Celgene sales highlight Revlimid dependence ahead of patent ruling

By Bill Berkrot

April 30 (Reuters) - Celgene Corp (Swiss: CELG.SW - news) 's dependence on its big-selling multiple myeloma drug Revlimid raised investor concerns on Thursday as sales of its other medicines fell short of expectations.

Celgene shares fell 5 percent after the company reported quarterly results in which Revlimid shored up profits. Industry analysts see room for Revlimid to grow much further, with some estimating the drug will nearly double annual sales in coming years.

But investors may be hesitating as Celgene faces a legal challenge that could cut its exclusive sales rights in Europe by a year or two. The European Patent Office hearing on a Revlimid patent that runs through 2024 is set for May 7.

"Nobody seems to want to buy the stock in front of May 7," said RBC Capital Markets analyst Michael Yee. "Once we get past that, I think the stock rebounds."

Revlimid sales of $1.34 billion in the first quarter were in line with expectations and especially strong in the United (Shenzhen: 000925.SZ - news) States. Sales of the cancer drug Abraxane, and newer medicines Pomalyst for multiple myeloma and Otezla for psoriatic arthritis and psoriasis all fell short of forecasts. Inventory stocking, higher co-pays and demands by payers for larger Otezla rebates contributed to first quarter weakness, analysts said.

The New Jersey-based company said it now sees 2015 Revlimid sales at or above $5.7 billion, the high end of its prior forecast range. The drug accounts for about 60 percent of Celgene revenue.

Patients are using the treatment longer to keep their cancer at bay, the company said. In addition, U.S. and European regulators recently expanded approvals to allow its use in newly diagnosed multiple myeloma patients, which will drive growth.

Cantor Fitzgerald analyst Mara Goldstein forecast Revlimid sales reaching $10 billion by 2020 if its duration of use and geographic expansion continues to grow, along with approvals or new uses.

"It's a high class problem to have," she said of the company's dependence on Revlimid. She predicts Revlimid will decline as a percentage of profit "not because it's declining, but because other products are growing. That's a very positive dynamic."

Celgene said it anticipates "significant market share gains over coming months and years" with reimbursements for newly diagnosed patients in Europe, and with an expected approval in Japan for such patients around the end of the year. The company is also conducting five late-stage trials of Revlimid in a variety of lymphomas.

"It's always less risky to expand the opportunities for an existing drug than to invest in advancing a new drug," Bernstein analyst Geoffrey Porges said. "They happen to have a great drug that still has a lot of runway in front of it."

Investors still have high hopes for future blockbuster sales of Celgene's experimental drug for Crohn's disease. The company is also collaborating with AstraZeneca (NYSE: AZN - news) to test Abraxane and other Celgene products in combination with experimental Astra drugs that spur the immune system to fight cancer.

Such partnerships "suggest there's going to be a huge range of revenue opportunities for them five to 10 years from now," Porges said. (Reporting by Bill Berkrot; Editing by Michele Gershberg and Chris Reese)