Celgene Slips Further on Weak Outlook

Celgene offers 2009 financial guidance below consensus expectations, as economic uncertainty and impending health-care reform weighed on management's outlook.
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Updated from 3:10 p.m. EST

SAN FRANCISCO --

Celgene

(CELG) - Get Report

offered 2009 financial guidance that fell below consensus expectations, as uncertainty over the global economy and the looming health-care reform in the U.S. weighed on management's outlook.

The Summit, N.J.-based drugmaker forecast 2009 earnings in the range of $2.05 per share to $2.15 per share, below the consensus view of $2.29 per share, according to Thomson Reuters.

Total revenue for 2009 is expected to reach $2.6 billion to $2.7 billion, Celgene said. Again, the forecast was below the consensus forecast of $2.9 billion.

Celgene announced 2009 financial guidance at the J.P. Morgan Healthcare Conference. Shares were closed Monday down 60 cents, or 1.2%, to $49.67.

Investors had been expecting Celgene to offer a conservative outlook for 2009, and in that way, the company did not disappoint.

"We are in a global economic crisis right now that is affecting every country," said Celgene CEO Sol Barer. This crisis, coupled with uncertainty over President-elect Barack Obama's plans for health-care reform, has created "great uncertainties over

drug pricing and growth," he added.

Celgene's most important revenue driver is the cancer drug Revlimid, which is marketed in the U.S. and internationally as a treatment for multiple myeloma and myelodysplastic syndrome -- two forms of blood cancer.

In recent weeks, investors have grown concerned about the Revlimid's growth trajectory, especially as it faces pricing pressure in Europe and competition from Velcade, a competing drug marketed by the Japanese drug maker

Takeda

.

Monday, Celgene forecast 2009 Revlimid sales in the range of $1.7 billion, slightly lower than consensus estimate of $1.8 billion. Celgene reported unaudited 2008 Revlimid sales of $1.3 billion, a 71% increase over 2007 sales.

While offering a cautious outlook for the coming year, Celgene management also expressed great optimism for Revlimid's growth, especially in Europe where the drug is still in the relatively early stages of a commercial launch.

The company sees growth in Revlimid revenue coming from increased market share and longer duration of therapy as well as opportunities to sell the drug in more countries around the world.

One thing that would help Revlimid would be an expansion of the drug's U.S. approval to include newly diagnosed multiple myeloma. Celgene said it plans to discuss this issue with the FDA in the first quarter using data from two studies conducted by cooperative research groups. While this data showed a compelling survival benefit for Revlimid in newly treated multiple myeloma patients, the quality of the data from the studies may not meet the standards required by the FDA for approval.

Celgene CEO Barer said FDA approval based on the cooperative group data was a "low probability," less than 50%. If that doesn't happen, Celgene will use data from a similar company-sponsored study that is ongoing, with results expected later this year.

While digesting the news from Celgene, investors were awaiting outlooks from

Genentech

(DNA)

and

Gilead Sciences

(GILD) - Get Report

, which also were expected to report Monday.

At the time of publication, Feuerstein's Biotech Select model portfolio was long CELG and DNA.

Adam Feuerstein writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;

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