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Celgene (NASDAQ:CELG) is a global biopharmaceutical company engaged in the discovery, development and commercialization of therapies designed to treat cancer and immune-inflammatory related diseases. Celgene's current main products include Revlimid, Abraxane, Vidaza, and Thalomid. Investors also need to pay attention to Apremilast, which could be the next blockbuster drug.

Products Sales and Development

Celgene continued to develop positively from the product end. Below is the sales breakdown for Celgene's main products as reported in the last quarter.

Q4 Sales

Change

Full Year Sales

Change

Highlight

Revlimid

$1,002M

+17%

$3,767M

+17%

Driven by strong overall market share and increased duration of therapy.

Abraxane

$106M

+3%

$427M

+11%

Affected by the restoration of the full supply of generic paclitaxel, the shortage of which benefited the fourth quarter 2011

Vidaza

$216M

+14%

$823M

+17%

Driven by market share increases in most regions

Thalomid

$73M

-12%

$302M

-11%

N/A

Overall, Revlimid remains as the main growth driver and contributed over 70% of sales among 4 major products.

In early February, FDA had approved Pomalyst brand therapy (pomalidomide) for patients with multiple myeloma who have received at least two prior therapies including lenalidomide and bortezomib and have demonstrated disease progression on or within 60 days of completion of the last therapy.

In early March, as reported, oral Apremilast achieved statistical significance for the primary endpoint of PASI-75 in the First Phase III Study (ESTEEM 1) in patients with psoriasis, where Apremilast significantly improved signs and symptoms of psoriasis across a range of patient types, from systemic treatment-naïve to biologic-treatment failure patients. As quoted from Deutsche Bank's analyst,

"Apremilast, being developed for psoriasis & psoriatic arthritis, is really the one asset where consensus expectations are below co. guidance. We too were somewhat concerned after initial checks on Apremilast. However, after a further survey of 100 dermatologists & rheumatologists, who suggest Apremilast is a blockbuster, we are encouraged."

Analysts' Calls and Estimates

On April 5, 2013, Deutsche Bank upgraded Celgene from hold to buy and increased its price target from $105 to $143. While a 10 percent share for Apremilast equals a $3.5 billion drug, Deutsche assumes:

"1) a slow launch 5-6 years 2) ~10% total share mostly coming from MTX or biologic failures 3) 40% discount in price to biologics ($13K)."

Analysts currently have a mean target price of $117.29 for Celgene. Analysts, on average, are estimating an EPS of $1.35 with revenue of $1.46B for the current quarter ending in March, 2013. For 2013, analysts are projecting an EPS of $5.69 with revenue of $6.12B, which is 11.10% higher than 2012. Celgene is expected to release Q1, 2013 earnings on April 23, 2013. In the last 4 quarters, Celgene had 3 positive and 1 negative earnings surprise.

Fundamentally, Celgene will be compared to one of its major competitors, Amgen Inc. (NASDAQ:AMGN), as well as the industry average to see where it stands.

Celgene

Amgen

Industry Average

Market Cap

$48.75B

$77.87B

-

Revenue Growth (3 year average)

27.0

5.6

13.6

Operating Margin, %, ttm

31.7%

32.3%

25.9%

Net Margin, %, ttm

26.4%

25.2%

13.7%

ROE, ttm

26.0

22.8

13.5

Debt/Equity

0.5

1.3

0.4

P/E

35.1

18.8

56.2

P/E 5 Year Avg

19.3

14.1

-

Forward P/E

17.0

12.6

14.3 (S&P 500 Avg)

Source: Morningstar

By comparing to AMGN, CELG's higher P/E is justified for its faster growth. However, both CELG and AMGN's current P/E are above their 5 year average, which causes some valuation concern. Nonetheless, CELG remains fundamentally sound with its strong growth, high margins, high ROE, and a healthy balance sheet.

Technically, CELG is on the long-term upside since mid-September, 2012, as seen from the chart below.(click to enlarge)Source: Finviz.com

Bottom Line
Celgene remains a solid long-term holding with its strong fundamentals and Revlimid should continue as the main growth driver while Apremilast may lift the top line sales and growth down the road. Any pullback will be a good buying opportunity for Celgene. Investors can also review the following ETFs to gain exposure to Celgene:

Market Vectors Biotech ETF (NYSEARCA:BBH), 6.97% weighting
Nasdaq Biotechnology (NASDAQ:IBB), 6.71% weighting
SPDR S&P Biotech ETF (NYSEARCA:XBI), 2.97% weighting
S&P Equal Weight Health Care ETF (NYSEARCA:RYH), 2.17% weighting

Note: Investors and traders are recommended to do their own due diligence and research before making any trading/investing decisions.

Source: Celgene Could Be Turbocharged With 2 Blockbusters: Revlimid And Apremilast