U.S. biotech company Celgene Corp (CELG.O) raised sales and profit forecasts for 2015 and 2017 on Monday, saying its improved long-term outlook was based on current momentum for its blood cancer medicines.
The relatively conservative increases, however, and a 2014 forecast that was slightly lower than current Wall Street estimates, were met with dampened shareholder enthusiasm and Celgene shares fell more than 3 percent.
"While Celgene tends to be conservative with its guidance, we believe heightened expectations had set a high bar for the stock (prior) to today's release," Cowen and Co analyst Eric Schmidt said.
Celgene shares had been rising over the past few weeks, touching a new all-time high prior to Monday's announcement.
"The numbers for 2014 are a little light of expectations and the stock has been very strong heading into this announcement, so some sell off was probably inevitable," said Geoffrey Porges, analyst with Sanford Bernstein.
Celgene raised the 2017 forecast for its flagship drug Revlimid by $1 billion to $7 billion, and now expects 2017 sales of $1.5 billion for its newer blood cancer drug Pomalyst, up from a prior view of $1 billion.
Celgene Chief Executive Robert Hugin told analysts and investors that the early sale performance of Pomalyst "certainly exceeded our expectations in the U.S. and Europe."
Celgene Chief Financial Officer Jacqualyn Fourse, in a breakout session following the formal presentation, appeared to leave room for future forecast increases, saying that the numbers "can evolve."
She called the forecasts "a new base case" and said the outlook was "based on conservative estimates of worldwide pricing." Fourse also said further upside could be driven by positive results from ongoing late-stage clinical trials.
In addition, the long-term forecasts were based on expected growth only from Celgene's blood cancer drugs, which does not take into account potential sales strides by Abraxane, its drug for breast cancer and other solid tumor cancers.
"Abraxane continues to have very meaningful growth," JP Morgan analyst Geoff Meacham said in a research note.
The forecasts were issued during Celgene's presentation at the annual JP Morgan Healthcare conference in San Francisco.
For 2014, Celgene expects sales of $7.3 billion to $7.4 billion and adjusted earnings, excluding one-time items, of $7 to $7.20 per share. Analysts, on average, are looking for sales of $7.43 billion and earnings of $7.29 per share, according to Thomson Reuters I/B/E/S.
"The 2014 guidance looks solid and potentially conservative, given strong commercial momentum," Meacham said.
For 2015, Celgene now expects sales of $8.5 billion to $9.5 billion and adjusted earnings of $9 to $9.50 per share, up from its prior view of sales of $8 billion to $9 billion and EPS of $8 to $9.
For 2017, Celgene sees sales growing to $13 billion to $14 billion, up from its prior view of at least $12 billion, and adjusted earnings of a about $15 per share versus its earlier forecast of $13 to $14 per share.
"While positive, we think the magnitude of this guidance raise is generally in-line with buy-side expectations," ISI Group analyst Mark Schoenebaum said.
Celgene shares were down $5.80, or 3.4 percent, at $164.01 in afternoon trading on Nasdaq.
(Reporting by Bill Berkrot; additional reporting by Deena Beasley in San Francisco; Editing by Jeffrey Benkoe and Andrew Hay)