Celgene Corp.'s first full quarter following its March acquisition of Pharmion Corp. proved to be a strong one, as the Summit, N.J.-based firm reported "record" sales for its flagship multiple myeloma drug Revlimid and posted higher-than-expected second-quarter earnings.
Its non-GAAP net income totaled $172.7 million, or 37 cents per share, ahead of consensus estimates of 35 cents. GAAP net income, which includes the after-tax impact of share-based employee compensation expenses, was $119.9 million, or 26 cents, for the quarter.
Celgene's second-quarter revenue reached $566.6 million, well above analyst estimates of $538.9 million.
Its quarterly revenue "climbed to new highs," Chief Financial Officer David Gryska told investors during a conference call, driven by "multiple growing global revenue streams, including record quarterly results of Revlimid, very strong sales of Vidaza and solid sales of Thalomid in the U.S. and thalidomide in the international markets."
Sales of Revlimid (lenalidomide), which also is approved in patients with transfusion-dependent anemia due to low- or intermediate-1-risk myelodysplastic syndromes (MDS) associated with a 5q deletion, came in at $325.8 million for the quarter, an increase of 80 percent over the second quarter last year and a 14 percent jump from the first quarter of this year.
Thalomid/thalidomide sales totaled $131.6 million for the second quarter, and sales of Vidaza (azacitidine) were $59.7 million.
Thalomid is approved for newly diagnosed multiple myeloma patients and Vidaza, the centerpiece of the $2.9 billion Pharmion acquisition, is approved in MDS.
Given the sales performance in the first half of the year, Celgene executives raised the company's full-year 2008 revenue guidance from $2.1 billion to $2.2 billion.
Analyst Christopher Raymond, of Robert W. Baird & Co., however, cautioned that the second half of this year might not be as stellar for Celgene. "We remain concerned that Revlimid may see increasing competitive forces going forward" from Velcade (bortezomib) from Cambridge, Mass.-based Millennium Pharmaceuticals Inc., a subsidiary of Takeda Pharmaceuticals Inc.
Velcade gained a wider approval last month for first-line multiple myeloma patients.
On the expense side, the company reported an increase in R&D investment for the second quarter, primarily to advance its clinical development pipeline, which includes ongoing and upcoming late-stage studies to expand the use of both Revlimid and Vidaza, as well as costs associated with upcoming regulatory filings. Non-GAAP R&D expenses totaled $133.2 million, up 52 percent from the same period in 2007.
The company is testing Revlimid in several additional indications, including Phase III trials slated to start this year - both of those under special protocol assessments with the FDA - in non-Hodgkin's lymphoma and chronic lymphocytic leukemia. It's also making progress with other pipeline products such as pomalidomide, which is in mid-stage trials in myelofibrosis, multiple myeloma and solid tumors, and amrubicin, which is in late-stage testing in small-cell lung cancer.
Vidaza also is being tested in additional indications, such as acute myeloid leukemia, but right now Celgene investors are hoping to see impressive sales growth in the U.S. following the FDA's expected approval later this quarter to allow Vidaza's recent survival data to be included in the drug's label.
Those data, reported by Boulder, Colo.-based Pharmion last summer, showed that Vidaza extended overall survival by 74 percent in higher-risk MDS patients and nearly doubled the two-year survival rate compared to a control group receiving best supportive care. That news, compounded by the recent failure of chief competitor, Dacogen (decitabine), which failed to show a significant survival advantage over best supportive care in a similarly designed trial, ultimately could give Vidaza a larger share of the MDS market. (See BioWorld Today, Aug. 3, 2007, and July 2, 2008.)
Celgene already is "seeing positive trends in terms of Vidaza market share," said Robert Hugin, president and chief operating officer, adding that "we hope to see significant improvement" following the FDA's decision.
The company also expects the drug to get through a European Commission review by the end of this year, with a European launch expected in early 2009. And Vidaza might be alone in that market, if analysts are correct in predicting a rejection in Europe for Dacogen in light of the disappointing survival data.
Dacogen is marketed by Dublin, Calif.-based SuperGen Inc. in partnership with Minneapolis-based MGI Pharma Inc. (now part of Tokyo-based Eisai Co. Ltd.)
"With Vidaza poised to capture the majority of the EU market share, [Celgene] is better positioned to secure its future growth," analyst Eun K. Yang, of Jefferies & Co. Inc., wrote in a research note. Yang reiterated a "buy" rating on the stock and a price target of $81.
Shares of Celgene (NASDAQ:CELG) gained $2.81 Thursday to close at $73.26.
The company ended the quarter with about $2.3 billion in cash.
In other earnings news:
• Elan Corp. plc, of Dublin, Ireland, reported total revenue of $245.6 million for the second quarter, driven primarily by an increase in sales of Tysabri (natalizumab), the multiple sclerosis drug partnered with Cambridge, Mass.-based Biogen Idec Inc. Earlier this week, Biogen reported total Tysabri sales of $200 million for the three-month period. Elan posted a net loss of $71.5 million, or 15 cents per share. The company had cash and equivalents of $423.5 million as of June 30. Its stock (NYSE:ELN) lost $1.20 Thursday to close at $32.34.
• ImClone Systems Inc., of New York, reported global net sales of cancer drug Erbitux (cetuximab) of $423.3 million in the second quarter, a 33 percent increase over the second quarter of 2007. ImClone recognized royalty revenue of $97.8 million, which consists of 39 percent of partner New York-based Bristol-Myers Squibb Co.'s North American net sales and 9.5 percent of Darmstadt, Germany-based Merck KGaA's international Erbitux net sales. The company reported total revenue of $166.5 million and adjusted net income of $27.1 million, or 31 cents per share, for the second quarter, down slightly from the same period last year. ImClone said an 11 percent increase in quarterly revenue was offset by increased investments to its antibody pipeline. The firm ended the quarter with cash, equivalents and securities totaling $935.6 million. Shares of ImClone (NASDAQ:IMCL) fell 70 cents Thursday to close at $45.18.
• OSI Pharmaceuticals Inc., of Melville, N.Y., reported total worldwide net sales of Tarceva (erlotinib) of $292 million for the second quarter. Under its joint U.S. deal with South San Francisco-based Genentech Inc., OSI recorded net revenues of $52 million. The company also pulled in $35 million in Tarceva royalties from Basel, Switzerland-based F. Hoffmann-La Roche Ltd. on international sales. OSI reported net income of $37.2 million, or 61 cents per share, for the three months ending June 30, 2008. It ended the quarter with $435.1 million in cash and investments. Shares of OSI (NASDAQ:OSIP) rose $1.10 Thursday to close at $51.02.