Celgene Tops, Lifts View - Analyst Blog
July 28 2011 - 8:55AM
Zacks
Celgene Corporation’s (CELG) second quarter
2011 earnings (excluding special items but including stock-based
compensation expense) of $0.78 per share beat the Zacks Consensus
Estimate by $0.01 and the year-ago earnings by $0.17.
On a reported basis (including special items), the company’s
earnings increased 78% to $0.59. Higher revenues boosted earnings
in the quarter.
Adjusted revenues climbed 38% to $1.18 billion in the second
quarter of 2011. Revenues were boosted by the impressive
performance of Celgene’s cancer products Revlimid and Vidaza.
Revenue for the quarter surpassed the Zacks Consensus Estimate of
$1.10 billion.
Revlimid net sales came in at $795 million, reflecting an
increase of 35% over the year ago period. Vidaza continued to
perform impressively. Net sales of the drug for the reported
quarter came in at $162 million, an increase of 23% over the second
quarter of 2010.
However, net sales of another cancer drug, Thalomid, continued
to decline due to the availability of better alternatives. Thalomid
sales were $88 million, down 10%. Net sales of Abraxane, added to
the portfolio with the October 2010 acquisition of Abraxis
BioScience, were $95 million in the reported quarter.
Adjusted research and development (R&D) spend climbed 51.5%
to $306 million in the reported quarter. The increase was primarily
attributable to Celgene’s efforts to expand its pipeline. Selling,
general and administrative expenses (on an adjusted basis) in the
quarter increased approximately 39.1% year-over-year to $274
million.
Costs associated with the launch of cancer drugs Revlimid in
Japan, Istodax in the US and Vidaza in Europe primarily led to the
rise. Acquisition related costs and higher facility costs incurred
in the quarter were also responsible for the increase.
We remind investors that the label of Istodax, already approved
for treating patients suffering from T-cell lymphoma who have
received at least one systemic therapy, was expanded in June
2011.
The US Food and Drug Administration (FDA) granted accelerated
approval to Istodax for treating patients suffering from peripheral
t-cell lymphoma (PTCL). The patients were treated at least once for
PTCL. In the PTCL market, the other notable therapy is
Allos Therapeutics’ (ALTH) injectable treatment −
Folotyn − which was launched in 2009.
2011 Forecast Upped
Following the release of second quarter results, Celgene upped
its guidance for 2011. In 2011, the company expects to earn in the
range of $3.45-$3.55 per share (on an adjusted basis) on revenues
of $4.60 billion to $4.70 billion.
The previous guidance hinted at adjusted earnings in the range
of $3.35-$3.40 per share on revenues of $4.45 billion to $4.55
billion. Currently, the Zacks Consensus Estimate for 2011 hints at
earnings of $3.09 on revenues of $4.53 billion.
Revlimid sales are expected to contribute the lion’s share to
total revenues. Sales of the cancer drug are expected in the range
of $3.15 billion to $3.25 billion (up approximately 30% year over
year).
Neutral on Celgene
We have a Neutral recommendation on Celgene. The stock carries a
Zacks #3 Rank (Hold rating) in the short run.
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