Celgene Provides an Attractive Entry Point

Source: http://www.flickr.com/photos/amadika/

Source: http://www.flickr.com/photos/amadika/

Though the past couple of weeks have caused some doubt in the minds of investors, one thing that shouldn’t be overlooked is the potential for attractive entry points as the stock market slides. One stock that stands out with an attractive entry price is Celgene (NASDAQ:CELG).

Over the past year, shares of Celgene have appreciated by nearly 57 percent. That is an outstanding return for a company of this size ($64 billion market cap). Despite that return, investors may be concerned about the selloff that has taken place over the past couple of months. Shares once traded as high as $174.66 but have since slid closing at $156.88 as of Friday’s trading session. Given the company’s earnings power and pipeline, that would appear to represent an attractive entry point.

Over the last three years, Celgene has demonstrated its ability to develop new drugs and treatments, which has led to impressive revenue and net income growth.

  • 2010 — Revenue of $3.625 billion; Net Income of $880.5 million
  • 2011 — Revenue of $4.842 billion; Net Income of $1.312 billion
  • 2012 — Revenue of $5.507 billion; Net Income of $1.456 billion

Through the first three quarters of 2013, Celgene has continued its impressive growth streak. Total revenue through the 3 quarters has been $4.738 billion with net income of $1.236 billion. So once again, it is all but certain that Celgene will shatter the numbers of 2012. Investors wondering about the future can point to the company’s impressive pipeline as an indication of continued success.

One of the most recent wins for Celgene came when the FDA approved Abraxane for first-line metastatic pancreatic adenocarcinoma. Pancreatic cancer is the fourth leading cause of cancer death in the U.S. The National Cancer Institute estimates that more than 45,000 patients will be diagnosed and more than 38,000 of them will die in 2013. Before Abraxane, the only options to permanently remove or cure pancreatic cancer was surgery. Unfortunately, by the time the disease is diagnosed, surgery is typically no longer an option. Given that Abraxane was only approved for pancreatic cancer in September of last year, it is still too early to tell what the sales will be. But given the limited options available, it is likely to be a major success.

Celgene has also asserted itself as a leader in the treatment of multiple myeloma. The company currently has three FDA approved treatments for the disease which include Thalomid, Pomalyst, and Revlimid.

In Celgene’s third-quarter report, the revenue numbers for the three treatments were as follows:

  • Revlimid: $1.09 billion
  • Pomalyst: $90 million
  • Thalomid: $60 million

Clearly, Revlimid is the big winner for Celgene. Those quarterly sales accounted for nearly 60 percent of Celgene’s total quarterly sales. But the fact that the company now has three approved products for the treatment of multiple myeloma is impressive as it gives patients options, something that wasn’t there before. It also speaks to Celgene’s ability to continue innovating and developing new treatments.

Investors looking ahead can look forward to the following milestones that Celgene is anticipating:

  • Submission of Revlimid for newly diagnosed multiple myeloma
  • Vidaza Phase 3 Trial Data — Elderly Newly Diagnosed AML
  • FDA approval of Otezla in psoriatic arthritis and psoriasis
  • CHMP opinion for Otezla in psoriatic arthritis and psoriasis
  • Otezla Phase 3 POSTURE trial in ankylosing spondylitis

These are just a few of the major events facing Celgene in 2014. As investors can see, there is plenty of room for growth if these catalysts prove to be successful. Additionally, if Celgene continues to execute on the financial side of the equation, there is no reason why shares can’t appreciate significantly from their current levels.

More From Wall St. Cheat Sheet: