Celgene Corporation (NASDAQ:CELG) reported operating results for the fourth quarter and full year of 2015. For the fourth quarter of 2015, net product sales were $2,539 million compared to $2,055 million from the same period in 2014, an increase of 24 percent. The net negative impact of currency on net product sales was 1 percent. Fourth quarter total revenue increased 23 percent to $2,563 million compared to $2,085 million in the fourth quarter of 2014. Adjusted net income for the fourth quarter of 2015 increased 14 percent to $961 million compared to $840 million in the fourth quarter of 2014. For the same period, adjusted diluted earnings per share (EPS) increased 17 percent to $1.18 from $1.01 and includes a $0.07 impact from a $70 million milestone achieved by OncoMed Pharmaceuticals, Inc. during the quarter.

Net product sales for the full year of 2015 were $9,161 million compared to $7,564 million for the full year of 2014, an increase of 21 percent. Total revenue for the full year of 2015 was $9,256 million compared to $7,670 million for the previous year, an increase of 21 percent. Adjusted net income increased 25 percent to $3,882 million compared to the prior year. Adjusted diluted EPS increased 27 percent to $4.71 from $3.71 for the full year of 2014.

Based on U.S. GAAP (Generally Accepted Accounting Principles), Celgene reported net income of $561 million and diluted EPS of $0.69 for the fourth quarter of 2015. For the fourth quarter of 2014, GAAP net income was $614 million and diluted EPS was $0.74. Full year GAAP net income for 2015 was $1,602 million and diluted EPS was $1.94. Full year GAAP net income for 2014 was $2,000 million and diluted EPS was $2.39.

“Celgene delivered outstanding operating and financial results in 2015. Our extraordinary operating momentum and key regulatory approvals in 2015 increase our prospects for significant growth in 2016 and beyond,” said Bob Hugin, Chairman and Chief Executive Officer of Celgene Corporation. “In 2016, we will continue to leverage our global operations and advance our deep and diverse pipeline to accelerate the next generation of transformational medicines.”

Fourth Quarter and Full Year 2015 Financial Highlights

Unless otherwise stated, all comparisons are for the fourth quarter and full year of 2015 compared to the fourth quarter and full year of 2014. The adjusted operating expense categories presented below exclude share-based employee compensation expense, in-process research and development (IPR&D) impairments, upfront collaboration payments and settlement of contingent obligations. Please see the attached Reconciliation of GAAP to Adjusted Net Income for further information.

Net Product Sales Performance

  • REVLIMID® sales for the fourth quarter increased 18 percent to $1,561 million and were driven by increased duration of therapy in the U.S. and market share gains in newly diagnosed multiple myeloma (NDMM) in Europe. Fourth quarter U.S. sales of $956 million and international sales of $605 million increased 20 percent and 15 percent, respectively. Full year REVLIMID® sales were $5,801 million, an increase of 16 percent.
  • POMALYST®/IMNOVID® sales for the fourth quarter were $294 million. Fourth quarter U.S. sales of $170 million and international sales of $124 million increased 29 percent and 77 percent, respectively. Full year POMALYST®/IMNOVID® sales were $983 million. Sales were driven by increased market share and duration gains.
  • ABRAXANE® sales for the fourth quarter were $270 million, an increase of 14 percent. U.S. sales were $180 million and international sales were$90 million, an increase of 5 percent and 41 percent, respectively. Full year ABRAXANE® sales were $967 million, an increase of 14 percent.
  • OTEZLA® sales in the fourth quarter were $183 million. Full year OTEZLA® sales were $472 million. OTEZLA® uptake and market share gains continued to accelerate in the fourth quarter in the U.S. with increased contribution from early launch countries in Europe.
  • In the fourth quarter, all other product sales, which include THALOMID®, ISTODAX®, VIDAZA® and an authorized generic version of VIDAZA®drug product in the U.S., were $231 million compared to $248 million in the fourth quarter of 2014. Full year sales for these products were $938 million.

