Celgene (CELG -2.5%) slides on a UBS downgrade to Neutral on valuation this morning. The firm...

Celgene (CELG -2.5%) slides on a UBS downgrade to Neutral on valuation this morning. The firm cites a lack of significant upside to its anemia drug Revlimid, saying the story has already "played itself out" since approval for the drug was shot down in the European Union.

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  • biothoughts
    , contributor
    Comments (390) | Send Message
    15 things CELG investors & analysts are missing or underestimating imo (its not just Apremilast)......


    1) Apremilast is underestimated in maybe 4 indications . Talk to Dermatologists and they will tell you they are really in need of an oral PDE-4 inhibitor so they can move away from drugs like $3 billion a year injectable biologic Enbrel which has links to lymphoma/leukemia and causes horrible infections in many patients


    2) Abraxane in Pancreatic Cancer – if it simply shows efficacy similar to Ph 2 it will become the gold std of care in this tough disease. 500 patients were in this trial for 20 months at least and it still has not reached the 600 event limit for interim look/halt


    3) Margins - best gross margins in the ENTIRE S&P 500 not just healthcare. CELG delivered amazing gross margins in Q2 (to me besides the Revlimid re-acceleration it was the most important variable in the quarter) - most analysts didn’t even mention it.


    4) P&L leverage and undervalued earnings growth - enormous "right to the bottom line" effect of international and indication expansion of Revlimid - a drug with 95% gross margins with an industry low global tax rate (REALLY BEING MISSED BY MANY). PEG ratio is ridiculously low because of SPM, misguided IP fears and "1 drug" BS. Soon 5 separate billion $ a yr drugs will be apparent.


    5) Tax Strategy/Rates - amazing effect of Swiss plant 0% tax


    6) Vidaza generic timing – now guaranteed through another yr end no generic sales in US.


    7) International Vidaza sales pace - heading to $1 billion a yr + imo - still yrs and yrs of exclusivity in EU


    8) Possibility of CHMP approval earlier than people expect in front line


    9) MM020 international results (Huge international Rev-Dex front line trial)


    10) China approval this yr for Revlimid and the 100-200 million+ private pay/private insurance people who could immediately buy


    11) International Expansion - Mexico-Brazil-Russia-T... America-So Korea-etc


    12) Indication expansion (first NHL approval coming sooner than people think)


    13) Pomalidomide in US (Feb PDUFA in US - FDA been approving cancer drugs ahead of pdufa)


    14) Pomalidomide in EU - it truly looks like EU wants to approve this on Ph 2 data - amazing


    15) What I call the "shadow pipeline" of the small biotech companies Celgene has partnered with Acceleron, GlobleImmune, Agios, Array, etc. Only Rodman has been talking about this promise. Love equity and milestone plays for early stage pipeline that doesn't hit R&D expense heavily.
    10 Sep 2012, 04:22 PM Reply Like
  • coby
    , contributor
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    First, Revlimid is NOT for the treatment of anemia, it is used very successfully for the treatment of Myeloma. Second, the European medical community approval has only been delayed pending more data from Celgene and has not been "shot down". Indeed, many of the studies proving Revlimid's efficacy were conducted in Italy, France and Spain. Not likely that the drug will fail approval in the not too distant future. Third, Celgene's pipeline is quite impressive with the next generation Myeloma drug, Pomalidimide, completing Phase III testing and nearly ready for FDA's consideration. Clinical trials to date very positive.
    10 Sep 2012, 05:15 PM Reply Like
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