What’s Boosting Celgene’s Valuations in 2016?

Hematologic oncology portfolio

Celgene (CELG) continues to be one of the leading companies in the hematologic oncology space. Its IMiD therapies, including Revlimid and Pomalyst/Imnovid, are increasingly being used as the backbone combination treatments for multiple myeloma (or MM). Celgene expects revenues from Revlimid to be $6.6 billion–$6.7 billion in 2016, mainly due to an increase in sales volumes. The company expects Pomalyst/Imnovid to attain blockbuster therapy status by earning more than $1 billion in revenues.

What’s Boosting Celgene’s Valuations in 2016?

Wall Street analysts have projected that in 2016, revenues from sales of Revlimid will be about $6.7 billion. That’s a year-over-year (or YoY) growth of 15.5%. Celgene has been gradually reducing its over-reliance on Revlimid by diversifying across multiple product lines. In 2015, Revlimid accounted for 63% of the company’s total product sales, which is an improvement from a 67% share in 2013. Celgene expects Revlimid revenues to continue to grow YoY in the range of 14%–16% through 2020.

Pomalyst is expected to earn revenues of about $1.3 billion in 2016, a YoY growth of 36.5%. Analysts’ 2016 projections are in line with Celgene’s for hematologic oncology drugs.

If Celgene manages to earn revenues according to these projections, it will boost the company’s share price in 2016. This is expected to have a positive impact on share prices of the Health Care Select Sector SPDR ETF (XLV), as Celgene accounts for about 3.1% of XLV’s total portfolio holdings.

Global launches

Celgene expects to benefit from the launch of Revlimid as a first-line therapy for MM in the United States, Germany, and Spain. The company also expects approval in France, Italy, and Japan in 2016. The company is looking forward to strong volume demand for Revlimid in 2016. Pomalyst should also witness strong revenues in Japanese markets.

Label expansion and global launches are expected to boost Revlimid’s revenues in 2016. The drug will continue to be strong competition for other hematologic oncology drugs such as Merck’s (MRK) Keytruda, Amgen’s (AMGN) Kyprolis, and AbbVie’s (ABBV) and Johnson & Johnson’s Imbruvica. To know more about Revlimid’s label expansion, please read Celgene’s Revlimid Continues to Dominate Multiple Myeloma Market

In the next part of this series, we’ll look at the key growth drivers for Celgene’s flagship drug, Revlimid.