July 15, 2015 | 12:25 PM by Fahad Khalid | fkhalid@jaguaranalytics.com

Celgene (CELG) Analyst Notes after Receptos (RCPT) Acquisition

Celgene (CELG) Analyst Notes after Receptos (RCPT) Acquisition:

UBS analyst Matthew Roden – raises target
Views deal as a positive as it adds a high-quality long-term growth asset that is big enough to move the needle, in an area of CELG’s clinical and commercial expertise; had considered RCPT a prime acquisition candidate – only worry is that another strategic comes in with a higher offer, citing media reports pointing to higher bids from GILD and TEVA; believes the price is full and fair value; notes management thinks it can find a price point to effectively compete in both MS and UC; initial combination of CELG and RCPT operating models clearly inflects NPV higher.
Target to $142 from $130
Maintains Buy rating

Deutsche Bank analyst Robyn Karnauskas – raises target
Believes the RCPT deal seems to be a rare NPV-positive deal in the current market and premium paid does not seem too hefty; believes CELG gets a relatively de-risked asset in Phase III with blockbuster potential; at lower end of CELG guidance, sees incremental NPV of deal at $7-11/share and at high end sees $14-21/share on a pro forma basis; believes MS opportunity alone could be enough to justify price paid and notes UC opportunity could be a free call option.
Target to $175 from $160
Maintains Buy rating

RBC analyst Michael Yee – raises target
Incrementally more positive as positive Q2, raised 2020 guidance, and RCPT acquisition are consistent with their positive pipeline thesis and deploying cash to drive long-term visible growth; believes RCPT is a fairly de-risked $4B peak sales drug with strong data in MS and UC; expects deal will be seen as a cornerstone of CELG’s strategy in 2020+ and reduces long-term risk and impact of a potential generic Revlimid; believes RCPT is synergistic as it adds to the immunology franchise and stacks on top of drugs such as Otelza that CELG has already build a salesforce around.
Target to $150 from $135
Maintains Outperform rating

Leerink analyst Howard Liang
Sees strong strategic and operational fit that could significantly diversify CELG’s revenue base; believes acquisition provides investors with increased confidence in CELG’s emerging second major franchise in inflammatory and autoimmune diseases; with three major deals announced over past three months, believes CELG’s focus is likely to shift to execution and absorbing the impact of the transactions over the near-term; highlights Q2 top and bottom line beat and increased guidance, reflecting strong operating results and positive impact of RCPT.
Target is $150
Maintains Outperform rating

Cantor Fitzgerald analyst Mara Goldstein – raises target
Continues to like CELG for near-term strength and efforts to diversify the revenue base; notes RCPT adds two Phase III programs that leverage CELG’s efforts in inflammatory disease and potential expansion into other indications; believes both MS and UC indications have billion dollar potential; if successful, believes potential revenues can eclipse the purchase price at peak and are additive to long-term growth; thinks most important aspect of deal is potential dilution of Revlimid through increasing the breadth of the commercial offering.
Target to $146 from $145
Maintains Buy rating

JMP analyst Michael King
Positive on the deal as it diversifies the CELG portfolio, leveraging its strength in Immune & Inflammation; believes deal leverages the company’s significant expertise and existing commercial infrastructure, allowing CELG to create an all-oral I&I therapeutic franchise; notes Q2 sales were in-line with their estimates, raised F15 EPS range bracketed their estimate; remains bullish and forecasts total revenues to rise to $20B+ by 2020.
Target is $133
Maintains Market Outperform rating

#CELG#Celgene Acquires Receptos#RCPT
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