Introduction
Now that Celgene (CELG) has plunged in short order from an all-time high above $145 to below $100 as I write this intra-day Thursday, it's time to take a fresh look at the whole story and reassess the company's strengths and weaknesses. Because the stock is on much more than just a down note, the first parts of the article will deal with the main negatives that I see after reading the press release and the webcast presentation, plus listening to the fraught conference call.
Celgene's Q3: Otezla bombs
First, some basic numbers from the press release:
- product sales up 11% yoy, from $3.0 B to $3.3 B
- EPS $1.21 versus $0.21 yoy (2016 was depressed by a large acquisition)
- 2017 product revenue guidance except Otezla unchanged
- Otezla 2017 guidance way down from $1.6 B (midpoint of the range) as of Q2 earnings report to $1.25 B
- 2017 EPS now projected around $5.00 from about $5.50 three months ago.
Note, guidance for this year increased non-GAAP "earnings" marginally, which further goes to show the uselessness of non-GAAP numbers in my humble opinion. What value do expected "earnings" have if they stay unchanged or trend up a bit when a major product sees sales crash below expectations and a major pipeline product, mongersen (GED-0301), fails in Phase 3? Especially when CELG informs the SEC about mongersen in an 8-K filing thusly (emphasis added by me):
