July 26, 2018 / 11:45 AM / 2 years ago

Celgene profit tops expectations, will limit future price hikes

(Reuters) - Celgene Corp CELG.O on Thursday posted better-than-expected second quarter profit, powered by a 21 percent jump in sales of its blockbuster cancer drug Revlimid, and the U.S. biotech promised to limit future price increases on its medicines. The company joined several rivals in bowing to pressure from the administration of U.S. President Donald Trump to rein in rising costs of prescription drugs to U.S. patients.

Based on strong Revlimid sales, Celgene lifted its full-year adjusted earnings forecast to between $8.70 and $8.75 per share from its prior projection of $8.45 per share.

Celgene said it increased the list prices of its two top-selling multiple myeloma drugs, Revlimid and Pomalyst, by 5 percent earlier this month, but would take no further price hikes on any of its products this year.

Going forward, Chief Executive Mark Alles said as Celgene increases the price of any individual therapy “that price increase will be limited to no more than once a year and at a level no greater than the Centers for Medicare & Medicaid Services projected increase in national health expenditures for the year.”

For 2018, this rate is 5.3 percent, he said.

Total revenue for the quarter rose 16.6 percent to $3.81 billion.

Celgene said the bulk of its second quarter sales growth was driven by increased demand rather than by price hikes.

RBC Capital Markets analyst Brian Abraham called that trend reassuring, saying it would “mitigate a concern around growth sustainability given expected pricing pressures.”

Revlimid recorded sales of $2.45 billion on increased demand and longer duration of use. The company raised its full-year sales forecast for its flagship product to $9.7 billion from $9.5 billion.

Celgene also raised its 2018 revenue forecast to $15 billion from $14.8 billion.

Excluding items, Celgene said it had adjusted earnings of $2.16 per share, topping analysts’ estimates by 5 cents.

The company has made a series of deals, including its $9 billion acquisition of immuno-oncology company Juno Therapeutics, to help lessen its future reliance on Revlimid, which accounts for about two thirds of total sales.

With five products in late stage development, Celgene cautioned that research and development expenses will rise in coming quarters.

It still plans to file for U.S. and European approval of ozanimod for multiple sclerosis in the first quarter of next year.

Celgene said it was reconsidering Phase III plans testing its psoriasis drug Otezla for ulcerative colitis, given the promise it sees for ozanimod in that space.

Otezla sales of $375 million fell short of Wall Street estimates of about $381.8 million.

Celgene shares, which had been battered by a series of management missteps and clinical setbacks prior to a recent run of positive clinical news, were up 1 percent at $88.52.

Reporting by Akanksha Rana and Tamara Mathias; Editing by Arun Koyyur, Sriraj Kalluvila, Sai Sachin Ravikumar and Bill Berkrot

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