Business Corpus: Is Celgene's Beat-And-Raise Enough To Outweigh MS Drug Woes?Celgene reported adjusted earnings of $2.05 per share on $3.54 billion in sales, both modestly better than expected. The biotech's stock rose early Friday. The post Is Celgene's Beat-And-Raise Enough To Outweigh MS Drug Woes? appeared first on Investor's Business Daily.

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Celgene (CELG) "nailed it" in the first quarter after delivering a broad beat-and-raise Friday, analysts said, but they questioned the timeline for the release of its key multiple sclerosis drug.

Analysts were split on whether the first-quarter beat was enough to outweigh concerns about the MS drug, dubbed ozanimod. The Food and Drug Administration punted Celgene's application for ozanimod in February. Now, Celgene expects to refile for approval in early 2019.

The "modest beat fails to offset more development setbacks," Leerink analyst Geoffrey Porges said in a note to clients. But RBC analyst Brian Abrahams says the update on ozanimod is in line with expectations and "should help diminish near-term uncertainty."

Investors rewarded Celgene, but it was short-lived. On the stock market today, Celgene rose as much as 4.1% before settling to a 1.7% gain at 86.89 by the close. Meanwhile, biotech stocks collectively lifted 1.3%.

Revlimid, Otezla Spike

For the first quarter, Celgene reported $3.54 billion in sales, rising 19% to top the consensus of analysts polled by Zacks Investment Research for $3.5 billion. Adjusted profit of $2.05 a share beat the consensus for $2 and grew nearly 23%.

Revenue from cancer drugs outperformed expectations. Revlimid brought in $2.23 billion, in line with the consensus and up 19%, Porges said. Pomalyst raked in $453 million, growing 24.5% to beat views by 3%. Abraxane generated $262 million, up 11% and topping by 6%.

In immunology, sales of psoriasis and arthritis drug Otezla grew 46% to $353 million. That was 2% above the consensus, Porges said, but down 5% sequentially. In the U.S., increased demand and improved access helped spike sales, Celgene said in a news release.

Mizuho analyst Salim Syed said Celgene "nailed it" for an "awesome quarter."

"All products came in line or beat slightly," he said in a note. "Total product revenues beat by $100 million and the company slightly raised the 2018 guide on the top and bottom line."

Celgene also boosted its sales guidance for 2018 to $14.8 billion, up from earlier views for $14.4 billion to $14.8 billion. The firm also sees earnings of $8.45 a share, adjusted for the recent acquisition of Juno Therapeutics. Analysts had predicted $14.84 billion in sales and earnings of $8.44 a share.

Ozanimod Delayed

The big news, though, regarded ozanimod. In February, the FDA refused to file the application for ozanimod. Celgene cited deficiencies in the nonclinical and clinical pharmacology sections of the application for the FDA's decision.

Earlier in the week, an analyst suggested that the issue came down to a specific substance within the drug, known as a metabolite. A metabolite is a substance formed in, or necessary for, metabolism. Celgene discovered this specific metabolite in later-stage testing in humans.

RBC's Abrahams noted that this specific metabolite, known as CC112273, seems to stay in the body much longer than researchers initially realized. It's also responsible for about 90% of the drug's activity, he said in a report to clients.

"However, the longer half-life should not be a major issue once the metabolite is characterized," he said. "Other drugs in the class, like Gilenya, also have half-lives in similar ranges."

Now, Celgene expects to refile its application for ozanimod in multiple sclerosis in the first quarter of 2019. This timeline "takes the uber bear case of a two-plus-year delay off the table," Evercore analyst Umer Raffat said in a note.

But it also means that Celgene's ozanimod, if approved, will be entering the market at about the same time as generic versions of Novartis' (NVS) rival drug Gilenya, Leerink's Porges said.

"The new timeline is three quarters behind what we have forecast and may put the commercial launch in some uncertainty given the expected entry of generic Gilenya," he said. But he kept his outperform rating on Celgene stock.

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