Biotech Beat: William Blair Bullish on Celgene Corporation (CELG) and Exelixis, Inc. (EXEL)

Analyst John Sonnier of William Blair began his 2016 coverage this week by providing updates on two biotech stocks, Celgene Corporation (NASDAQ:CELG) and Exelixis, Inc. (NASDAQ:EXEL). The analyst is bullish on both companies due to Celgene’s financial and clinical accomplishments of 2015 and new pipeline data from Exelixis.


Celgene Corporation

Earlier this week, Celgene management reviewed key points from 2015 and provided guidance for 2016. Celgene management estimates Q4 EPS to be $1.18 and full-year EPS of $4.71. Sonnier comments, “Given that there is a one time negative impact of $0.07 from a milestone payment to partner OncoMed, these results are roughly in line with guidance and our prior expectations of $1.26 in earnings for the quarter and $4.80 in earnings for the year.”

The company expects to post product sales for 2015 of $9.16 billion, slightly below Sonnier’s estimate of $9.22 billion. The analyst points out Revlimid sales estimates, a treatment for relapsed of refractory mantle cell lymphoma, which are in-line with his estimates. He continues, “We believe future revenues will continue to be driven by Revlimid sales, but we also point out the increasing contributions from Celgene’s other products, including Pomalyst/Imnovid, Abraxane, and added contributions from Otezla.”

Overall, the analyst believes that Celgene is a smart investment with “the best financial clarity through 2020 among large-cap biotech companies.” He reiterated an Outperform rating on the company without a price target. According to TipRanks, all 10 analysts who have weighed in on the stock in the last 3 months are bullish with an average price target of $154.22, marking a 44% potential upside from current levels.

CELG consensus


Exelixis, Inc.

Sonnier reiterated an Outperform rating on Exelixis without providing a price target after the company presented additional data from the Phase 3 trial of cabozantinib in second-line renal cell carcinoma. The analyst notes this additional data “further [highlights] cabozantinib’s potential important role in the treatment paradigm of RCC, which is a $4 billion-$5 billion market.”

The analyst believes that cabozantinib’s strong data suggests it could become a meaningful option for patients with second-line RCC. In addition, he notes, “cabozantinib appears to be more active relative to Afinitor,” a competing drug made by Novartis, “in patients with metastatic disease… which has the potential to differentiate cabozantinib from other drugs in the setting and is consistent with our previous observations in earlier cabozantinib trials.”

Sonnier concludes, “the strong clinical profile across various subgroups further solidifies our view that cabozantinib, once approved, will likely become one of the cornerstone therapies among second-line RCC patients.” According to TipRanks, only one other analyst has weighed in on the stock in the last three months, providing a Hold rating with a $6 price target.

Sonnier stats

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