Celgene's Still Surging

With returns over the last five years that just about any investor -- not to mention the managers of its rivals -- would love to have, it might be fair to wonder whether Celgene (NASDAQ:CELG) can keep it up.

Source: Morningstar.

But the guidance Celgene released yesterday at the J.P. Morgan Healthcare Conference looks pretty solid. The company expects revenue to grow 20% year over year, with adjusted earnings per share in the $2.05 to $2.15 range.

At the midpoint, that's a 35% increase in earnings over what the company is expecting this year. And let's not forget that Celgene has a track record of offering conservative guidance. At last year's conference, management guided for adjusted earnings of $1.50 to $1.55 per share in 2008. Celgene now looks poised to hit the high end of that forecast, if not beat it slightly.

Celgene's main drug, multiple myeloma treatment Revlimid, is past its peak growth -- sales are expected to increase just 28% next year, compared to a whopping 71% year-over-year increase this year. Much like Onyx Pharmaceuticals (NASDAQ:ONXX), Celgene's plan to keep the ball rolling revolves around getting its lead drug approved for additional indications. Revlimid has shown promise in other blood cancers -- chronic lymphocytic leukemia (CLL) and diffuse large B-cell lymphoma (DLBCL) -- and Celgene is also hoping to get the blockbuster approved to treat newly diagnosed multiple myeloma patients. Revlimid is currently approved for treatment only after patients fail another drug, like GlaxoSmithKline's (NYSE:GSK) Alkeran or Bristol-Myers Squibb's (NYSE:BMY) Cytoxan. Many of those front-line treatments are available as generics, but that shouldn't affect Celgene's chances of taking market share; when you're treating something as serious as cancer, effectiveness easily trumps higher copays.

If Celgene can squeeze a little bit more out of Revlimid, and work a couple of its drug candidates through the pipeline, the next five years should be just as bright as its last five.

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