If Celgene (CELG) were a Beach Boy, it would be David Marks, who left the band and missed out on all the fun.
This year, Celgene has dropped 9.9%, even as other giant biotech companies like Biogen Idec (BIIB), Gilead Sciences (GILD) and Regeneron Pharmaceuticals (REGN) has gained 7% or more. Even the SPDR S&P Biotech ETF (XBI) has managed to stay above water despite big March losses.
Part of Celgene’s weakness can be attributed to the battle over Revlimid, which is facing a patent challenge. UBS analyst Matthew Roden and team explain why they’re sticking with Celgene:
We spoke to the company and a legal expert following the Markman order this week, and continue to believe that a 2025-27 Revlimid patent duration is likely (which in our opinion is not priced in). Our Buy thesis on Celgene is unchanged, as it trades at a considerable discount to its DCF until the legal case is resolved 2014-1H15e, as well as other catalysts that we believe can drive upside to
numbers…
Apart from a possible settlement, we believe upside can be driven by a good Otezla launch and ph3 data in ankylosing spondylitis (1H14), as well as Revlimid and Vidaza label expansion studies. Indeed we are considerably higher than consensus 2015-17.
Shares of Celgene have slipped 0.4% to $152.68 at 2:09 p.m. today, while Biogen Idec has dipped 0.3% to $319.04, Gilead Sciences has fallen 1.4% to $80.90 and Regeneron Pharmaceuticals has ticked up 0.2% to $306.76. The SPDR S&P Biotech ETF has dropped 1.2% to $132.12.
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