Source: Celgene Corporation
Gilead Sciences' (GILD 2.45%) blockbuster launches of the hepatitis C drugs Sovaldi and Harvoni resulted in its revenue jumping 122% in 2014, but with Gilead Sciences facing tough comparisons this year, these three big-cap biotech stocks may be in better positions to see their shares climb in 2015
1. Celgene Corporation (CELG +0.00%)
Celgene Corporation just landed an important FDA and EU label expansion for its top-selling multiple myeloma drug Revlimid. Revlimid was already on pace to deliver sales of more than $5 billion this year as the leading second-line treatment for the indication; the FDA and EU's approval for its use in newly diagnosed patients could mean that sales finish 2015 closer to an annualized $6 billion pace than a $5 billion pace.
Celgene should also be able to notch solid sales growth from its third-line multiple myeloma drug Pomalyst and its cancer drug Abraxane. Pomalyst won FDA approval in 2013, and sales soared by 123% to $679 million in 2014. Abraxane saw its label expanded to include pancreatic cancer in the fall of 2013, and its sales grew 30.7%, to $848 million last year. Also, this year could be the first year that Celgene's psoriasis drug Otezla makes a big financial impact. Otezla won FDA approval for use in psoriasis patients in September, and its sales reached $47.6 million in Q4.
Overall, Celgene thinks that its sales will be between $9 billion and $9.5 billion this year, up 22.3% from 2014. Celgene also expects to deliver adjusted EPS of between $4.60 and $4.75 this year, which is up 26% from 2014 at the midpoint. If Celgene makes good on those predictions, it's likely to grow faster than Gilead Sciences, which is guiding for sales of between $26 billion and $27 billion this year, up between 4.4% and 8.4% from last year.
2. Biogen Idec (BIIB 1.86%)
Gilead Sciences is the big Kahuna in hepatitis C, but Biogen Idec is the biggest player in the treatment of multiple sclerosis. Ongoing demand for Biogen Idec's MS drugs Avonex, Tysabri, and Tecfidera should allow it to post double-digit sales growth this year that also outpaces Gilead Sciences.
In 2014, Biogen's revenue surged 40%, to $9.7 billion, and that growth allowed the company to post adjusted EPS of $13.83 last year, up 54% versus 2013. The big reason for Biogen's soaring sales and profit is Tecfidera, a new oral MS drug with $2.9 billion in sales last year. Tecfidera sales jumped 131% year over year in the fourth quarter, and given that it continues to roll out in new international markets, its sales should continue climbing this year, too.
Biogen could also get a nice boost to sales from its new hemophilia drugs. Last year, the company launched Alprolix and Eloctate as longer-lasting alternatives to prior-generation therapies. Combined sales for the two drugs were nearly $80 million in the fourth quarter, which could indicate that these two drugs could make a significant impact in 2015.
As a result, Biogen is guiding for sales growth of between 14% and 16% this year, and that has analysts estimating that Biogen's EPS will increase by 22.6%, to $16.96 in 2015. That would be nicely above the 17.8% growth analysts are forecasting for Gilead Sciences.
3. Pharmacyclics (NASDAQ: PCYC)
Gilead Sciences successfully launched its first cancer drug last year, but Pharmacyclics' and Johnson & Johnson's (JNJ 1.37%) competing drug Imbruvica has stolen the oncology show so far.
Despite Zydelig winning approval for use in chronic lymphocytic leukemia, or CLL, last July, sales of Imbruvica, which got the FDA's nod for the indication last February, climbed from $142 million in the third quarter to $185 million in the fourth quarter. That fourth-quarter sales performance lifted full year sales to $492 million. That makes Imbruvica both the market-share-leading treatment in relapsing CLL, and one of the fastest growing oncology drugs on record.
The company expects Imbruvica's success will continue this year. In January, Pharmacyclics issued guidance that calls for Imbruvica sales eclipsing $1 billion in 2015, up 103% from 2014. A doubling of sales is impressive, but Pharmacyclics and J&J also have 13 phase 3 trials ongoing that could add indications to Imbruvica's label and drive sales even higher.
Over time, Pharmacyclics believes that Imbruvica's addressable patient population across blood cancers could climb from 40,000 people today to more than 374,000. If that happens, then Pharmacyclics EPS should climb nicely over the coming years from the adjusted net income of $1.80 reported in 2014. For example, the average analyst expects that Pharmacyclics' EPS will more than double from current levels, to hit $3.94 in 2016. If so, that would mean that its growth trounces that of Gilead Sciences from here.
Tying it together
Gilead Sciences has a market-leading HIV and hepatitis C franchise, and its expansion into oncology shows that it deserves a spot in investor portfolios. However, the faster growth of Celgene, Biogen Idec, and Pharmacyclics could mean that their shares that prove to be more profit friendly to investors this year.
