Celgene CEO Mark Alles

Celgene (CELG) has been reeling as of late. It has brandished an image as having a strong R&D pipeline and an ability to acquire drug companies in late stage development before larger rivals get wind of them. After setbacks for ozanimod (multiple sclerosis) and morgensen (Chrohn’s disease), the company’s drug pipeline has come under scrutiny.

Though Q1 2018 revenue was up by 20% Y/Y, some of that growth was aided by price hikes. Otezla, Celgene’s third largest drug at 10% of total revenue, also appeared to have cracked:

Otezla’s (treats moderate to severe plaque psorias) Q1 revenue was $353 million, up an eye-popping 46% Y/Y. It currently represents 10% of Celgene’s total revenue. Management touted the drug’s market share gains in the U.S. and in international markets. However, sales were down 5% sequentially …

Johnson & Johnson’s (JNJ) psoriasis drug Tremfya generated $72 million in Q1 2018 revenue. It was launched in the second half of 2017, and its gains may have come at the expense of Otezla and others.

Flush with additional cash after President Trump’s tax cuts, Celgene also went on an acquisition spree. It acquired Juno Therapeutics for about $9 billion in cash, and invested another $1 billion into Impact Biomedicines. However, recent developments could seriously damage the value of the company’s Impact investment.

According to Shocking The Street, an investment service Shock Exchange runs in conjunction with Seeking Alpha, new research suggests Impact’s main drug could lead to dangerous side effects. If the research leads to Impact not receiving FDA approval or lowered sales prospects it could be another embarrassment for CELG. Read more:


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