Mr. Market didn't much like what Celgene (CELG) had to say on Monday -- and promptly shaved around $2 billion off of the big biotech's market cap. But was Celgene's message at the J.P. Morgan Healthcare Conference really that disappointing? Consider what was actually said.

Rearview mirror

First of all, Celgene gave a sneak peak at the 2013 fourth-quarter numbers that will be announced in a couple of weeks. Adjusted diluted earnings per share should be around $1.51. That's a solid increase of 14% year-over-year, so why were investors not excited?

Wall Street expected Celgene to report earnings of $1.55 per share for the fourth quarter. Without the negative impact of collaboration-related payments to partners, though, the earnings figure would have been $0.10 per share higher.

News from just last week provided a helpful reminder that collaboration payments can be positive. Epizyme (EPZM) reported good results from an early stage study of acute leukemia drug EPZ-5676. Those results landed the small biotech a $25 million milestone payment from -- you guessed it -- Celgene.

That was clearly great news for Epizyme. The company's shares nearly doubled last week. It's also good news for Celgene, because it's one more step along the path to possibly bringing another profitable drug to market. If you're just focused on the past, an earnings miss of $0.04 per share is disappointing. But if you're focused on the future, $0.10 per share in collaboration payments is reason to be optimistic about what could be on the way. 

Down the road

And that leads us to the rest of what Celgene had to say on Monday. The biotech projects 2014 revenue of $7.5 billion -- up 15% from last year. A big chunk of that growth will come from Revlimid, which Celgene expects will generate sales of around $5 billion.

This year's earnings should be in the range of $7.00 to $7.20 per share. The midpoint of that range is 19% higher than 2013 earnings. Not bad at all, but a little short of the $7.30 per share estimated by analysts. 

A lot of companies shy away from trying to predict financial results more than a year out. Celgene isn't so bashful. The company thinks that revenue in 2015 will be between $8.5 billion and $9.5 billion -- a $500 million increase from the previous target and a 20% jump from this year's expected revenue. Earnings in 2015 are anticipated to be in the range of $9.00 to $9.50 per diluted share, considerably more optimistic than the $8.00 to $9.00 per share previously estimated. 

What's of particular interest, in my view, is how Celgene views its future into 2017. It sees revenue four years from now as high as $14 billion. Revlimid should continue to rock along, with projected sales of $7 billion -- even better than predicted earlier.

Celgene thinks that it's Pomalyst/Imnovid multiple myeloma franchise will exceed previous estimates also. The company says that by 2017 the drug should bring in $1.5 billion. My guess is that Celgene anticipates stealing significant market share away from Amgen's (AMGN -1.78%) Kyprolis.

Even though Kyprolis has been on the market longer in the U.S., Pomalyst managed to trounce its rival in sales in the third quarter. And while Celgene won regulatory approval in Europe as well, Amgen still hasn't succeeded across the Atlantic with Kyprolis.

Disappointment?

How should long-term investors interpret Celgene's announcement on Monday? I don't think the company is actually worth $2 billion less because of the fourth-quarter earnings miss and 2014 earnings projection slightly below analysts' estimates.

Remember why Celgene's earnings last quarter weren't as high as they could have been.  Also, keep in mind that Celgene has been known to offer relatively conservative guidance for the future. While the market might have been disappointed this week, with Revlimid powering along and more potential blockbuster drugs in its arsenal, I suspect that the biggest disappointment will be experienced by investors who sell Celgene now rather than hold on for what should be solid growth into the future.  

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