Celgene Corp on Thursday reported lower-than-expected first-quarter revenue with Otezla sales well short of Wall Street estimates, but the U.S. biotechnology company promised the psoriasis drug was poised to rebound.
Lower costs helped the company beat analysts' earnings expectations by 5 cents, and Celgene raised both ends of its full-year forecast by that amount. It now expects adjusted earnings of $7.15 to $7.30 per share.
Otezla sales of $242 million missed analysts' estimates by nearly $100 million.
Contraction in the overall psoriasis market, greater discounting, and inventory drawdown contributed to the Otezla disappointment.
But Celgene said it was already seeing a sales rebound, and that three new multi-year contracts with payers that no longer require patients to try older biologic treatments before Otezla was "going to have a very positive effect on our market share towards the second half of the year."
Cantor Fitzgerald analyst Mara Goldstein agreed that the Otezla weakness was likely temporary.
"It's our belief that it's a one-quarter phenomenon because we think the company will add new patients onto therapy at a rate that will overcome whatever first-quarter contraction we saw."
Revlimid, Celgene's flagship drug for multiple myeloma, continued to be the gift that keeps on giving with sales up nearly 20 percent to $1.88 billion due to increases in new and repeat prescriptions and longer average duration of use.
The company sees U.S. and European approvals for Revlimid as long-term maintenance therapy following stem cell transplants as a major opportunity to grow sales.
Total revenue rose 18 percent to $2.96 billion in the quarter, below Wall Street estimates of $3.03 billion, according to Thomson Reuters I/B/E/S.
Sales of cancer drug Abraxane rose 5 percent to $236 million, also below expectations of about $243 million.
However, Chief Executive Mark Alles on an conference call said Celgene was "on track to achieve or exceed our 2020 outlook."
Celgene said it has 14 drugs with at least billion-dollar potential in its developmental pipeline, and has the financial flexibility to build on that through more deals.
"Pipeline execution is what is needed to expand the company's valuation and we see that occurring," Goldstein said.
Net profit for the quarter rose to $941 million, or $1.16 per share, from $801 million, or 99 cents per share, a year earlier.
Excluding items, Celgene earned $1.68 per share.
Celgene shares, which had been down 2.5 percent, trimmed losses and were off 0.5 percent at $124.45.
(Additional reporting by Akankshita Mukhopadhyay in Bengaluru; Editing by Shounak Dasgupta, Bernard Orr)