Celgene Corporation’s (CELG) first quarter 2011 earnings (excluding special items but including stock-based compensation expense) of $0.71 per share were below the Zacks Consensus Estimate by $0.02 but exceeded the year-ago earnings by $0.17.
On a reported basis (including special items), the company’s earnings increased 8% to $0.54. Higher revenues boosted earnings in the quarter.
Adjusted revenues climbed 40% to $1.11 billion in the first quarter of 2011. Revenues were boosted by the impressive performance of Celgene’s cancer products Revlimid and Vidaza. Revenue for the quarter surpassed the Zacks Consensus Estimate of $1.08 billion.
Revlimid net sales came in at $738 million, reflecting an increase of 39% over the year ago period. Vidaza continued to perform impressively. Net sales of the drug for the reported quarter came in at $163 million, an increase of 36% over the first quarter of 2010.
However, net sales of another cancer drug, Thalomid, continued to decline due to the availability of better alternatives. Thalomid sales were $85 million, down 18%. Net sales of Abraxane, added to the portfolio with the purchase of Abraxis BioScience (in October 2010), were $74 million in the reported quarter.
Adjusted research and development (R&D) spend climbed 49.5% to $278 million in the reported quarter. The increase was primarily attributable to Celgene’s efforts to expand its pipeline. Selling, general and administrative expenses (on an adjusted basis) in the quarter increased approximately 43.6% year-over-year to $270 million.
Costs associated with the launch of cancer drugs Revlimid in Japan, Istodax in the US and Vidaza in Europe primarily led to the rise. Acquisition related costs and higher facility costs incurred in the quarter were also responsible for the increase.
2011 Forecast
Following the release of first quarter results, Celgene upped its guidance for 2011. In 2011, the company expects to earn in the range of $3.35-$3.40 per share (on an adjusted basis) on revenues of $4.45 billion to $4.55 billion.
The previous guidance was $3.30 to $3.35 per share (on an adjusted basis) on revenues of $4.4 billion-$4.5 billion. Currently, the Zacks Consensus Estimate for 2011 hints at earnings of $3.04 on revenues of $4.47 billion.
Revlimid sales are expected to contribute the lion’s share to total revenues. Sales of the cancer drug are expected in the range of $3.05 billion to $3.15 billion (up approximately 26% year over year).
Neutral on Celgene
We have a Neutral recommendation on Celgene. Our long-term stance is supported by the Zacks #3 Rank (Hold rating) carried by the company in the short run.
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