Could Bristol-Myers and Celgene survive their upward momentum?

Bristol-Myers Squibb

Bristol-Myers Squibb Co (NYSE:BMY) made a gap up opening on October 27th, 2016 and surged more than 7% (as of 1:16PM EDT) driven by their solid third quarter results coupled with positive 2016 outlook.

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Bristol-Myers Squibb enhanced their 2016 GAAP EPS guidance range to $2.62 – $2.72 as compared to their earlier forecasts of $2.43 – $2.53. Major drivers behind their upgrade is the rising high-teens worldwide revenues coupled with lower Research and development expenses. Gross margin as a percentage of revenues is forecasted to be around 75%.

Bristol-Myers Squibb forecasts an ongoing rise in Opdivo, Eliquis and Orencia while their specialty medicines pipeline would continue over time. Bristol-Myers Squibb delivered a 21% rise in revenues during the third quarter while their U.S. revenues enhanced by 36%. Opdivo surged $615 million while Eliquis grew 90% during the quarter. Yervoy grew 19% while Orencia and  Sprycel rose 18% and 15% respectively.

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Third quarter of 2016 results (Source: Company Reports)

During September, Bristol-Myers Squibb made a “clinical collaboration to evaluate Nektar Therapeutics investigational medicine, NKTR-214 as a potential combination treatment regimen with Opdivo in five tumor types and seven potential indications. The Phase 1/2 clinical trials would asses the potential for the combination of Opdivo and NKTR-214 to show better and sustained efficacy and tolerability above the current standard of care in melanoma, kidney, colorectal, bladder and NSCLC. An initial dose-escalation trial is underway with Opdivo and NKTR-214”. Bristol-Myers Squibb even got favorable Advisory Opinion for the Treatment of Classical Hodgkin Lymphoma in Europe, Moreover, the Application for Advanced Form of Bladder Cancer has been accepted for Priority Review in the U.S. while validated in Europe.

Bristol-Myers Squibb stock fell over 10% on October 10th, 2016 impacted by the group’s disappointing results of CheckMate -026. But, today’s quarter update could place the stock in the growth track in the coming months. Bristol-Myers Squibb new $3 billion repurchase authorization could support the stock further as well as indicates management confidence on their milestones. This buyback program is in addition to its current repurchase program of June 2012 which has over $1.1 billion outstanding. BMY stock fell over 30.8% since the last three months (Source: Google finance) placing the stock at reasonable levels. According to tipranks.com, 16 analysts cover the stock while recommend a “Moderate Buy”. BMY has an average price target of $69.67, which is a further upside of 31.9%.

 

Celgene Corporation

Celgene Corporation (NASDAQ:CELG) surged over 6.7% (as of 1:15PM EDT; Source: Google finance) as they came out with a solid third quarter results as well as enhanced their guidance. Moreover, FDA has approved the Priority Review for the group’s REVLIMID® as Maintenance Treatment Post-Autologous Stem-Cell Transplant in Multiple Myeloma. The group’s net product sales rose 28% on a year over year basis to $2,969 million for the third quarter of 2016. The group’s enterprise-wide performance is on track to exceed their major 2016 objectives as well as positioning themselves for long-term growth.

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As per the segment’s Performance, the group’s core product REVLIMID® sales surged 30% to $1,891 million during the quarter as compared to the prior corresponding period (pcp) boosted by new patient market share gains coupled with rising duration. U.S. sales and international sales for REVLIMID surged 29% and 32% on a year-over-year basis, respectively. POMALYST®/IMNOVID® sales enhanced by 33% against the pcp.  . U.S. sales and international sales enhanced by 35% and 30% on a year-over-year basis for POMALYST®/IMNOVID. OTEZLA® sales delivered an outstanding rise of 98% on a year-over-year basis.  All other product sales comprising THALOMID®, ISTODAX®, VIDAZA® and an authorized generic version of VIDAZA® drug product in the U.S., reached $229 million from $234 million in the prior corresponding period.

Meanwhile, Celgene generated an Operating cash flow of $723 million during the third quarter of 2016 while built a solid $6.9 billion in cash, cash equivalents and marketable securities as of the quarter ending.

Celgene Corporation also update their 2017 guidance, and forecasts an overall net product sales at the high end of the range of $12.7 billion to $13.0 billion. REVLIMID® net sales are forecasted to be more than $8.0 billion against the earlier forecasts of over $8.0 billion. Adjusted diluted EPS is anticipated to be at the high end of the range of $6.75 to $7.00.

 

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Celgene finished a transaction for $625.3 million plus contingent development, regulatory and commercial milestones in the month of September. EngMab’s lead molecule is EM901, a T-cell bi-specific antibody targeting B-cell maturation antigen (BCMA). Moreover, Celgene intends to file an Investigational New Drug (IND) application for EM901 by the second half of 2017. The transaction would lead to $623.3 million of research and development expense and $2.0 million of net working capital acquired.

Based on 18 Analyst Ratings, CELG stock has a “Strong Buy” recommendation as per tipranks.com. Average price target is $140.27, indicating a 34% upside. The group also reported over 2.5 million of its shares at a total cost of over $273 million during the third quarter. CELG had about $4.9 billion outstanding as per the stock repurchase program, as of September supporting the stock further.

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