Onyx Pharmaceuticals, Inc. (ONXX), Johnson & Johnson (JNJ): Is Celgene Corporation (CELG)’s Pipeline a Fit for Your Portfolio?

Few big biotech firms have been as successful recently as Celgene Corporation (NASDAQ:CELG). The maker of multiple myeloma home run drug Revlimid has seen its shares rocket higher by more than 38% over the last three months alone and more than double in the past two years. Celgene’s done a good job growing revenue and making shareholders happy, but is this company’s pipeline of future drug candidates enough to justify a place in the long-term investor’s portfolio? Let’s dive into the details of this biotech’s future and see how Celgene will earn tomorrow’s revenue.

Johnson & Johnson (JNJ)

Firming up the foundation
It’s worth noting first off that Celgene’s super-blockbuster Revlimid isn’t going away any time soon. The company’s star, which sold more than $3.7 billion last year, doesn’t face patent protection for more than a decade in both Europe and Japan. Peak sales estimates predict the drug’s revenue could jump higher than $4.5 billion, offering Celgene plenty of time to dig into its pipeline before its top-selling pharmaceutical faces the specter of generic competition.

That $4.5 billion or so mark could be conservative: Celgene recently won approval for the drug’s use in China, and is still awaiting the FDA’s decision on Revlimid’s use as a treatment for mantle cell lymphoma. While it’s still questionable exactly how much Revlimid will earn from the Chinese market, any expansion of this drug’s treatment opportunities is good news for Celgene Corporation (NASDAQ:CELG) that shows its growth hasn’t ended despite its lofty sales.

Of course, competition will play a part in Celegene’s multiple myeloma future. Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX)‘  rival therapy Kyprolis won FDA approval last year, and experts peg peak sales of the drug at $1.5 billion or more. Johnson & Johnson (NYSE:JNJ)‘s multiple myeloma treatment Velcade also figures to remain part of the equation, as research firm Decision Resources expects Velcade to remain the second best-selling drug in the industry for the foreseeable future.

Celgene Corporation (NASDAQ:CELG) has done well in treating multiple myeloma, but the company’s future demands it diversify beyond its narrow scope. The company currently records far more than half of its total sales from Revlimid, an unsustainable proposition for the long term. Fortunately, the company’s pipeline doesn’t disappoint.

What’s in store for the future?
Let’s start within the multiple myeloma part of Celgene’s future before digging deeper into the company’s portfolio. Investors are all kinds of excited about Pomalyst, Celgene’s new multiple myeloma oral treatment approved back in February. While the drug did warrant a black-box warning from the FDA, many industry observers still forecast sales in excess of $1 billion. It’s expected to go head-to-head with Kyprolis in a growing multiple myeloma market that’s expected to climb to $7.2 billion by 2021, according to Decision Resources. If all goes according to plan, chalk up another future blockbuster for Celgene with Pomalyst.

In other treatments, Celgene’s developmental drug CC-486, currently in late-stage clinical trials for MDS and AML maintenance, is a pipeline product to watch. While no one has released peak sales estimates for a drug still a long way away from regulatory filing, the American Cancer Society estimates that between 10,000 to 20,000 new MDS cases sprout up each year in the U.S.

That’s a patient population Celgene should be able to take advantage of if CC-486 comes through: The company’s drug Vidaza, which sold more than $800 million last year, is already recommended for use in treating high-risk MDS. Considering that Vidaza already lost patent protection back in 2011, a successful CC-486 would provide a buffer against any lost sales due to generic competition that could sprout up.

Unfortunately, not everything’s so optimistic in the pipeline. Oral psoriasis treatment Apremilast looks well on its way to FDA approval, but the drug’s phase 3 trial results didn’t show the gains over phase 2 data that analysts were hoping for. As a result, while Celgene Corporation (NASDAQ:CELG) likely can count on some revenue from Apremilast — the drug’s safe with little risk of serious side effects and still proved far more effective than placebos in studies — the blockbuster hopes for the drug may be tough to reach. Don’t give up on Apremilast, but don’t pin all your hopes for Celgene’s future on the drug, either.

Celgene’s drugs in earlier-stage trials aren’t anywhere near ready to excite investors yet, but they’re worth keeping an eye on. Anemia candidate Sotatercept, currently in phase 2 studies, could help diversify Celgene’s sales in a big way: While the drug’s in different studies for various types of the ailment, such as renal anemia and cancer-induced anemia, the overall market for anemia drugs generated more than $10 billion worldwide in 2011. Even just a slice of that revenue would greatly help solidify Celgene’s future growth.

Other drugs include CC-11050, an investigational candidate for treating lupus. These mid- to late-stage drug therapies aren’t known quantities by any means, but if Celgene can bring in regulatory approvals in the near future, the company will be well on its way to diversifying away from multiple myeloma treatments enough to build up a broad portfolio of drugs across numerous treatment areas.

A future to believe in
Celgene Corporation (NASDAQ:CELG)’s pipeline isn’t enough to make anyone forget Revlimid any time soon, but why should they, when the drug has patent protection until 2024 in the EU and 2027 in the U.S.? The company has plenty of time to build up its pipeline, and while the cupboard’s only partially full right now, Celgene shareholders shouldn’t fret about this company’s long-term future. Between already-approved drugs such as Pomalyst to developmental candidates still working their way towards FDA filing and approval, Celgene’s future is in good hands.

The article Is Celgene’s Pipeline a Fit for Your Portfolio? originally appeared on Fool.com.

Fool contributor Dan Carroll has no position in any stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson.

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