Celgene's (Nasdaq: CELG) fourth-quarter earnings tend to be anticlamatic since the drugmaker traditionally releases preliminary figures at the annual JPMorgan conference in January. Still, the earnings call is still a good chance for investors to hear what management has to say, and this year was no different.
As you'll recall, Celgene's shares declined substantially after the company said that Abraxane hadn't extended progression-free survival in lung cancer patients. Still, Celgene seems fairly optimistic about the acquisition of Abraxis Bioscience, pointing to the company's confidence that Abraxane can hit $1 billion in sales by 2015. Part of that comes from confidence that Abraxane will be approved by the Food and Drug Administration for lung cancer based on the response rate data, but also because Celgene believes it can expand the sales in the breast cancer market better than Abraxis Bioscience ever did.
Hospira (NYSE: HSP) will likely launch a cheap generic version of sanofi-aventis's (NYSE: SNY) competing drug, Taxotere, soon, but I'm not sure that really matters. Cancer is a life-or-death indication, and most patients are going to make their choice based on how well it works, not on the price of the drug. Abraxane is a version of Bristol-Myers Squibb's (NYSE: BMY) Taxol, which has albumin attached to make it more tolerable. Both Taxotere and Abraxane have sold decently well despite Taxol being available as a generic for years; I doubt generic Taxotere will have much effect on Abraxane's sales.
Celgene really needs a hit from Abraxane and other drugs it may license or purchase. Revlimid is still growing well -- 42% year over year in the fourth quarter -- but that can't continue forever. Given that it makes up two-thirds of Celgene's revenue, the slowdown is going to have a dramatic effect on the company's growth rate if it doesn't have newer drugs with rocket-ship-shaped growth curves to make up the difference.
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