Symbol not found

:CELG   00:00AM GMT
0.00 (0.00%)
StockTwits Share  Twitter Share  Facebook Share

Celgene is Simply the Best Biotech in the World


Written by Ophir Gottlieb, 10-08-2015

Celgene may simply be the most compelling biotech company and stock in the world. It has the largest organic pipeline in all of biotechnology, a ten-year partnership with likely the most transformational small cap in the world, a current line-up of drugs that have generated all-time highs in revenue (TTM) every single quarter for ten straight years. For those that like to read children's books, borrowing from Roald Dahl, [Celgene is] "The Champion of the World."

Before we get into the details of what does exist, let's look at the incredible pipeline for Celgene relative to all of biotechnology in the United States. In the image below, we have plotted the number of Phase III trials on the y-axis and the number of Phase II trials on the x-axis for large cap biotechs.

That's right, Celgene has more products in Phase III and Phase II than any other biotech, period.

Current Products
In the last year, CELG has generated just over $8.4 billion in revenue. The company's revenue is driven by five key products: (1) Anemia and cancer treatment REVLIMID ($5B) (2) Breast, lung and pancreatic cancer treatment ABRAXANE ($850M) (3) Myeloma drug POMALYST/IMNOVID ($680M) (4) Bone marrow disorder myelodysplastic syndrome (MDS) drug VIDAZA ($612M) and (5) Plaque psoriasis treatment OTEZLA ($70M).

Here's a chart of Celgene's revenue (TTM) over the last sixteen years.

That mountain of revenue is not only at an all-time high, it has increased consecutively to new all-time highs every quarter for the last ten years. Even given that fantastical streak, revenue is still up 20% year-over-year.

Celgene and Juno Therapeutics
Celgene and Juno (JUNO have entered into a ten-year collaboration that could generate a revenue base growth of 50%. Juno Therapeutics is a radical, promising and in the very sense of the word, transformational biotech. It has no revenue, but a market cap that tops $4 billion, and here's why:

The firm is a clinical-stage company developing novel cellular immunotherapies. The company's stated goal is "to revolutionize medicine by re-engaging the body's immune system to treat cancer". And when the firm says "revolutionize," they aren't kidding. Check this out:

Here's how this company works, in English, from The Motley Fool:

"Juno's CAR-T therapeutics require the removal of a cancer patient's immune cells, selection and activation of the cells, and gene transfer to train the cells to attack the patient's tumor. At that point, the cells are grown in an incubator until there are enough to put back into the patient."

That's right, the firm creates personalilzed cells and then reinserts them into the patient so she can attack the cancer herself. That's an attempt at curing cancer with no side effects. Here's what a recent FBR analyst wrote:

"Investors' discussions focused on the company's products in development for leukemia, lymphoma, and solid tumors but also on the science behind the treatments with questions centering on manufacturing and cell persistence. The company's pipeline is deep with 10 candidates potentially in clinical trials [] by early 2016."
(Source: Benzinga).

Juno and Celgene could revolutionzie medicine, and this is yet another potential blockbuster win for Celgene.

Acquisition of Receptos (RCPT)
When Celgene purchased RCPT, the focal point was a drug called "ozanimod" that presents possible usage for multiple sclerosis and irritable bowel disorders. Upon acquisition of RCPT, Celgene made a bold case that the drug could ultimately yield $4-$6 billion in annual sales (remember, Celgene's total sales in the trailing-twelve-months is $8.4 billion). Yes, the initial forecasts from Celgene was a potential 50% growth in revenue from the acquisition.

But, it gets more bullish if you believe Celgene's management. On the most recent earnings call Celgene reminded us that the $4-$6 billion projection does not include other future possible uses for ozanimod, such as Crohn's disease and lupus. With a positive ruling from the FDA, this drug could run as high as Celgene's current total revenue in several years.

While we may (or may not) be in the throws of a biotech correction, CELG stock is up over the last 3-, 6- and 12-months. Celgene is "The Champion of the World," and we just explained why.