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Celgene Continues Growing While Waiting for its Acquisition to Close

By Brian Orelli, PhD - Aug 6, 2019 at 3:37PM

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Bristol-Myers is getting an even bigger cash cow.

Celgene (CELG) turned in a solid second quarter, allowing management to raise 2019 guidance as the company waits to be acquired by Bristol-Myers Squibb (BMY -0.57%).

The deal was supposed to be closing shortly, but the Federal Trade Commission appears to think the combined company would have too much power in the anti-inflammatory market, so Bristol-Myers decided to get rid of Celgene's psoriasis and psoriatic arthritis treatment Otezla. The merger is now expected to close at the end of this year or early next year, so we'll probably get at least one more report out of Celgene.

Celgene's results: The raw numbers

Metric

Q2 2019

Q2 2018

Change

Revenue

$4.40 billion

$3.81 billion

15%

Income from operations

$2.11 billion

$1.49 billion

42%

Earnings per share 

$2.16

$1.43

51%

Adjusted EPS

$2.86

$2.16

32%

Data source: Celgene.

What happened with Celgene this quarter?

  • Sales of blood cancer treatment Revlimid jumped 11% year over year to $2.73 billion, boosted by 14% growth in the U.S. as doctors increase their use of triplet therapies that include Revlmid. Not only are more myeloma patients getting Revlimid, but the triplets are also helping them respond longer, which increases the amount of drug each patient gets.
  • Pomalyst, which goes by Imnovid in some markets, is part of its own triple combination for myeloma that has also driven growth. Sales jumped 22% year over year to $619 million.
  • Otezla sales were up 31% year over year to $493 million, with most of the sales and growth coming in the U.S. International sales were just $94 million, up 12% year over year.
  • Solid tumor treatment Abraxane has gained a second life as a combination treatment with immuno-oncology drugs in patients with non-small cell lung cancer and triple-negative breast cancer. Sales jumped 30% year over year to $316 million.
Pills on $100 bills

Image source: Getty Images.

What management had to say

Management didn't hold a conference call in conjunction with the earnings report -- why bother, I guess -- but in a prepared statement, CEO Mark Alles noted that "outstanding operating performance in the second quarter supports raising our full-year financial guidance."

That about sums it up.

Looking forward

Management now thinks 2019 revenue will be in the $17.2 billion to $17.4 billion range, up from a range that topped out at $17.2 billion. The increase comes from higher expectations for Pomalyst and Abraxane, which both saw guidance increase by $0.1 billion.

The increased revenue will fall to the earnings line with adjusted EPS now expected in the $10.65 to $10.85 range, up from previous guidance of $10.60 to $10.80.

In the pipeline, marketing applications for fedratinib, ozanimod, and luspatercept have been filed with the regulators, and a submission for liso-cel is expected in the fourth quarter. Investors who plan to hold on to the contingent value right (CVR) that Bristol-Myers will give Celgene's shareholders at the acquisition will especially want to watch multiple sclerosis treatment ozanimod and lymphoma treatment liso-cel, which are both part of the CVR payout.

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Stocks Mentioned

Celgene Corporation Stock Quote
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CELG
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