Shares of Celgene (CELG) are sinking today after the biotech company reported disappointing results from a trial of Revlimid as a treatment for lymphoma. RBC’s Michael Yee and Judy Liu explain why the selloff could be a buying opportunity:
Celgene just announced the Revlimid Phase III REMARC data – which actually did hit the primary endpoint of a stat sig PFS benefit but the interim analysis on OS (survival) showed no benefit. From a safety standpoint, long-term multi-year use also showed no difference in SPM’s (cancers) too – we think another good thing on that front for the franchise. Thus, they will not seek approval for this indication at this time and we believe the Street should not expect that this specific indication will get any material use. It does not impact or change our estimates as this was probability adjusted in 2020 company guidance of $1-1.5B of NHL sales in 2020; we believe this study was already modest in their guidance with lower confidence than the other studies that are still coming and higher likelihoods and if those are positive would more than offset if positive ultimate readouts.
Importantly however – we think the stock will likely bounce from any short-term dip from the negative headline and this could be a short-term overhang removed and since investors were nervous on this event — it could actually be a clearing event for the bulls…
Looks like the market reached the same conclusion. After trading down as much as 2.3% earlier this morning, shares of Celgene have fallen 0.4% to $107.50 at 10:22 a.m. today, while the iShares Nasdaq Biotechnology ETF (IBB) has dipped 0.3% to $281.36.