Relax, Celgene investors. The situation isn't as bad as you think: analyst

Celgene’s stock has taken a beating in recent months, thanks to a string of bad news. But the company’s situation isn’t quite as dire as its share price indicates, one analyst insists.

Leerink Partners analyst Geoffrey Porges broke things down to determine that if the worst-case scenario for the big biotech played out—as in, aging megablockbuster Revlimid doesn't record a cent in sales after 2022, and neither of two closely watched pipeline candidates, ozanimod and luspatercept, make it to market—“the stock would be trading at or around its current level,” he wrote to clients.

The way he sees it, Celgene’s portfolio and pipeline account for $89 per share with those three drugs blacked out. Celgene shares sat at just over $90 late Thursday morning.

Thing is, that worst-case scenario isn’t what he thinks Celgene will wind up facing. The possibility that both ozanimod and luspatercept strike out before winning FDA approval “seems highly unlikely based on the available data,” he wrote.

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That’s not to say green lights for the prospects are gimmes, though. In February, the FDA refused to review Celgene’s approval application for ozanimod, concluding that the company hadn’t provided the necessary preclinical and clinical pharmacology information on the multiple sclerosis wannabe.

Meanwhile, though, Porges’ bast-case scenario—which “includes a slow revenue decline for Revlimid post-2022 and ozanimod’s approval in MS during 2019 with a 50% probability of success in all indications”—results in “a net present value of $140/share,” he wrote.

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Porges, for his part, isn’t surprised by the share-price disparity, considering “the company’s recent missteps and misjudgments,” including a doomed Revlimid trial, he wrote. But it does go to show that Celgene’s stock boasts “remarkable upside” for those investors “willing to step in at the current ‘distressed’ valuation.”