Celgene (CELG) Tops Q2 Earnings & Revenues, Lifts View

Celgene Corporation (NASDAQ:CELG) reported second-quarter 2016 earnings of $1.28 per share (including share-based compensation expense and tax adjustments), beating the Zacks Consensus Estimate of $1.24 and increasing from $1.08 per share in the year-ago period.

Excluding share-based compensation expense, Celgene’s earnings climbed 17.1% year over year to $1.44 per share in the reported quarter.

Total revenue shot up 21% to $2.75 billion in the second quarter of 2016. Revenues were boosted by the consistently good performance of the company’s key growth driver, Revlimid. Revenues were also above the Zacks Consensus Estimate of $2.72 billion.

Revlimid Continues to Impress

Net product sales climbed 21.8% year over year to $2.74 billion, including a 1% negative impact from currency movement.

Net sales of Revlimid came in at $1.7 billion, reflecting a year-over-year increase of 17.8%. The drug did well in both the U.S. (up 23.7%) and international markets (up 8.7%). Growth in the reported quarter was driven by new patient market share gains and increased duration.

Net sales of another cancer drug, Abraxane, increased 2% year over year to $249.1 million. Sales of oncology drug, Pomalyst/Imnovid, came in at $317.7 million, up 35.5%. Growth was driven by increased volume from duration gains.

Newly launched Otezla reported sales of $241.9 million in the reported quarter, up 23.7% sequentially. Sales benefited from market share gains and increased prescriber adoption.

All other product sales (inclusive of Istodax, Thalomid, Vidaza, and an authorized generic version of Vidaza in the U.S.) came in at $235 million in the second quarter, down 2.9%.

Adjusted research and development expenses increased approximately 26% to $601 million while adjusted selling, general and administrative expenses climbed 1.1% to $547 million.

2016 Earnings Outlook Upped

Celgene upped its earnings outlook for 2016 once again and also updated the outlook for net product sales and Revlimid. The company now anticipates earnings in the range of $5.70–$5.75 per share (old guidance: $5.60–$5.70 per share). The Zacks Consensus Estimate for earnings is $5.06 per share.

While net product sales are now expected to be approximately $11 billion (old guidance: $10.75–$11 billion), Revlimid sales are anticipated to be approximately $6.8 billion (old guidance: approximately $6.7 billion).

Net product sales guidance for Pomalyst/Imnovid, Abraxane and Otezla remained unchanged.

While Pomalyst/Imnovid and Otezla are still expected to generate sales greater than $1 billion, Abraxane sales are expected in the range of $950 million to $1 billion.

Our Take

Celgene’s second-quarter results were better than expected with the company beating on both top- and bottom-line estimates. Revlimid continued to deliver in the reported quarter. Other key products Pomalyst/Imnovid, Abraxane and Otezla also performed well. The company’s raised and updated outlook for 2016 is also encouraging. Meanwhile, the company continues to progress with its label expansion efforts and pipeline development.

Celgene is a Zacks Rank #3 (Hold) stock. Some better-ranked stocks in the health care sector include Innoviva, Inc. (NASDAQ:INVA) , ANI Pharmaceuticals, Inc. (NASDAQ:ANIP) and Fibrocell Science, Inc. (NASDAQ:FCSC) , each sporting a Zacks Rank #1 (Strong Buy).