Shares of Celgene (CELG) are dropping this morning after the biotech giant said that its arthritis drug failed to meet its primary endpoint in a Phase III trial. Bernstein’s Geoffrey Porges and Wen Shi aren’t concerned:
The ankylosing spondylitis indication offered upside compared to our forecasts and estimates for Celgene, but was not part of our base case valuation. This disappointment is likely to have some negative effects on sentiment and the stock, but the overall negative reaction is likely to be modest. Celgene’s stock has performed strongly in recent weeks, partly on the basis, we suspect, of company buying. We remain positive about the stock’s outlook for the next 6-12 months, and also increasingly positive on the early stage pipeline which is likely to show its potential more clearly in the next 18 months.
Celgene’s drop has, in fact, been modest. Its shares have fallen 0.5% to $85.28 at 10:26 a.m., while Amgen (AMGN) has dipped 0.4% to $119.45, Biogen Idec (BIIB) has declined 0.6% to $315.58 and the iShares Nasdaq Biotechnology ETF (IBB) is off 0.6% at $252.28.
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