Research and Development (R&D)

Adjusted R&D expenses were $649 million for the fourth quarter of 2015 compared to $478 million for the fourth quarter of 2014. The fourth quarter of 2015 included a $70 million milestone achieved by OncoMed Pharmaceuticals, Inc. and also reflected increased clinical trial activity for pipeline programs.

For the full year of 2015, adjusted R&D expenses were $2,044 million compared to $1,651 million for the full year of 2014. Adjusted R&D expenses included expenses related to advancing clinical trials and expenses for collaboration-related payments to partners.

On a GAAP basis, R&D expenses were $777 million for the fourth quarter of 2015 versus $585 million for the same period in 2014. The year-over-year increase in R&D expenses on a GAAP basis was primarily due to an increase in clinical trial activity. Full year of 2015 R&D expenses were$3,697 million compared to $2,431 million for 2014. The increase in R&D expenses on a GAAP basis was primarily due to upfront payments for collaboration arrangements and an increase in clinical trial activity, partially offset by an impairment recorded in the prior year.

Selling, General, and Administrative (SG&A)

Adjusted SG&A expenses were $533 million for the fourth quarter of 2015 compared to $479 million for the fourth quarter of 2014. For the full year of 2015, adjusted SG&A was $2,011 million versus $1,778 million in 2014. The increase was primarily due to launch expenses related to OTEZLA® in the U.S. and Europe and the ongoing launch of REVLIMID® for NDMM in Europe.

On a GAAP basis, SG&A expenses were $609 million for the fourth quarter of 2015 compared to $544 million for the same period in 2014. Full year SG&A expenses were $2,305 million for 2015 compared to $2,028 million for 2014.

Cash, Cash Equivalents, and Marketable Securities

Operations generated cash flow of $2,483 million for 2015, a decrease of 12 percent year-over-year, primarily driven by an increase in upfront collaboration payments. For the full year of 2015, Celgene purchased approximately $3,257 million of shares. As of December 31, 2015, the Company had $3,890 million remaining under the existing share repurchase program. The Company ended the year with $6,552 million in cash and marketable securities.

Product and Pipeline Updates

Hematology/Oncology

In December 2015, Celgene announced the settlement of litigations with Natco Pharma Ltd. and its partners and affiliates, relating to certain patents for REVLIMID®. As part of the settlement, Celgene agreed to provide Natco with a license to Celgene’s patents required to manufacture and sell an unlimited quantity of generic lenalidomide in the U.S. beginning on January 31, 2026. In addition, Natco will receive a volume-limited license to sell generic lenalidomide in the U.S. commencing in March 2022, which is expected to be a mid-single-digit percentage of the total lenalidomide capsules dispensed in the U.S. during the first year of entry. The volume limitation is expected to increase gradually each twelve months until March 2025. Natco’s ability to market generic lenalidomide in the U.S. will be contingent on its obtaining approval of an Abbreviated New Drug Application.

In December, REVLIMID® was granted full marketing authorization by Japan’s Ministry of Health, Labour and Welfare (MHLW) for use in combination with dexamethasone as a treatment for patients with NDMM. This marketing authorization expands upon the approval of REVLIMID® in 2010 for the treatment of patients with relapsed or refractory multiple myeloma (RRMM). Reimbursement discussions are ongoing.

Celgene, in collaboration with partner AstraZeneca, announced the initiation of the FUSION clinical development program with durvalumab in hematologic malignancies. The initial trials combine durvalumab with Celgene assets and novel compounds in RRMM, myelodysplastic syndromes (MDS), acute myeloid leukemia (AML), non-Hodgkin’s lymphoma (NHL) and chronic lymphocytic leukemia (CLL). Additional trials in NDMM and diffuse large B-cell lymphoma (DLBCL) are expected to begin late in the first quarter of 2016.

