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Celgene Loses 17.8% in 3 Months: Time to Reshuffle Portfolio?
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Celgene Corporation is taking desperate attempts to bolster its portfolio and reduce dependence on lead drug, Revlimid. However, things do not seem to be working in favor of the company.
Celgene’s stock has lost 17.8% in the last three months, worse than the industry’s decline of 5.6%.
Last month, Celgene suffered yet another setback when it received Refusal to File letter from the FDA regarding its New Drug Application (“NDA”) for multiple sclerosis candidate ozanimod. The candidate is being developed for the treatment of patients with relapsing forms of multiple sclerosis (“MS”). The FDA stated that the nonclinical and clinical pharmacology sections in the NDA were inadequate to allow a complete review. Hence, Celgene will request a Type A meeting with the FDA to ascertain the additional information needed for resubmission of the NDA. The news comes as a great disappointment for investors given the potential the MS market holds.
Notably, things have been on the downturn for the company since last October after Celgene announced a phase III trial, REVOLVE, (CD-002) on pipeline candidate GED-0301 in Crohn’s disease and the extension trial, SUSTAIN (CD-004) have been discontinued following a recommendation from the Data Monitoring Committee, which assessed overall benefit/risk during a recent interim futility analysis.
In December 2017, a late stage study on its lead cancer drug Revlimid in combination with Roche Holdings’ (RHHBY - Free Report) Rituxan failed. The study evaluated Revlimid plus Rituxan (R2) followed by R2 maintenance compared with the standard of care featuring Rituxan plus chemotherapy (R-CHOP, R-bendamustine or R-VN CVP) followed by Rituxan maintenance for previously untreated follicular lymphoma. However, the R2 treatment arm could not achieve superiority in the co-primary endpoints of complete response or unconfirmed complete response CR/CRu) at 120 weeks and in terms of progression-free survival observed during the pre-planned analysis.
Celgene’s key growth engine is Revlimid. While Revlimid sales continue to be impressive, we are concerned about the company’s dependence on the product for growth. The drug is set to lose patent exclusivity soon and hence Celgene is desperately trying to revive its portfolio.
Celgene was on the look-out of new deals and acquisitions given a lacklustre 2017 just like Gilead Sciences (GILD - Free Report) which acquired Kite Pharma. The Juno acquisition added JCAR017 (lisocabtagene maraleucel; liso-cel) to Celgene’s lymphoma pipeline. JCAR017 is a best-in-class CD19-directed CAR-T candidate, currently in a pivotal program for relapsed and/or refractory diffuse large B-cell lymphoma. The candidate is expected to obtain regulatory approval in the United States in 2019 and generate sales of approximately $3 billion. While the acquisition of Juno will surely boost Celgene’s growth prospects given the immense potential in the CAR-T therapy space, it might be a risky proposition for Celgene as Juno has faced setbacks with its pipeline candidate, JCAR015.
Hence, we expect investors to stay on the side-lines for the time being and observe how the revival story for Celgene plays out.
Regeneron’s earnings per share estimates have moved up from $18.65 to $18.68 for 2018 in the last 30 days. The company pulled off a positive earnings surprise in three of the last four quarters, with an average beat of 9.15%.
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Celgene Loses 17.8% in 3 Months: Time to Reshuffle Portfolio?
Celgene Corporation is taking desperate attempts to bolster its portfolio and reduce dependence on lead drug, Revlimid. However, things do not seem to be working in favor of the company.
Celgene’s stock has lost 17.8% in the last three months, worse than the industry’s decline of 5.6%.
Last month, Celgene suffered yet another setback when it received Refusal to File letter from the FDA regarding its New Drug Application (“NDA”) for multiple sclerosis candidate ozanimod. The candidate is being developed for the treatment of patients with relapsing forms of multiple sclerosis (“MS”). The FDA stated that the nonclinical and clinical pharmacology sections in the NDA were inadequate to allow a complete review. Hence, Celgene will request a Type A meeting with the FDA to ascertain the additional information needed for resubmission of the NDA. The news comes as a great disappointment for investors given the potential the MS market holds.
Notably, things have been on the downturn for the company since last October after Celgene announced a phase III trial, REVOLVE, (CD-002) on pipeline candidate GED-0301 in Crohn’s disease and the extension trial, SUSTAIN (CD-004) have been discontinued following a recommendation from the Data Monitoring Committee, which assessed overall benefit/risk during a recent interim futility analysis.
In December 2017, a late stage study on its lead cancer drug Revlimid in combination with Roche Holdings’ (RHHBY - Free Report) Rituxan failed. The study evaluated Revlimid plus Rituxan (R2) followed by R2 maintenance compared with the standard of care featuring Rituxan plus chemotherapy (R-CHOP, R-bendamustine or R-VN CVP) followed by Rituxan maintenance for previously untreated follicular lymphoma. However, the R2 treatment arm could not achieve superiority in the co-primary endpoints of complete response or unconfirmed complete response CR/CRu) at 120 weeks and in terms of progression-free survival observed during the pre-planned analysis.
Celgene’s key growth engine is Revlimid. While Revlimid sales continue to be impressive, we are concerned about the company’s dependence on the product for growth. The drug is set to lose patent exclusivity soon and hence Celgene is desperately trying to revive its portfolio.
Celgene was on the look-out of new deals and acquisitions given a lacklustre 2017 just like Gilead Sciences (GILD - Free Report) which acquired Kite Pharma. The Juno acquisition added JCAR017 (lisocabtagene maraleucel; liso-cel) to Celgene’s lymphoma pipeline. JCAR017 is a best-in-class CD19-directed CAR-T candidate, currently in a pivotal program for relapsed and/or refractory diffuse large B-cell lymphoma. The candidate is expected to obtain regulatory approval in the United States in 2019 and generate sales of approximately $3 billion. While the acquisition of Juno will surely boost Celgene’s growth prospects given the immense potential in the CAR-T therapy space, it might be a risky proposition for Celgene as Juno has faced setbacks with its pipeline candidate, JCAR015.
Hence, we expect investors to stay on the side-lines for the time being and observe how the revival story for Celgene plays out.
Zacks Rank & Key Pick
Celgene currently carries a Zacks Rank #4 (Sell).
A better-ranked stock from the same space is Regeneron Pharmaceuticals (REGN - Free Report) , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Regeneron’s earnings per share estimates have moved up from $18.65 to $18.68 for 2018 in the last 30 days. The company pulled off a positive earnings surprise in three of the last four quarters, with an average beat of 9.15%.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>