Thomas Weisel "Management Highlights Revlimid's Growth Opportunities. MM-015 data to support improving Revlimid trends. Multiple clinical and commercial milestones approaching. Reiterate Overweight and Valuation Range of $71 - $74. "

Thomas Weisel Partners

September 9, 2009

CELG (09/08/09): $51.65 USD

Management Highlights Revlimid's Growth Opportunities And Recent Positive Top-Line MM-015 Data

OVERWEIGHT


VALUATION Range $71 - $74 (Midpoint $72)

Conference Takeaway


Celgene provides a pipeline review focused on Revlimid growth opportunities: On Wednesday morning (September 9), Celgene presented at the 2009 Thomas Weisel Partners Healthcare Conference in Boston, MA. David Gryska, SVP and CFO, provided a pipeline review highlighting Revlimid’s growth prospects and key upcoming milestones.

o MM-015 data to support improving Revlimid trends: Management highlighted previously announced top-line data from the Phase III MM-015 study (RMP vs. MP in NDMM) that was stopped early following the first interim analysis due to efficacy. Recall the pre-specified efficacy analysis demonstrating that RMP had crossed the O'Brien-Fleming boundary by producing a hazard ratio of at least 1.825 in progression free survival (PFS) (p>0.0015). We anticipate a global regulatory filing in NDMM in 1Q10 and a label expansion 2H10. We expect this data set to drive front-line penetration and expand duration. We believe the MM-015 data could drive Revlimid duration in front-line MM above 24 months (international duration currently at 7 months).However, considering the MP regimen is not widely used in the U.S. (<4%) we expect a disproportional greater impact in Europe where MP use is more widespread.

O Multiple clinical and commercial milestones approaching: Top-line data from a Phase IIb PSOR-004) study of apremilast in recalcitrant plaque type psoriasis in 3Q09. Presentation of Phase II (PSA-001) data of apremilast in psoriatic arthritis (positive top-line data released in June) at the American College of Rheumatology (ACR) meeting (October 17-21). Presentation of multiple data sets at the American Society of Hematology (ASH) meeting (December 5-8) include Phase III (MM-015) trail of RMP vs. MP in front-line MM, Phase III (IFM-0502) trial of Revlimid used as maintenance therapy following AST in MM and Phase III (MDS-004) trial of Revlimid in del 5Q MDS. Commercial milestones include reimbursement approval for Revlimid in UK, Canada and Australia in 2H09 and approval in Japan mid-2010.

O Valuation: The midpoint of our 12-month price target range is $72. Our price target range of $71 to $74 per share is based on a P/E multiple of 25-26x, applied to our 2010 EPS estimate of $2.03. The P/E range represents a premium to the 2010 14 average P/E of large-cap biotechnology companies, which we believe is justified, given Celgene’s projected 25% EPS CAGR from 2009E to 2012E and a robust pipeline. There are always risks that the price target for any security will not be realized. In addition to general market and macroeconomic risks, for Celgene, these risks include, among other things, regulatory and clinical risks to its pipeline as well as the risk that Revlimid may not meet expectations