At the 57th American Society of Hematology Annual Meeting, data on the combination of REVLIMID®, bortezomib and low-dose dexamethasone (RVd) in NDMM were presented. In the 471-patient study, patients receiving RVd achieved a median progression free survival (PFS) of 43 months compared to a median PFS of 30 months for patients who received Rd alone (HR = 0.712, 96% CI, one-sided p=0.0018 (two-sided p=0.0037)). The data also show that overall survival (OS) was improved for RVd compared to Rd. Patients who received RVd had a median OS of 75 months compared to a median 64 months for patients receiving Rd (HR=0.709, 96% CI, one-sided p=0.0125 (two-sided p=0.0250)). In January, the National Comprehensive Cancer Network (NCCN) added the RVd combination to the multiple myeloma guidelines as a category 1 preferred treatment for both stem-cell transplant and non stem-cell transplant candidates.

Subsequent to our October 2015 supplementary new drug application filed with the U.S. Food and Drug Administration (FDA) for the expanded indication of REVLIMID® for the treatment of non-del 5q lower risk MDS, the FDA requested additional analyses and data for the submission to further support the risk/benefit assessment of REVLIMID® in this population. Based on the request, Celgene has decided to withdraw the submission at this time. Celgene remains committed to continued development in myeloid disease with ongoing trials in MDS and AML with CC-486, luspatercept in collaboration with Acceleron and the IDH platform in collaboration with Agios.

Data on the combination of ABRAXANE® with chemotherapy and with anti-PD-L1 compounds in neoadjuvant and triple-negative breast cancer were presented at the San Antonio Breast Cancer Symposium in December. Data from the phase III ETNA cooperative group trial with ABRAXANE® in patients with HER2-negative high-risk breast cancer are expected to be presented in 2016. Celgene expects to submit ABRAXANE® for early-stage breast cancer for regulatory approval in Europe in 2016.

Inflammation & Immunology

In January 2016, Celgene announced that radiographic data from long-term follow-up from the phase III POSTURE® trial of OTEZLA® in ankylosing spondylitis showed a delay in disease progression. Based on this result, Celgene is evaluating the next steps for OTEZLA® in this disease. The data are expected to be presented at a major medical congress in 2016.

Results from the two phase III ESTEEM trials (ESTEEM 1 and ESTEEM 2) in patients with psoriasis were published in the Journal of the American Academy of Dermatology. At week 16, OTEZLA® produced greater NAPSI-50 response (50% reduction from baseline in target Nail Psoriasis Severity Index score) versus placebo (both studies P < .0001) and ScPGA response (Scalp Physician Global Assessment score 0 or 1) versus placebo (both studies P < .0001). Improvements were generally maintained over 52 weeks in patients with Psoriasis Area and Severity Index response at week 32.

Three year efficacy and safety data of OTEZLA® in patients with psoriatic arthritis from the phase III PALACE 1 trial were presented at the American College of Rheumatology meeting in November. Among patients remaining in the study on treatment at 156 weeks, OTEZLA® demonstrated sustained and clinically meaningful improvements in ACR 20, ACR 50 and ACR 70 scores with a well-tolerated safety profile.

In the fourth quarter, a large phase III pivotal trial with GED-0301 in active Crohn’s disease began enrollment. In addition, a phase II trial with GED-0301 in ulcerative colitis also began enrollment. Data from the registration-enabling endoscopic trial with GED-0301 is expected in 2017. Also in the quarter, the phase II STEPSTONE trial with ozanimod in Crohn’s disease began enrollment.

The Group for Research and Assessment of Psoriasis and Psoriatic Arthritis (GRAPPA) updated their Treatment Recommendations for Psoriatic Arthritis in 2015. OTEZLA® was included for the first time in these recommendations including for peripheral arthritis, enthesitis, dactylitis, psoriasis and nail disease in psoriatic arthritis.

Business Update

Human Longevity, Inc. (HLI), a genomics and cell therapy-based diagnostic and therapeutic company based in San Diego, agreed to purchase Celgene Cellular Therapeutics’ (CCT) biobanking business known as LifebankUSA and CCT’s biomaterials portfolio of assets including Biovance. In addition, in this transaction HLI will also acquire the full rights to PSC-100, a placental stem cell program which CCT partnered with HLI in August 2014. CCT remains committed to advancing a pipeline of cell therapy and regenerative medicine products including PDA-002 in clinical trials for diabetic foot ulcers and diabetic peripheral neuropathy and PNK-007 (natural killer (NK) cells) in phase I trials for AML and multiple myeloma.

