Dive Brief:

• Celgene Corp. lowered its 2020 guidance more than $1 billion on Thursday, triggering a large stock selloff and raising concerns about the company's long-term growth strategy.
• The revised guidance came as Celgene reported net product revenues of $3.28 billion for the third quarter, missing consensus estimates by about 4%. Key to that miss were U.S. sales of the blockbuster anti-inflammatory drug Otezla, which remained relatively flat at $250 million. 
• The big biotech now predicts Otelza will reach $1.25 billion for 2017, down from previous estimates of $1.5 billion to $1.7 billion that it gave back in 2015. As for 2020, Celgene leadership previously pegged total net product sales at northwards of $21 billion, but reeled back that guidance to a range of $19 billion to $20 billion during a Thursday announcement.

Dive Insight:

Celgene investors have long pushed the company to diversify its portfolio past the core blood cancer franchise Revlimid (lenalidomide). The Food and Drug Administration's approvals of Otezla (apremilast) in psoriatic arthritis and moderate-to-severe plaque psoriasis were big steps for Celgene in that direction, as they handed Celgene a soon-to-be blockbuster immunology asset.

Otezla's third quarter wasn't exactly terrible — the drug still brought in $308 million, representing 12% growth year-over-year. But relatively flat sales in the U.S. plus a lower long-term guidance had shareholders mulling exactly where Celgene's promised growth will come from.

"After a choppy first quarter that we discussed earlier this year, I think this slowing script volume became more prominent in quarter three," Terrie Curran, Celgene's president of inflammation and immunology, said during an Oct. 26 earnings call. "Historically we've seen an increase in September and that wasn't seen this year, so I think it really was a convergence of a number of dynamics — the market softening, increasing competition as well as the impact from gross-to-net adjustments."

The breakdown of Celgene's revised guidance also didn't help abet investor worries. The company lowered its 2020 target for net product sales on new or innovative drugs from $1.8 billion to a range of $700 million to $1.4 billion. Conversely, it raised guidance on existing products and indications from $13 billion to $14.7 billion — reinforcing the notion it will continue to rely on just a handful of drugs for the bulk of its revenue.

Celgene shares opened at $98.95 apiece on Thursday, down more than 17% from Wednesday's close.

Pressed for more information on the strategy moving forward, Celgene noted its continued investment and optimism in ozanimod, the company's sphingosine-1-phosphate receptor-1 (S1P1) agonist that is in testing as a treatment for multiple sclerosis and ulcerative colitis.

"With respect to ozanimod, we're quite confident in what we see in  the profile," Celgene's CEO Mark Alles said during the call. "We think it will be a blockbuster in multiple sclerosis and one of the deltas again we've described is the ulcerative colitis program moving out with the accrual thought to happen a little bit sooner, now it will be mid-2018 and that pushes ozanimod in ulcerative colitis into more of the post-2020 period in terms of an impact."

Alles also said M&A is an avenue for potential growth.

"I've said it many times, wherever there's great science, wherever innovation's happening — whether it's happening here at Celgene or through another startup or other company — we're interested in following that science to build our company," he said.