The global biotechnological company based in the U.S., Celgene Corporation (CELG, Financial), reported its first quarter’s financial number mix on April 30 that beat the analysts’ estimate in terms of earnings while the company missed the revenue estimate due to the negative impact of the currency fluctuations which are currently predominant in the market where the dollar is reigning over other currencies. The outlook for the coming quarters also remains solid from the management’s end. Let’s quickly take a sneak peek into the earnings report posted by the company last Thursday.
The first quarter’s key highlights
Celgene is a leading biopharmaceutical company that develops and commercializes drugs targeting cancer and immune diseases. Among the vital products in its portfolio are oncology drugs such as Vidaza, Istodax, Abraxane, Pomalyst and Thalomid. However, many of these are presently facing challenges from competitors developing generic versions of such drugs.
Under such a scenario investors were watching for the important drugs’ sales during this quarter as well as sales of recently approved products like Otezla. The company has had a good track record in terms of earnings for the past four quarters in a row with the average surprise of 4.36%.
Even in this quarter, the earnings came in at $0.95 a share including stock-based compensation expenses and tax adjustments that beat the analysts’ consensus estimate of $0.93 a share. Barring the stock based compensation expenses, the earnings rose 29% year over year to $1.07 a share in the first quarter.
The rise in earnings was attributed to the improvement in revenue of around 20.3% year-over-year that came to $2.08 billion in the first quarter. The boost in revenue was mostly driven by the impressive performance of Revlimid. However, the currecy translation negatively impacted earnings by around 2% during the quarter and led to revenue missing the analysts’ estimate of $2.12 billion.
The key drivers of growth
The oncology drugs such as Revlimid aided the company to grow its sales during the quarter. While Revlimid sales improved 17.4% year over year to $1.3 billion, Abraxane’s sales climbed 20.9% year over year to $223.4 million. However, sales of Vidaza which has been facing intense competition from peers dealing in generic drug versions dipped 3.2% year over year to $143.6 million. Sales of Pomalyst rose 46% in the quarter to $199 million.
The newly approved drug Otezla witnessed sales growth sequentially up by 27.7% to $60 million in the quarter. This drug for the treatment of adult patients suffering from active psoriatic arthritis cleared the FDA approval stages in March of last year.
Other product sales plunged about 7.5% to $86 million in the quarter, and this fall was mostly due to the generic competition that is outgrowing the patented drug regime in the U.S. In fact, during the first quarter of the year, the biotech company saw a fall of about 60% in U.S. total drug sales.
Outlook remains firm
The company reaffirmed its guidance for the entire fiscal year. It expects the adjusted earnings for the entire year to fall in the range of $4.60-$4.75 per share. Buoyed by the growing sales of Revlimid drug, the management has projected total product sales to be in the range of $9-$9.5 billion for 2015. Interestingly, the Revlimid drug is estimated to grow its net sales to around $5.6-$5.7 billion by the end of the fiscal year.
Last word
Celgene looks poised for growing its drug sales and that has been well reflected through the prudent acquisitions the company has been making to bolster its product pipeline. The recent acquisition of privately held biotech company Quanticel Pharmaceuticals that is expected to close in the later part of the fiscal year stands testimony to the company’s interest in adding new viable products in its drug portfolio for being benefited from its sales in the long run. The mixed drug sales during the first quarter did project the promising sales of most of Celgene’s drugs moving forward. So, let’s stay tuned and keep watching for further updates in the upcoming quarters.
