Tags: Celgene | drugs | market | CELG

Celgene Projects Steady Flow of New Drugs to Market

By    |   Tuesday, 10 July 2012 06:06 PM

Celgene (CELG) is a relatively large market-cap operation in a sector filled with small caps. It has blazed a path toward growth with mergers and acquisitions, including one in early 2012, and management projects that it will be able to maintain a flow of new drugs to market.

Celgene is a global biopharmaceutical company primarily engaged in the discovery, development and commercialization of therapies designed to treat cancer and immune-inflammatory related diseases.

The company is involved in research in several scientific areas that may deliver proprietary next-generation therapies, targeting areas such as intracellular signaling pathways in cancer and immune cells, immunomodulation in cancer and autoimmune diseases, and therapeutic application of cell therapies.

Its primary commercial stage products include Revlimid, Vidaza, Thalomid, Abraxane and Istodax. Additional sources of revenue include a licensing agreement with Novartis (NVS) which entitles Celgene to royalties on Focalin XR and the entire Ritalin family of drugs, the sale of services through Celgene’s cellular therapeutics subsidiary, and other miscellaneous licensing agreements.

“We believe that continued acceptance of our primary commercial stage products, participation in research and development collaboration arrangements, depth of our product pipeline, regulatory approvals of new products and expanded use of existing products will provide the catalysts for future growth,” management said in a recent filing.

Celgene was formed in a spin-off from from Celanese Corporation that led to an initial public offering in 1987. A recent acquisition was the 2012 merger with Avila Therapeutics, a privately-held biotechnology company.

“We . . . made progress advancing our deep and diverse mid-stage pipeline as well. We have seven additional novel products in clinical development spanning hematology, oncology and immune-inflammatory diseases that provide new platforms for delivering therapies to patients with serious unmet medical needs. We look forward to communicating about these programs as they advance in development,” Chairman and CEO Robert Hugin told analysts in a recent call, after updating the listeners on existing commercialized products.

Celgene has a market cap of $28.61 billion in a sector, biotech, where the average company size is $4.52 billion. Its trailing 12-month P/E ratio is 20.23 and its five-year projected price-to-earnings-growth (PEG) ratio is 0.86, compared to 35.03 for the sector.

Its projected earnings per share growth for the coming year is 13.96 percent, compared to a sector average of 26.06 percent.

M&A deals

Analysts are bullish on CELG, with buy or outperform calls from Morgan Stanley, Jefferies, Piper Jaffray, Stifel Nicolaus, UBS, Cantor Fitzgerald, and Standard & Poor’s Equity Research.

“In our view, CELG continues to have robust growth prospects, despite recent share price weakness. We see recent Revlimid revenue shortfalls and a regulatory delay to expand the drug's label to earlier-stage multiple myeloma use in Europe as near-term overhangs. We were surprised by the delay for more mature study data, as regulators reaffirmed the drug's positive risk/benefit profile in 2011,” S&P analysts wrote in late June.

“We look for CELG's inflammation/immunology unit to complement its core hematology/oncology franchise longer-term, and view favorably its $2.27 billion in cash at March 31, 2012, to potentially make more M&A deals and repurchase shares.”

Celgene next reports on July 26.

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Tuesday, 10 July 2012 06:06 PM
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