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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Celgene Corporation    CELG

CELGENE CORPORATION (CELG)
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Celgene : Scripps hopes for royalty windfall from potential blockbuster drug

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11/11/2017 | 12:54am CEST

Nov. 10--If the new drug ozanimod achieves blockbuster status, it could generate tens of millions of dollars a year in royalties for the Scripps Research Institute -- and provide relief from the ongoing financial challenges facing the nonprofit lab.

Scripps won't say how much it stands to receive from sales of ozanimod, a drug that slows brain atrophy in patients with multiple sclerosis. Scripps discovered the drug, then partnered with Celgene to shepherd the medicine through clinical trials. The biopharmaceutical company expects to begin marketing the drug to MS patients in late 2018.

Celgene (Nasdaq: CELG) also is testing ozanimod as a treatment for ulcerative colitis, which is more common than MS. If ozanimod wins approval as a medicine for the intestinal disorder, sales could reach $4 billion to $6 billion a year.

Scripps says its royalty arrangement with Celgene is confidential. Brian Skorney, an analyst who follows Celgene for Robert W. Baird & Co., said the typical deal pays a drug's inventor "in the low single-digit percentage."

So, if ozanimod's sales reach $4 billion and Scripps gets a 2 percent cut, that would amount to $80 million a year. It would be a welcome windfall for Scripps, which has seen its revenue decline steadily in recent years.

The nonprofit lab's revenue fell to $347.5 million for the year ended Sept. 30, 2016, according to a financial statement, down from $362.5 million the previous year.

It was the fifth consecutive year of declining revenue for San Diego-based Scripps, the scientific juggernaut that's the anchor of Florida's billion-dollar bet on biotech. Scripps in 2016 reported its lowest annual revenue since 2004.

Scripps' net assets dipped to $637 million, down from $647 million in 2015 and the lowest level since 2007.

Dr. Hugh Rosen, a Scripps researcher who's the co-inventor of ozanimod, said the institute's agreement with Celgene calls for royalty payments through 2033 or 2034.

"It could be a significant contributor to the health of the institution," Rosen said.

Patient studies proved that ozanimod is safe and effective, but it's still no sure thing. Skorney said ozanimod faces competition from other MS drugs.

"It's a very crowded space in terms of the number of effective treatments, so we'll see how Celgene ends up pricing it," Skorney said.

Rosen said ozanimod's journey from the lab to the doctor's office underscores the long-term nature of scientific research. In 2002, he started the work that led to ozanimod, and a flurry of tests from 2006 to 2008 ultimately yielded the new drug.

"It will be literally 10 years from discovery to launch for patients, and that's about as fast as you could hope for," Rosen said.

___

(c)2017 The Palm Beach Post (West Palm Beach, Fla.)

Visit The Palm Beach Post (West Palm Beach, Fla.) at www.palmbeachpost.com

Distributed by Tribune Content Agency, LLC.

© Tribune Content Agency, source Regional News

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Financials ($)
Sales 2018 15 136 M
EBIT 2018 8 427 M
Net income 2018 4 591 M
Debt 2018 13 270 M
Yield 2018 -
P/E ratio 2018 14,47
P/E ratio 2019 10,80
EV / Sales 2018 5,08x
EV / Sales 2019 4,18x
Capitalization 63 563 M
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Mean consensus OUTPERFORM
Number of Analysts 27
Average target price 112 $
Spread / Average Target 24%
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Managers
NameTitle
Mark J. Alles Chairman, President, CEO & COO
David V. Elkins Chief Financial Officer & Executive Vice President
Joseph S. Camardo Senior Vice President-Global Medical Affairs
Jay T. Backstrom Chief Medical Officer
Rupert J. Vessey President-Research & Early Development
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