Celgene Corporation (CELG), Sarepta Therapeutics Inc (SRPT): Analysts Share Two Cents on a Biotech Earnings Blunderer and a Champ

Cantor: CELG pipeline needs commercial juice; Cowen: Sarepta soars on strong Exondys 51 orphan launch.


Celgene’s Light on Otezla Commercial Pipeline Evolution

Celgene Corporation (NASDAQ:CELG) shares are falling 19% even after delivering an EPS outclass. Why? Investors did not much care to see a revenue guidance chop, with the CELG team dialing down expectations for the year for psoriasis drug Otezla.

Cantor analyst Mara Goldstein recognizes that Otezla sales were “light,” which led to a 2020 topline guidance reduction from over $21 billion down to $19 to $20 billion, with EPS reigned in from over $13.00 to above $12.50. Nonetheless, Goldstein stands by the biotech giant’s stellar financial elasticity that in the short-term hopefully can withstand the Otezla stumble.

As such, the analyst an Overweight rating on CELG stock with a $162 price target, which represents a close to 68% increase from where the stock is currently trading. (To watch Goldstein’s track record, click here)

For the third quarter, Celgene posted non-GAAP EPS of $1.91, surpassing both the analyst’s expectations of $1.90 by a hair as well as FactSet consensus of $1.87. Meanwhile, another strength of Celgene’s print points to reported net income, which hiked 23% year-over-year to $1.56 million, aligning with the analyst’s expectations of $1.54 billion.

Goldstein notes, “In spite of strong earnings, the top line was weaker than anticipated (10% growth) and CELG announced slight changes to full year guidance, truncating the high end of the revenue guidance range but raising the bottom end of the EPS guidance range. More importantly, the company lowered estimated revenues for 2020, reducing oncology and I&I forecasts by roughly $1 billion each, while increasing hematology sales by $1.3 billion. This news is likely to pressure the shares as this suggests that pipeline execution and strengthening of non-REVLIMID franchises are under greater pressure. We also expect the next quarter to reflect the loss of the GED-0301 in Crohn’s disease, which was not included into our valuation.”

Overall, “We continue to see strong financial flexibility that can offset some topline weakness, but ultimately the company must convert its large pipeline to commercial product in order to dilute Revlimid’s P&L dominance, and this capitulation amid the loss of GED-0301 last week elevates concerns about doing so,” surmises the analyst.

How does Goldstein’s bullish vote weigh against the word of the Street? It stands as a solid bet, considering TipRanks analytics indicate CELG as a Buy. Out of 24 analysts polled by TipRanks in the last 3 months, 18 are bullish on Celgene stock, 5 remain sidelined, and 1 is bearish on the stock. With a return potential of 55%, the stock’s consensus target price stands at $150.85.

Sarepta Does It Again with Strong 3Q Outperformance

Sarepta Therapeutics Inc (NASDAQ:SRPT) knocked it out of the park earnings-style for the third quarter in a row, with top analyst Ritu Baral at Cowen singing the biotech player’s praises “once more, with feeling.”

In reaction to the stellar print, the analyst maintains an Outperform rating on SRPT stock with a $69 price target, which implies a just under 44% upside from current levels.

For the third quarter, Sarepta not only scored its third outclass, but also saw another revenue boost for Exondys 51, which from Baral’s stance highlights a “very strong orphan launch” – a launch that flies with such an “impressive trajectory,” it shows “no signs of slowing down” any time soon.

Baral underscores, “We continue to expect a positive CHMP opinion for Exondys 51 in 1H18. Management also outlined pipeline progress, with an FDA meeting on golodirsen ’53 expected 1Q18, and Ph1/2 trial starts for PPMO next-gen exon 51 and gene therapy candidates by YE2017.”

“On today’s call, management largely reiterated launch metrics for Exondys 51, including adoption across all age groups, increasing genotyping rates, low dropout rates, a stable start form pool, stable start form conversions, start form submission by >160 individual prescribers as well as by 100% of Tier 1 and 2 centers (representing 75% of all treaters) as well continuing encouraging payor coverage,” comments the analyst.

To Baral, Sarepta’s robust performance is a symptom of an exciting future pathway ahead: “We are strongly encouraged by these metrics and see continued robust revenue numbers as evidence of both strong compliance and persistence as well as continued new patient starts through 2017 and at least early 2018. Publication of the Ph1/2 ‘204 nonambulatory boys data in 4Q17 could also provide compelling evidence for broader coverage.”

Keep in mind, the analyst writes, the Phase III PROMOVI trial evaluating Duchenne Muscular Dystrophy (DMD) drug eteplirsen has full enrollment, with Baral anticipated data from the two year six-minute walk test (6MWT) primary endpoint prospectively by the back half of 2019. The design of the Phase IV post-marketing high-dose trial does not have all i’s dotted and t’s crossed just yet, as the firm awaits “potential harmonization” with the post-marketing guidelines required by the European Union (EU). Moving forward, momentum shines in Sarepta’s favor, as the analyst contends EU approval of Exondys 51 will hit by the first half of next year.

Ritu Baral has a very good TipRanks score with a 51% success rate and a high ranking of #130 out of 4,700 analysts. Baral garners 19.7% in her annual returns. When recommending SRPT, Baral gains 4.6% in average profits on the stock.

TipRanks analytics demonstrate SRPT as a Strong Buy. Based on 13 analysts polled by TipRanks in the last 3 months, 12 rate a Buy on Sarepta stock while 1 maintains a Hold. The 12-month average price target stands at $70.73, marking a 47% upside from where the stock is currently trading.