2nd UPDATE: Celgene 2Q Profit Up 8.8%; Again Boosts 2010 View

Celgene Corp.'s (CELG) second-quarter earnings rose 8.8%, as sales growth continued for its flagship blood cancer drug Revlimid.

The Summit, N.J., drug maker's results exceeded Wall Street profit and revenue expectations and the company again bumped up its 2010 projections for both, largely on increased sales of Revlimid. Although it seeks to push into broader areas, Celgene's business remains focused on selling treatments for blood cancer, primarily multiple myeloma, where steady growth continues.

The stock, which was down 5% for the year through Wednesday, recently rose 67 cents, or 1.3% to $53.52.

"The fundamentals in our core myeloma business remain very strong," Chief Executive Robert Hugin said in a conference call Thursday. He said U.S. Revlimid growth was driven by new patients and by existing users staying on the drug for longer periods.

Like many drug makers, Hugin warned that Celgene is facing some pressure in Europe as governments, the primary payor for drugs in the region, tighten their budgets amid economic pressure.

"We're monitoring the environment closely and believe that our guidance appropriately reflects the current economic reality," he said.

Celgene raised its full-year earnings range expectations by 5 cents a share, the same increase it made in April, to $2.65 to $2.70 a share. Wall Street analysts were already expecting the company to beat its previous forecast with an average of estimate of $2.68 a share.

Notably, the earnings projection includes an estimated reduction of about 5 cents a share from Celgene's planned $2.9 billion acquisition of Abraxis BioScience Inc. (ABII), which the company said should close before late October.

Celgene now sees revenue of $3.4 billion to $3.45 billion, up from $3.3 billion to $3.4 billion. Analysts expect $3.36 billion. The latest topline projection from the company excludes any benefit from the Abraxis acquisition.

When Celgene gave its initial 2010 view earlier this year, some analysts believed the company was being conservative to avoid a repeat of last year's March earnings warning, which sent its stock reeling.

In the latest quarter, sales of Revlimid rose 48% to $587.1 million, exceeding analyst expectations of $558 million, according to MDRx Financial. On the back of that growth, Celgene again raised its 2010 sales projection for the drug to a range of $2.3 billion to $2.35 billion, up from a previous range of $2.2 billion to $2.3 billion.

Sanford Bernstein analyst Geoffrey Porges said that Revlimid sales seemed to benefit from a "significant increase" after data was presented at the American Society of Clinical Oncology's annual meeting in June.

That increase bodes well for the drug's prospects for the rest of the year, Porges said in a note to clients, and he expects Wall Street expectations to increase.

Hugin noted the second-half guidance for Revlimid factors in uncertainty such as potental lower seasonal sales and European pressures.

"Hopefully there is better opportunity than the guidance indicates, but we wanted to be cautious with the environment that we are facing," he said.

The company is in the early stages of a launching Revlimid in Japan, which it called the world's second-largest cancer market, after getting regulatory approval there in June.

Revlimid is a more potent derivative of thalidomide, which Celgene has sold as Thalomid since 1998. Thalomid sales dropped 7% to $97.8 million in the quarter.

Sales of Vidaza, another blood-cancer drug, rose 43% to $132 million, in line with Wall Street expectations.

For the three months ended June 30, Celgene's profit rose to $155.4 million, or 33 cents a share, from $142.8 million, or 31 cents, a year earlier. Excluding items, earnings were 69 cents a share, beating analyst expectations of 66 cents a share, according to Thomson Reuters.

Revenue rose 36% to 852.7 million, also above expectations of $821 million.

-By Thomas Gryta, Dow Jones Newswires; 212-416-2169; thomas.gryta@dowjones.com

Abraxis Bioscience Inc. (MM) (NASDAQ:ABII)
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