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July 29, 2010
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Total revenue for the reported quarter climbed 36% year-over-year to $853 million. The rise in total revenue was driven by strong sales of Celgene’s lead drug, Revlimid. The Zacks Consensus Estimate for revenues in the reported quarter was $822 million.
Revlimid net sales came in at $587 million, reflecting an increase of 48% 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.
Vidaza, approved as a MDS therapy, continued to perform impressively. Net sales of the drug for the reported quarter came in at $132 million, an increase of 43% over the second quarter of 2009. However, net sales of Thalomid (approved for MM) declined 6.7% to $98 million in the reported quarter.
Research and development (R&D) spend climbed 56.9% year-over-year to $342.8 million. The increase was primarily attributable to Celgene’s efforts to expand its pipeline. Selling, general and administrative expenses in the quarter increased approximately 24.4% year-over-year to $219.3 million.
Net interest and other income plummeted to $4.6 million in the second quarter of 2010 from $28.7 million in the year-ago quarter. The decline was primarily attributable to a reduction in interest and investment income, coupled with a loss on net hedging and foreign currency revaluation in the reported quarter.
2010 Outlook Upped
The biotechnology company raised its earnings and revenue guidance for 2010. Celgene forecasts total revenue for 2010 in the range of $3.40 billion - $3.45 billion as against the prior projected range of $3.30 billion - $3.40 billion. Net sales of Revlimid in 2010 are expected between $2.30 billion to $2.35 billion, as opposed to the earlier forecasted range of $2.20 billion to $2.30 billion.
Furthermore, the company expects earnings (excluding special items) in the range of $2.65 - $2.70 per share in 2010. The previous guidance range was $2.60 - $2.65 per share. The revised outlook is inclusive of an approximate 5 cents per share dilution from the impending acquisition of Abraxis BioScience (ABII). The Zacks Consensus Estimate for 2010 earnings and revenue stand at $2.40 per share and $3.37 billion, respectively.
Our Recommendation
Celgene is a Zacks #3 Rank (Hold) stock. This implies that the company is expected to perform in line with the broader US equity market over the next 1-3 months.
We are Neutral on Celgene in the long-term, since the outlook is stable and growth is expected to be driven by Revlimid, Vidaza and the acquired cancer drugs. Our long-term Neutral stance on the company indicates that the stock is expected to replicate its short-term performance, but over the next 6+ months. Consequently, we advise investors to retain the stock over the time period.
Read the full analyst report on "CELG"
Read the full analyst report on "ABII"
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