Wednesday, January 14, 2009

Celgene Projects Continued Growth

Celgene (CELG), a biotechnology company specializing in drugs for blood cancers such as multiple myeloma, on January 12, 2009 updated investors on its progress and guidance for 2009. In 2008 revenues grew 58% to $2.23 billion, and are expected to grow another 20% in 2009. Profits (net income) for 2008 was about $1.55 per share.

The key to growth in 2008 and 2009 is the drug Revlimid, which grew revenues 71% from the prior year to $1.32 billion. Revlimid is still being introduced on a global scale, so it has room for more growth. Celgene is also hoping that Revlimid, which is primarily for multiple myeloma, will be approved for more indications, such as solid tumors, as trial data comes in.

It also expects VIDAZA sales to double in 2009 to about $400 million.

Some investors were disappointed that revenue growth is expected to slow to 20% in 2009, up from the astounding 58% of 2008. However, it should be noted that sales increases in new drugs come in waves after indications get FDA (or foreign) approval. Also Celgene's base of sales is much larger, so 20% is still quite impressive.

As with all drugs, Celgene's pharmaceuticals carry some risks for investors as well as patients. Each drug is subject to competition, including pricing pressures. Each drug may turn out to have previously undetected adverse affects on patients. Governments may change the rates of reimbursement that are allowed.

Still, given those risks, Celgene has turned out to be a relatively stable bet in this years remarkably declining stock market. Its 52 week high was $77.39, and it is selling right now at $48.70. But in the mean time a lot of the risk has been taken out because of increased earnings causing its price-to-earnings ratio to decline (NASDAQ gives it a PE of 34 and a forward PE of 17).

We will know more after the analyst conference and report of Q4 results later in January. As usual I will be writing a summary of the results and conference that you can find at my main Celgene page.

I own some Celgene stock.

Keep diversified!

Celgene January 12, 2009 press release
Q3 2008 Celgene analyst conference summary

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