In a pre-Halloween fright show, Celgene just scared the hell out of Wall Street — shares crater

For years now Celgene has impressed analysts and wowed investors with aggressive revenue growth and one of the most ambitious R&D efforts in biotech. But after alarming Wall Street with a major fail for one of its big Phase III drugs a few days ago, Celgene managed to score a pre-Halloween fright that sent its shares — already badly dented by the failure of mongersen — tumbling $CELG 18% Thursday morning.

Mark Alles, Celgene

Its Q3 numbers were a bit shy of the $3.3 billion consensus mark, which didn’t help. But what hurt was the news that Celgene is having to discount its anti-inflammatory Otezla in the face of some fearsome competition from Humira. Then came the news that the company is cutting its long-range forecast for 2020 by $1 billion to $2 billion, and investors were not pleased by the latest nasty surprise to come out of the company.

The numbers out today also explain why Celgene CEO Mark Alles has opted to jack up the price of its big franchise drug Revlimid 20% this year — exactly the kind of unilateral, utility-like price hike that has earned the biopharma business repeated lashings at the hands of President Donald Trump and a chorus of critics in Congress.

Geoffrey Porges, Leerink

Leerink’s Geoffrey Porges caught a whiff of existential angst in the numbers.

Investors are likely to ask whether the company’s good fortune has run out, with disappointments (mongersen) and negative revisions (Otezla) left and right. Recently installed new management are likely to face tough questions from investors about the company’s direction and leadership after the operational and guidance disappointments this quarter.

As we reported yesterday in a look at the way market valuations have soared over the past six years, Celgene has been a darling of the biopharma business, with its stock up 351% before this sudden turn of events. Today’s news came like a slap in the face to besotted investors, and they don’t like it one bit.

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Research Scientist - Immunology
Recursion Pharmaceuticals Salt Lake City, UT
Director of Operations
Atlas Venture Cambridge, MA

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