Data from at Least 18 Phase III Trials Expected from Mid-2016 Through Mid-2018

2016

  • REMARC trial with REVLIMID® in DLBCL maintenance
  • CONTINUUM® trial with REVLIMID® in CLL maintenance
  • ETNA trial with ABRAXANE® in neoadjuvant breast cancer
  • PSA-006 trial with OTEZLA® in biologic naïve psoriatic arthritis

2017

  • RELEVANCE® trial with REVLIMID® in first-line follicular lymphoma
  • AUGMENT® trial with REVLIMID® in relapsed and/or refractory follicular lymphoma
  • IMpower 130 Roche-sponsored trial with ABRAXANE® and atezolizumab in non-squamous non-small cell lung cancer (NSCLC)
  • IMpower 131 Roche-sponsored trial with ABRAXANE® and atezolizumab in squamous NSCLC
  • apact® trial with ABRAXANE® in adjuvant pancreatic cancer
  • abound®.sqm with ABRAXANE® in squamous NSCLC maintenance
  • RELIEFTM trial with OTEZLA® in Behçet’s disease
  • SUNBEAM trial with ozanimod in multiple sclerosis
  • RADIANCE trial with ozanimod in multiple sclerosis

2018

  • OPTIMISMM® trial with POMALYST® in second-line relapsed and/or refractory multiple myeloma
  • IMpassion 130 Roche-sponsored trial with ABRAXANE® and atezolizumab in triple-negative breast cancer
  • CD-002 trial with GED-0301 in Crohn’s disease
  • CD-003 trial with GED-0301 in Crohn’s disease
  • TRUE NORTH trial with ozanimod in ulcerative colitis

Celgene Expects Strong Product Sales and Earnings Growth in 2016

  • Total net product sales of $10.5 billion to $11.0 billion, an increase of 17 percent year-over-year based on the mid-point of the range and includes a negative impact from foreign exchange of approximately $120 million
  • REVLIMID® net sales in the range of $6.6 billion to $6.7 billion, an increase of 15 percent year-over-year based on the mid-point of the range
  • Adjusted operating margin of approximately 53.5 percent after investments across the entire organization, a 150 bps improvement over 2015. GAAP operating margin is expected to be approximately 42 percent
  • Adjusted diluted EPS in the range of $5.50 to $5.70, an increase of approximately 19 percent year-over-year based on the mid-point of the range. GAAP diluted EPS is expected to be in the range of $4.26 to $4.64
  • Fully diluted share count for the full-year 2016 of approximately 825 million
  • For the first quarter of 2016, adjusted diluted EPS in the range of $1.27 to $1.30. GAAP diluted EPS is expected to be in the range of $0.98 to$1.05 (Original Source)

Shares of Celgene Corporation closed yesterday at $102.31. CELG has a 1-year high of $140.72 and a 1-year low of $92.98. The stock’s 50-day moving average is $111.28 and its 200-day moving average is $118.49.

On the ratings front, Celgene has been the subject of a number of recent research reports. In a report issued on January 20, Credit Suisse analyst Alethia Young initiated coverage with a Buy rating on CELG and a price target of $149, which represents a potential upside of 45.6% from where the stock is currently trading. Separately, on January 14, Standpoint Research’s Ronnie Moas initiated coverage with a Buy rating on the stock .

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Alethia Young and Ronnie Moas have a total average return of -12.2% and 4.5% respectively. Young has a success rate of 30.4% and is ranked #3394 out of 3596 analysts, while Moas has a success rate of 66.2% and is ranked #59.

Overall, 13 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $152.00 which is 48.6% above where the stock closed yesterday.

Celgene Corp is a biopharmaceutical company. It is engaged in the discovery, development and commercialization of therapies designed to treat cancer and immune-inflammatory related diseases.