Staff Writer

Shares of Celgene Corp. hit a new 52-week low on Wednesday as investors reacted to weaker-than-expected first-quarter revenues previewed during Citigroup's Fourth Annual Citi Biotech Day.

Celgene said first-quarter 2009 revenues were approximately $600 million, considerably less than the $647.1 million expected by analysts. While the revenue figure represents a 30 percent increase over non-GAAP revenues of $461 million in the first quarter of 2008, it is a decrease from the $623 million reported in the fourth quarter of 2008.

Greg Geissman, associate director of public relations at Summit, N.J.-based Celgene, attributed the decline to four primary factors. First, he said, there were fewer shipping days in the first quarter than in the fourth quarter, which impacts top-line results. Second, the pharmacies that distribute Celgene's cancer drugs seem to be "thinning their inventories" and keeping less of the drugs in stock, he said.

Third, Geissman continued, some patients on Celgene's cancer drugs hit the Medicare Part D "doughnut hole" around the beginning of the year and may have chosen to delay treatment. Such patients, along with those who lost their employer-sponsored insurance coverage and others struggling with the current economic environment, contributed to a higher number of patients requesting co-pay assistance or free access to drugs - the fourth factor behind Celgene's revenue slide.

"It's Celgene's policy, if somebody needs this drug - which does extend life - and they can't afford it, at the end of the day we will provide it free of charge," Celgene Chairman and CEO Sol Barer said during his presentation at the Citi conference.

Despite the first-quarter revenue miss, Celgene reaffirmed its previously issued full-year 2009 guidance. The company said it still expects non-GAAP revenues in the range of $2.6 billion to $2.7 billion and non-GAAP earnings per share between $2.05 and $2.15 - although it now expects to land at the lower end of those ranges.

Non-GAAP revenues were $2.2 billion in 2008, while earnings per share were $1.56. Celgene ended 2008 with $2.2 billion in cash and expects to end this year with $3.1 billion.

Shares of Celgene (NASDAQ:CELG) fell $5.93, or 13.4 percent, to close at $38.47 on Wednesday.

JMP Securities Inc. analyst Charles Duncan wrote in a research note that he expects sales to "ramp upward" as the year progresses and sees the potential for share price appreciation through the rest of 2009.

But analyst Christopher Raymond, of Robert W. Baird & Co., isn't so sure. He wrote in a research note that Revlimid (lenalidomide), approved for refractory multiple myeloma and anemia associated with certain myelodysplastic syndromes, may be suffering from competitive pressure, along with Thalomid (thalidomide), which is approved for front-line multiple myeloma.

In 2008, Revlimid brought in $1.3 billion and Thalomid brought in $505 million. Vidaza (azacitidine), a myelodysplastic syndrome drug that Celgene gained in its March 2008 acquisition of Pharmion Corp., generated $207 million.

A product-specific breakdown for the first quarter of 2009 was not yet available, but Celgene said it expects full-year 2009 Revlimid sales to hit $1.7 billion and Vidaza sales to hit $400 million, thanks mostly to geographic expansion.

The company made no projections regarding Thalomid, and Raymond wrote that survey data and discussions with management indicated the product's revenue is declining "faster than expected."

Geissman acknowledged that Thalomid is "also a factor" in the first-quarter miss, but he maintained that Celgene "always knew" Thalomid's multiple myeloma sales eventually would be cannibalized by Revlimid and by Velcade (bortezomib), the multiple myeloma drug approved last year from Takeda Pharmaceutical Co. Ltd.'s Millennium subsidiary.

Raymond also raised concerns that Celgene's flagship revenue-driver Revlimid may be losing ground to Velcade, and he wrote that survey data and conversations with Millennium's management lead him to believe the effect "may be more pronounced than many investors believe."

For that reason, Raymond said the analyst consensus numbers on Celgene "need to come down."

Velcade is approved for both front-line and refractory multiple myeloma, while Revlimid only is approved in the refractory setting, although Geissman noted that it is reimbursed for front-line use and a Phase III front-line trial is ongoing with data expected possibly mid- to late 2009.

Revlimid also is in Phase III for chronic lymphocytic leukemia and Phase II for non-Hodgkin's lymphoma and other indications.

A second-generation version of the drug, pomalidomide, is in Phase II for multiple myeloma and myelofibrosis and is expected to offer higher potency.

And Celgene is looking beyond Revlimid for longer-term growth. Amrubicin, a synthetic anthracycline analogue, is in Phase III for small-cell lung cancer; while apremilast, a small-molecule inhibitor of multiple proinflammatory mediators, is in Phase II for various autoimmune and inflammatory conditions; and PDA-001, a stem cell product, is in Phase I for Crohn's disease.

"These are uncertain, stressful times, but our fundamentals of our business and our growth of our business are very sound," Barer said.