UBS Cuts Price Target On Celgene To $146 As GED Drops Out

The discontinuation of Celgene Corporation CELG’s mongerson for Crohn’s disease prompted a 6.6-percent sell-off in Friday’s premarket trading.

But UBS was undeterred by the announcement.

“Looking forward, we are still encouraged by the prospects for this next product cycle (ozanimod and luspatercept) for Celgene,” analysts Carter Gould, Jeffrey Hung and Andrea Brettler wrote in a note. “While there is more priced in there (we model peak sales of $4.2B and $2.5B, respectively), there are defined paths to upside (Crohn's, myelofibrosis, broader MDS) with some clinical data in hand.”

UBS maintains a Buy rating on the stock while lowering its price target from $153 to $146.

What About Mongerson?

The analysts had long registered skepticism of the abandoned candidate’s potential in Crohn’s. Earlier studies triggered enduring questions about patient selection, endoscopic response data and impact on C-reactive protein levels, according to UBS.

Celgene’s shift from mongerson, or GED-0301, is not entirely certain, as the company continues the drug’s Phase 2 trials for ulcerative colitis, but UBS removed candidate from its model entirely. The cut justified a $7 drop in price target and a decrease in 2020 earnings per share estimates from $13.17 to $13.10.

At the time of publication, Celgene was set to open at $127, down from Thursday’s closing rate of $135.96.

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