Analysts Chime in on Celgene Corporation (CELG) Crohn’s Dud and Gilead Sciences, Inc. (GILD) Winning FDA Nod for Yescarta

Cowen always deemed CELG's failed drug a risky contender, welcomes GILD's full approval for Yescarta.


Celgene Still Has Potential to Make Billions with Other Assets

Celgene Corporation (NASDAQ:CELG) is getting hammered 6% in pre-market trading today after breaking the bad news that its main mongersen trial, REVOLVE was getting the axe. This Crohn’s Disease asset met its end after the results of an interim futility analysis that spelled out shortfalls in effectiveness.

Top analyst Eric Schmidt at Cowen acknowledges the bitter pill of the discontinued trial is certainly “disappointing,” but he for one is none too surprised by an outcome that missed the boat. Why? Schmidt notes that of beyond 15 Phase III data readouts the drug maker has in the works between now and 2019, CELG’s GED-0301 in Crohn’s always seemed “one of the most risky.”

Yet, the analyst continues to bet on the biotech player, explaining, “While this is disappointing, we did not have conviction in this potential asset given the quality and strength of prior datasets. Within the company’s broad pipeline (>15 Phase III data readouts over the next 1-2 years), we favor bb2121 and luspatercept.”

True, there will be negative publicity lashing out at Celgene shares, as Schmidt underscores, “With a lack of solid placebo controlled data, previous results demonstrating clinical response via the Crohn’s disease activity index (CDAI) were difficult to interpret. While GED-0301 represented one of Celgene’s first major acquisitions, the drug did not retain a high profile with investors and the disappointment will cost management some credibility. […] Today’s news will likely put pressure on the remaining Phase III data readouts expected from Celgene’s pipeline.”

In the bigger picture though, the analyst roots for two key assets that carry blockbuster potential: “While we anticipate there will be more failures, we have the most confidence in bb2121 for myeloma and luspatercept for MDS/beta-thalassemia, each of which has multi-billion dollar potential.”

Angling for Celgene to bring to the biotech table capital circling $100 billion throughout the next decade, the analyst concludes bullish on “Celgene’s historical standards” with hopes that GED-0301 will be a false move offset by future clinical success.

Therefore, despite the Phase III REVOLVE flop, the analyst reiterates an Outperform rating on CELG stock with a price target of $150, which represents a 17% increase from where the stock is currently trading.

Eric Schmidt has a very good TipRanks score with a 67% success rate and a high ranking of #22 out of 4,698 analysts. Schmidt yields 43.7% in his yearly returns. When recommending CELG, Schmidt garners 12.1% in average profits on the stock.

Celgene is a biotech winner on the Street, earning one of the most popular consensus ratings, considering TipRanks analytics exhibit CELG as a Strong Buy. Out of 19 analysts polled by TipRanks in the last 3 months, 17 are bullish on Celgene stock, 1 remains sidelined, and 1 is bearish on the stock. With a return potential of nearly 15%, the stock’s consensus target price stands at $155.94.

Gilead’s Yescarta’s Uptake Will Outclass Investor Expectations

It looks like the party hit early for Gilead Sciences, Inc. (NASDAQ:GILD) after the biotech firm won advance approval for its Kite collaboration on its cancer drug Yescarta (Axi-Cel) over a month before its PDUFA date set for the end of November.

Cowen analyst Phil Nadeau offers a bullish take now Yescarta scored a key “yes” from the agency and even believes based on recent physician checks that the drug “will have more rapid uptake than investors appreciate.”

Investors had anticipated Yescarta’s price tag to approach $400,000, Nadeau wagers, and with Gilead pricing its asset designed to treat adults with r/r large B-cell lymphoma at $373,000, it looks like the firm is in good standing.

In reaction to the full approval granted for the CAR-T therapy, the analyst maintains an Outperform rating on GILD stock with a $90 price target, which implies a 10% increase from where the shares last closed. (To watch Nadeau’s track record, click here)

Nadeau surmises, “Yescarta’s pivotal data are compelling and the FDA had indicated that an Advisory Committee review would not be necessary. These factors, combined with the fact that Gilead paid $12B for Kite after reviewing its ongoing FDA interactions, made investors confident that Yescarta would be approved by FDA during Q4. In fact, at our recent Therapeutics conference 95% of investors estimated the likelihood of Yescarta’s FDA approval was 80-100%. Moreover, Kite had been suggesting that the approval could be granted early in the quarter. Therefore, the fact that it actually came more than a month before Yescarta’s November 29 PDUFA is not overly surprising. Nonetheless, there had been some question about whether Yescarta would get a full or accelerated approval, and therefore the fact it secured a full approval is notable.”

Cautious optimism circles this biotech stock, as TipRanks analytics reveal GILD as a Buy. Based on 17 analysts polled by TipRanks in the last 3 months, 10 rate a Buy on Gilead stock while 7 maintain a Hold. The 12-month average price target stands at $88.00, marking a nearly 8% upside from where the stock is currently trading.GILD analyst ratings chart

  • Norman Foster

    Many people will not know the financial impact of Celgene stopping two trials for Crohn’s disease. Celgene has announced that info in an SEC filing.