Actionable news
0
All posts from Actionable news
Actionable news in BIB: ProShares Ultra Nasdaq Biotechnology,

Celgene stock drops 19% on top drug’s sluggish sales, cuts to long-term guidance

Mark Alles is chief executive officer of Celgene Corp.

Celgene Corp. shares plummeted 19.4% in extremely heavy afternoon trade Thursday after the company reported a third-quarter revenue miss and lowered its outlook, which it attributed to sluggish sales for one of its top drugs.

Sales of psoriatic arthritis and psoriasis drug Otezla — Celgene’s CELG, -1.82% third-most valuable drug in the latest quarter by revenue — came to $308 million, significantly below the FactSet consensus of $405.5 million. Sales for Celgene’s top drug, Revlimid, were also disappointing but to a lesser extent, with revenue totaling $2.08 billion compared with the $2.18 billion consensus.

Chief Executive Mark Alles nodded to worse-than-expected Otezla sales on a Thursday conference call, adding that the company is “very disappointed with the results of the quarter.”

A “deep and persistent slowing growth of the psoriatic arthritis and psoriasis markets” hurt Otezla sales, Alles said. That slowdown was a result of controls in managed care, a health insurance approach that aims to cut costs, competitive dynamics and marketwide challenges in the U.S. dermatology market, the company said.

These factors will likely pressure Otezla sales growth in the near-term, Alles said, causing Celgene to reduce its guidance. Celgene lowered its 2017 revenue and EPS guidance on Thursday to below the FactSet consensus for both measures, and lowered 2020 targets.

Celgene was dealt another major blow just last week, when it announced it will abandon development efforts in Crohn’s disease for its GED-0301 therapy.

GED-0301, also called mongersen, was part of Celgene’s inflammation and immunology development program, and its abandonment puts pressure on other drugs in the program, which include Otezla and product candidate ozanimod, which is in development for Crohn’s disease, relapsing multiple sclerosis and ulcerative colitis.

Still, Otezla is “arguably unable to pick up slack,” said Baird Equity Research analyst Brian Skorney last week, noting that Celgene has recently tried to boost demand.

A coming Revlimid patent cliff and Otezla’s “unexpected” sales results “continue to put the onus both on ozanimod as well as potential [business development] to help fill in long-term picture,” said RBC Capital Markets analyst Brian Abrahams.

Even so, he called the company’s major stock decline early Thursday “an overreaction,” referencing ozanimod’s potential and news of GED-0301’s failure being made public last week. The announcement, made on Friday, sent Celgene’s stock plummeting nearly 11%.

In addition, Celgene pushed back the expected readouts of two clinical trials, noted EvercoreISI analyst Umer Raffat, asking, “does this heighten the urgency for deals?”

Others were more optimistic.

Celgene management “was forthright in admitting where it made mistakes in its projections,” as Mizuho analyst Salim Syed said. “We believe there will be a rebuilding process with investors in the months to come to pave the path forward and restore confidence / credibility, but today was a good first step, in our view.”

Celgene shares have plummeted 29.6% to $97.10 over the last three months, compared with a 3.4% rise in the S&P 500 SPX, +0.81% and a 7.9% gain by the Dow Jones Industrial Average DJIA, +0.14% The SPDR S&P Pharmaceutical ETF XPH, -0.66% declined 0.3% and the Health Care Select Sector SPDR XLV, -0.02% declined 0.5% in Thursday morning trade.


More