The Motley Fool Previous Page

2 Perspectives on Celgene's Q4 Results

Keith Speights
January 25, 2013

Perspective matters. Depending on your perspective, you could view Celgene's (NASDAQ: CELG) results announced on Thursday as strong or disappointing. Which viewpoint is more accurate? Actually, both are equally on target. Let's look at the two perspectives on the company's latest earnings numbers. 

Strong stuff
If your glasses are rose-colored, there's plenty to like with Celgene's results. Adjusted net income jumped 21% in the fourth quarter year-on-year to $572 million. Thanks to share buybacks, that translated to 26% higher adjusted diluted earnings per share compared to the same quarter in 2011. Revenue climbed 14% during fourth quarter of 2012 versus the prior year to $1.42 billion.

Looking at all of 2012, adjusted net income increased by 23% to nearly $2.2 billion. Adjusted diluted earnings per share rose nearly 30% to $4.91. Full-year revenue came in at $5.5 billion, up 14% compared to 2011.

Revlimid sales for the fourth quarter were slightly over $1 billion, a 17% gain versus the same time in 2011. Sales for Vidaza during the quarter increased by 14% to $216 million. Abraxane brought in $106 million in Q4, up 3% over the prior year.

For the full year, Revlimid sales totaled nearly $3.8 billion. Sales for Vidaza during all of 2012 were $823 million. Both drugs saw sales increase by 17% over 2011. Abraxane's full-year sales were $427 million, a gain of 11% year-on-year.

Yet mildly disappointing
Double-digit growth in nearly every category sounds great, right? Not necessarily. Analysts were expecting revenue for the quarter of $1.44 billion to $1.46 billion, a bit higher than Celgene's actual number. Sales for Revlimid weren't quite what some hoped for, either. 

While sales for Abraxane were up during the fourth quarter, growth of 3% sounds pretty weak. This isn't as bad as it might seem, though. The last quarter of 2011 was a bit of an anomaly because of a shortage of generic paclitaxel, which boosted sales of Abraxane temporarily.

Since we're focusing on the more negative perspective now, we can throw Thalomid into the discussion. Sales for the drug fell 12% in the fourth quarter and 11% for the year. The declines resulted in Thalomid sales of $73 million in Q4 and $302 million for the full year. However, these results shouldn't come as a surprise to anyone who has kept up with Celgene. 

Forward perspective
Different people can legitimately have different viewpoints on Celgene's financial results. The more important perspective, though, is the one looking ahead. That's where I think Celgene comes out better than most biotech companies.

Revlimid could experience stronger sales in the days ahead if the FDA approves the drug  for relapsed/refractory mantle cell lymphoma later this year. Phase 3 trials are also under way for Revlimid in the treatment of non-Hodgkin's lymphoma and chronic lymphocytic myeloma.

Of course, Revlimid faces a challenge from the new kid on the block: Kyprolis. Onyx Pharmaceuticals (NASDAQ: ONXX) announc