Celgene Corporation’s (CELG) first quarter 2010 earnings (excluding special items) of 63 cents per share beat the Zacks Consensus Estimate by 8 cents. The company earned 44 cents (excluding special items) in the year-ago quarter. On a reported basis the company earned 50 cents per share as opposed to 35 cents in the year-ago quarter.
Total revenue for the reported quarter climbed 30.8% year-over-year to $791.3 million. The recently enacted U.S. healthcare reform legislation negatively impacted revenues by approximately $4 million in the reported quarter.
The rise in total revenue was driven by worldwide market share gains, increased duration of therapy of the company’s lead drug Revlimid. Revlimid net sales came in at $530.5 million reflecting an increase of 46% over the year-ago period.
Revlimid is currently approved for Myelodysplastic Syndromes (MDS) and second-line Multiple Myeloma (MM), and the company is expanding its label into other indications.
Net sales of Thalomid, also approved for MM, stood at $104 million in the reported quarter. Vidaza net sales for the quarter came in at $120.3 million, an increase of 60% over the first quarter of 2009.
Research and development (R&D) spend climbed to $204.7 million from $181.2 million in the year-ago quarter. Selling, general and administrative expenses in the quarter increased approximately 20% year-over-year to $208 million.
The net interest and other income slipped to $17.4 million in the first quarter of 2010 from $49.6 million in the year-ago quarter. The decline was primarily attributable to reduced net hedging, coupled with foreign currency revaluation gains.
The company has a strong balance sheet, having exited the quarter with $2.954 billion in cash, cash equivalents and marketable securities.
Outlook
The biotechnology company has provided guidance for fiscal 2010. Celgene forecasts total revenue for 2010 in the range of $3.3 billion – $3.4 billion as against the prior projected range of $3.2 billion – $3.3 billion. Net Sales of Revlimid in 2010 are expected between $2.2 billion to $2.3 billion, as opposed to the earlier forecasted range of $2.1 billion to $2.2 billion.
Furthermore, the company expects to earn (excluding special items) in the range of $2.60 – $2.65 per share in 2010. The previous guidance range was $2.55 – $2.60 per share. The Zacks Consensus Estimate for 2010 is $2.40 per share.
Our Take
Celgene boasts of a strong product portfolio — a key driver for both near-term and long-term top-line and bottom-line growth. With the acquisition of Gloucester Pharmaceuticals, Celgene has further boosted its cancer portfolio which will drive growth in the coming quarters.
Although the MDS market will be dominated by Celgene with Vidaza and Revlimid, it will face tough competition in the MM market. We maintain a Neutral rating on Celgene.
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