Celgene Corp (NASDAQ:CELG)

CAPS Rating: 5 out of 5

A biopharmaceutical company primarily engaged in the discovery, development and commercialization of innovative therapies designed to treat cancer and immune-inflammatory related diseases.

Recs

5
Player Avatar NetscribeBiotech (96.17) Submitted: 2/22/2007 2:19:29 AM : Underperform Start Price: $27.27 CELG Score: -191.07

Celgene is a biopharmaceutical company focused on novel therapies to treat a broad range of hematopoietic, immunological, neuronal, and cancerous conditions. Celgene currently markets Thalomid for ENL and multiple myeloma, Revlimid for myelodysplastic syndromes and multiple myeloma, Alkeran for multiple myeloma, and Focalin/Focalin XR for attention deficit disorder.

The company has posted impressive results for fiscal 2006 with its topline growing 67% from $536.5 million to $898.9 million. The key driver for this stock in the medium term would be the performance of its potential block buster drug, Revlimid. The drug, mostly prescribed for multiple myeloma, could exceed $2 billion in annual sales within a few years if it is approved for additional disease categories. The additional clinical data for Revlimid in chronic lymphocytic leukemia (CLL) has also been encouraging, influencing the optimism for the same.

Celenge is bound to have strong 2007 on back of robust performance of Revlimid. However many a times stock prices run ahead of fundamentals and this seems to be a perfect example of that. The stock is trading at around 300 times its fiscal 2006 earnings which is much ahead of its peers. The stock has appreciated more than 50% in the last year. Thus it seems that the market has already discounted the promising future of the company. Moreover it seems that the current stock price has not built in potential regulatory risks and the risks associated with clinical trials. Thus the stock despite being on growth trajectory and promising future may not out perform the market.

Member Avatar NetscribeBiotech (96.17) Submitted: 5/22/2007 8:27:19 AM
Recs: 1

Celgene is one of the largest biopharmaceutical company with a strong franchise in cancer drugs. Their cancer drug portfolio consists of Revlimid and Thalomid meant for multiple myeloma. In 1Q’07, Revlimid and Thalomid generated 86% of total revenue. This fact highlights their importance to the company. The company as expected had a robust quarter lead by more than 300% jump in revenues from Revlimid. Its adjusted operating profit and earning per share have both risen by more than 100% in the 1st quarter.The company would largely be driven in the medium term on the traction, its gains form Revlimid. Revlimid received positive opinion from European Medicines Agency for Use in combination with dexamethasone as a treatment for patients with multiple myeloma who have received at least one prior therapy. The company is likely to launch Revlimid in European markets this year further boosting its growth trajectory.Celgene is a growth stock with superior growth trajectory than many of its peers. Fundamentally this company is extremely sound with traction in top-line, a potential block-buster in its kitty, solid cash flows and strong and stable balance-sheet. However one factor which is arguably the most important factor from the point of view of investors is valuation and in this regard celgene becomes a dicey affair. The management expects to do EPS of $1 in fiscal 2007. Thus the stock is trading at more than 60 times its forward earnings. Although the stock deserves premium given its superior growth curve; however the gulf between the valuations of Celgene and its peers is too wide. All the positives in Celgene seem to be in the price. Thus it may not be the best time to venture in the stock as it seems overvalued from both objective and relative point of view.

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