I touch 300+ CELG investors by email distribution daily, get replies from at least 50 a week and talk to at least 20 large CELG investors and a few analysts each week.
Its kind of amazing to me but most of these veteran CELG investors are stunned at this move. Multiple people thought we wouldn't get paid for Apremilast data until launch, others thought we couldn't move until MM-020 results came out, and others just generally stated because of past performance (short attacks) at ASH, JPM etc they just are conditioned to expect Celgene not to hold gains. Some of the longer term guys like Justhangin and Moranpicks and Polo and JBWIN and I have a term for this – “Celgeneitis”.
After yrs and yrs of getting hit after runs, short attacks and others – and after 5 yrs of stagnation during the no capital plan/"the data speaks for itself" strategy of the Sol B CEO yrs that left us extremely vulnerable to attacks - we seemed to have 3 – 4 large short attacks/pullbacks a yr and even veteran large holders always expected that CELG would “give back half its gains” the day after a big run. Reality became perception and then perception became reality as it occurred over and over and over again in a seemingly endless 5 yr loop. 5 yrs of retracements of gains and planned short attacks at/during/after ASCO, ASH, JP Morgan, and earnings calls.
Well that was pre-Jackie Fouse (and her world class capital plan – first time in Celgene history) and when we were a “one trick pony” with Revlimid such a large percentage of our next 2-3 yrs revenue – well something like SPMs or Velcade CR or CHMP turn down – we got crushed when these things occurred.
But now we are entering a new era, as I have been saying for a yr – it would soon become apparent that we will have 5 separate billion $ a yr drugs.
People put down Abraxane – then we got lung cancer approval, stunning melanoma and Pancreatic Cancer top line that could (with OS detail on Jan 25 at ASCO GI mtg in San Fran) make this the standard of care in this difficult disease. No one believed in Apremilast - they said its impossible to have an oral PDE4 inhibitor without serious GI side effects. They said we would have generic Vidaza yrs ago - I said we wouldn't. They forgot about oral aza and the rest of the pipeline. And they are STILL underestimating Pomalidomide as well as International Revlimid sales and Non-Myeloma Revlimid sales. The pipeline is still seriously undervalued at the current PPS. They continue to miss the "earning leverage story" as international sales ramp with industry high margins and industry low tax rates combined with a world class buyback/capital plan.
So what was the turning point yesterday – sure the $13-$14 EPS in 2017 helps as at a 0.8 PEG that is a $280-$315 stock in 2017 discounted back.
But to me what was of paramount importance was the Apremilast news. Most of us were expecting only Esteem 1 results but Hugin delivered a stunner as “breaking news” that they had BOTH Esteem 1 and Esteem 2 trial results – 2 Phase 3 trials with an impressive 1250 patients and the key word was HIGHLY statistically significant with positive safety profile consistent with the THREE PsA Ph 3 trials and EVEN better than the Phase 2 positive safety results. Then after reading the Apremilast PR investors started to realize that the endpoint is PASI 75 – which if you talk to dermatologists (and as noted by grafzepplin on this board) is a pretty high bar and HIGHLY stat sig over this bar is amazing for an oral PDE-4 inhibitor. When you look at that Enbrel commercial link I posted – you wonder why anyone would ever again take Enbrel before at least trying Apremilast once approved.
In addition the comments on EU front line and what is in the long term guidance exudes confidence in Pomalidomide, Apremilast, Abraxane Pancreatic Cancer detailed data coming and MM-020 coming results.
So am I selling a few of my nearer term calls bought on the big fiscal cliff decline that had nothing to do with CELG here over 91 (while keeping all my shares and a boatload of long 2014 and 2015 leaps & some Aprils as more news is coming) – of course .
But am I surprised this stock – that really had not reacted to all the positive news in the second half of 2012 is now rising to this $90 area with MANY big catalysts still to come including China/Mexico/Brazil/South Korea/Russia Revlimid approvals, Pomalidomide approval, MM-020 data, Detail Pancreatic Cancer data at ASCO GI, etc still to come. No I am not – why?– because the stock is still cheap by almost any measure. Its still under a 1.0 PEG ratio. Its at a ridiculous discount to 3 or 5 yr discounted cash flow or discounted earnings stream. And it still does not reflect the value of this companies pipeline, strong margins, amazing cash flow and now world class capital plan completing the third leg of the stool thanks to our superstar CFO.
Sure could there be a pullback at some point. Yes… But have we had our complete run – not close. Not with this management team and new CFO. They have finally come up for a cure - for "Celgeneitis".