Image source: Getty Images.

It's back to business as usual for one of the world's largest biotechnology companies.

Celgene (CELG), which had produced two consecutive subpar earnings reports featuring a quarterly profit shortfall and reduced earnings-per-share guidance for fiscal 2017, reversed this temporary trend of disappointment by reporting another Street-topping quarter on Thursday before the opening bell.

For the quarter, Celgene reported net product sales of $2.75 billion, a 22% increase from the prior-year period, and net income up 13% year over year to $1.15 billion. Adjusted EPS increased to $1.44 from $1.23 in Q2 2015. By comparison, Wall Street had been anticipating $40 million less in sales and only $1.39 in adjusted EPS.

Looking ahead, Celgene also boosted its full-year forecast, bringing it more or less in line with analyst expectations. Having previously forecast 2016 full-year sales of $10.75 billion to $11 billion and EPS of $5.60 to $5.70, Celgene is now projecting full-year sales of $11 billion and EPS of $5.70 to $5.75. 

For shareholders, it was a genuine relief to see Celgene back to its earnings-beating ways.

Back to business as usual for Celgene

Celgene's strong results could once again be traced to the success of its blockbuster multiple myeloma drug Revlimid, which saw its sales increase by 18% to $1.7 billion. Revenue in the U.S. grew 24%, while international sales improved 9%. As Celgene has previously stated, an increase in multiple myeloma diagnoses, longer duration of use, maintenance of first- and second-line market share, and ongoing pricing power have helped push sales of Revlimid ever higher.

Image source: Celgene.

Also remember that in December, Celgene settled long-standing litigation over Revlimid's patents with Natco Pharma and two other generic-drug makers. The deal allows a small percentage of generic Revlimid to enter the market by March 2022 -- but a flood of generic Revlimid has been pushed back until January 2026. In other words, Celgene secured the profitability of its key drug for another decade. Through organic growth and label expansion, Revlimid could make a run at $10 billion in annual sales by 2020.

We saw continued growth from other areas of Celgene's pipeline, too. Multiple myeloma drug Pomalyst (known as Imnovid abroad) grew sales by 35% to $318 million. Oral anti-inflammatory Otezla kept marching higher, with sales growing 170% year over year to $242 million, possibly putting it on track to reach $1 billion in sales this year.

But it was Celgene's smallest improvement that I'd argue has had the biggest impact.

This small improvement had a big impact

Abraxane, a cancer drug that Celgene acquired when it purchased Abraxis Bioscience in 2010, had been a steadily growing oncology product for years. Organic growth in metastatic breast cancer treatment, as well as label expansions for advanced pancreatic cancer and advanced non-small-cell lung cancer, pushed Abraxane sales more than 200% higher between 2009 (the year before the acquisition) and 2015.

Image source: Celgene.

However, Celgene hit a major speed bump in recent quarters. Abraxane's growth ground to a sudden halt, and in the U.S. it even went into reverse. The culprit was the proliferation of next-generation oncology drugs known as cancer immunotherapies. Immunotherapies block the immunosuppressant quality of cancer cells that allows them to "hide" from a patient's immune system, thereby giving the immune system a fighting chance of killing cancer cells. Two great examples are Bristol-Myers Squibb's (BMY -1.42%) Opdivo and Merck's Keytruda.

Although Opdivo and Keytruda aren't approved to treat indications that Abraxane is approved to treat, we're witnessing dozens of ongoing clinical trials in directly competitive indications to Abraxane, as well as the possibility of some off-label use. It's hard to argue against the superior response rates Opdivo and Keytruda have delivered for certain cancer patients, which has weighed on sales of Abraxane, a more traditional cancer drug.

However, during the second quarter, Abraxane sales improved 2% to $249 million, including a 3% gain in the U.S. markets, where it had previously been seeing sales declines. Although this might not mean a complete reversal of fortune for Abraxane, this small gain suggests that it will remain an important medication for breast, lung, and pancreatic cancer patients going forward.

Image source: Bristol-Myers Squibb.

Let's not forget that Bristol-Myers Squibb and Celgene are also working on early-stage combination studies analyzing Opdivo and Abraxane in various cancer types. Immunotherapies have generally shown better efficacy in combination with existing cancer-fighting drugs, so success in these combination studies could invigorate Abraxane in a big way. It's possible this bump could also be in relation to off-label combination use, but right now that's mere speculation on my part.

Long-term and growth investors take notice

Following its second-quarter results, one thing is quite clear about Celgene: It appears as strong as ever.

Earlier this year, Celgene reaffirmed its 2020 guidance, which calls for at least $21 billion in sales and more than $13 in adjusted EPS. This implies a near-doubling in sales from 2016 and a better-than-doubling in EPS. Revlimid has few, if any, obstacles standing in its way, and both Otezla and Pomalyst should deliver significant near-term growth. Label expansion opportunities for Revlimid and Otezla are expected to remain key growth drivers.

Image source: Getty Images.

In addition to label expansion, Celgene has more than 30 ongoing collaborations that it can use to pad its pipeline. Though its collaborations could require Celgene to pay out a substantial amount of money in milestone payments to its partners, collaborations also ensure that the company spends its money on only the most promising new drugs.

While investors won't be receiving a dividend any time soon, Celgene offers double-digit growth potential throughout the remainder of the decade, and perhaps beyond. With its PEG ratio still below one (a PEG below one usually implies a cheap valuation), this is a growth stock that long-term investors would be wise to consider adding to their portfolios.