Celgene (CELG) Investment in Acceleron (XLRN) Now Bearing Fruit; Cowen Weighs In


In September last year, Celgene (NASDAQ:CELG) bought 750,000 shares of Acceleron Pharma (NASDAQ:XLRN), and for a good reason. Celgene is Acceleron’s largest holder and is a partner for the latter’s lead program, Luspatercept, and for sotatercep.

Yesterday evening, CELG and partner Acceleron announced top line results for the Phase 3 trial of Luspatercept in patients with low-to-intermediate risk MDS (MEDALIST Trial). The trial was a great success, meeting both primary and secondary endpoints.

In reaction, shares of Celgene rose nearly 4%, while shares of Acceleron skyrocketed over 40% in Friday’s trading session.

Cowen analyst Phil Nadeau commented, “Though a more complete evaluation of the data must await the presentation of the full data during H2:18, the top-line success provides much-needed good news for Celgene in the wake of a series of pipeline disappointments for the company. Though luspatercept had produced solid Phase II data in MDS, investors had been nervous heading into the MEDALIST top-line release, and therefore its success should help lift an overhang. In addition to MEDALIST, Celgene and Acceleron are also conducting a Phase III study of luspatercept in patients with beta-thalassemia (BELIEVE, data anticipated mid-2018) and a Phase II study in patients with myelofibrosis. Though CELG management had suggested luspatercept is a $2-3B opportunity in MDS and beta-thalassemia alone, our model is more conservative and we project 2022 revenue of less than $1B. Nonetheless, the success of MEDALIST increases our confidence that luspatercept will be a meaningful contributor to CELG’s P&L.”

Looking ahead, Nadeau expects CELG to outperform, and as such, reiterates an Outperform rating on the stock, with a price target of $150, which represents a potential upside of 88% from where the stock is currently trading. (To watch Nadeau’s track record, click here)

TipRanks showcases CELG as one that has drawn optimism mixed with caution when it comes to consensus opinion among sell-side analysts. Out of 15 analysts polled in the last 3 months, 9 are bullish on Celgene stock, while 6 remain sidelined. With a potential upside of just over 40%, the stock’s consensus target price stands at $114.13 revealing optimism baked into analysts’ expectations. 

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