lymphoma.