Tuesday, November 19, 2013

Celgene Grows Beyond Cancer Products

Although growth prospects for Celgene’s (CELG-$154.44) oncology franchise remain strong, the product portfolio remains highly concentrated. To justify a PE ratio almost twice that of key competitors, the company needs additional revenue streams to offset competitive risks.

Just in 2013, Celgene has invested more than $500 million in third-party ventures – young companies working on promising drugs, ranging from epigenetics (structure-based drug design) to cancer metabolism and immunotherapy. Celgene will owe millions more in milestone payments – should any of these ventures pan out. 

Luckily, the balance sheet is sound, with healthy credit metrics and liquidity available to finance both internal R&D expense and external ventures. The company holds a revolving credit facility totaling some $1.5 billion and its long-term debt maturities are staggered, with the bulk of maturities scheduled out to 2017 and beyond.  

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.  

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