Celgene Reports Record Third Quarter 2010 Operating and Financial Results

Record Third Quarter Results Driven By Share Gains Across Major Markets

REVLIMID® Third Quarter Global Net Product Sales Increased 43% Y/Y

VIDAZA® Third Quarter Global Net Product Sales Increased 37% Y/Y

Non-GAAP Third Quarter Diluted Earnings Per Share Increased 34% Y/Y

SUMMIT, N.J.--(BUSINESS WIRE)--Oct 28, 2010 - Celgene Corporation (NASDAQ: CELG):

2010 Third Quarter Financial Results Year-Over-Year

 

  • Non-GAAP Total Revenue Increased 31 Percent to $908 Million; GAAP Total Revenue $910 Million
  • Global REVLIMID Net Product Sales Increased 43 Percent to $641 Million
  • Global VIDAZA Net Product Sales Increased 37 Percent to $141 Million
  • Global THALOMID® Net Product Sales of $94 Million
  • Non-GAAP Operating Income Increased 40 Percent to $409 Million; GAAP Operating Income $311 Million
  • Non-GAAP Net Income Increased 35 Percent to $350 Million; GAAP Net Income $281 Million
  • Non-GAAP Diluted Earnings Per Share Increased 34 Percent to $0.75; GAAP Diluted Earnings Per Share $0.60

2010 Financial Outlook Update (Includes Impact of Acquisition of Abraxis BioScience)

 

  • Total Revenue Expected to Increase Approximately 34 Percent Year-Over-Year to Approximately $3.60 Billion, Up From a Previous Range of $3.40 to $3.45 Billion
  • REVLIMID Net Product Sales Anticipated to Increase Approximately 44 Percent Year-Over-Year to Approximately $2.45 Billion, Up From a Previous Range of $2.30 to $2.35 Billion
  • Non-GAAP Diluted Earnings Per Share Expected to Increase Approximately 34 Percent Year-Over-Year to a Range of $2.78 to $2.80, Up From a Previous Range of $2.65 to $2.70

Recent Developments and Highlights

 

  • Completed Acquisition of Abraxis BioScience
  • Completed $1.25 Billion Debut Debt Offering
  • Announced Appointment of Jacqualyn A. Fouse as Senior Vice President and Chief Financial Officer
  • Initiated Launch of REVLIMID® in Japan for Treatment of Relapsed/Refractory Multiple Myeloma
  • Initiated PALACE 1, PALACE 2, and PALACE 3, Phase III Trials Evaluating Apremilast in Psoriatic Arthritis, and ESTEEM 1, a Phase III Trial Evaluating Apremilast in Moderate-to-Severe Psoriasis
  • Brought Infringement Action to Enforce our REVLIMID Patents Against Natco Pharma Ltd. for Filing an Abbreviated New Drug Application With a Paragraph IV Certification for Lenalidomide
  • ABRAXANE® Pharmaceutical Composition and Method Claims Patent Issued on October 26, 2010, expiring in 2024
  • Initiated MF-002, a Phase III Trial Evaluating Pomalidomide in Myelofibrosis
  • Initiated AZA-AML-001, a Phase III Trial Evaluating VIDAZA® in Newly Diagnosed Acute Myeloid Leukemia
  • Initiated Phase II Trial for PDA-001 Cellular Therapy in Crohn's Disease

2010 Selected Corporate Objectives

 

  • Expand Celgene Product Approvals, Reimbursements, and Global Market Share
  • Submit REVLIMID Newly Diagnosed Multiple Myeloma (NDMM) Regulatory Filing with European Medicines Agency
  • Complete Enrollment of MM-020, a Phase III Trial Evaluating REVLIMID and Low-Dose Dexamethasone Versus Melphalan, Prednisone, and Thalidomide in NDMM
  • Submit ISTODAX® Peripheral T-cell Lymphoma Regulatory Filing with Food and Drug Administration
  • Advance More Than 25 Phase III and Pivotal Clinical Trials and 17 Preclinical Programs Addressing More Than 30 Serious and Debilitating Diseases
  • Initiate ESTEEM 2, a Phase III Trial Evaluating Apremilast in Moderate-to-Severe Psoriasis, and PALACE 4, a Phase III Trial Evaluating Apremilast in Psoriatic Arthritis
  • Initiate Phase II Trial for Apremilast in Rheumatoid Arthritis
  • Initiate Phase II Trial for PDA-001 Cellular Therapy in Ischemic Stroke; Initiate Phase I Trial in Multiple Sclerosis
  • Initiate Phase II Trial for JNK CC-930 in Idiopathic Pulmonary Fibrosis and Discoid Lupus Erythematosus

Celgene Corporation (NASDAQ: CELG) announced non-GAAP (Generally Accepted Accounting Principles) net income of $349.9 million, or non-GAAP diluted earnings per share of $0.75 for the quarter ended September 30, 2010. Non-GAAP net income for the third quarter of 2009 was $259.8 million or non-GAAP diluted earnings per share of $0.56. Based on U.S. GAAP, Celgene reported net income of $281.2 million, or diluted earnings per share of $0.60 for the quarter ended September 30, 2010. GAAP net income for the third quarter of 2009 was $216.8 million, or diluted earnings per share of $0.46.

Celgene posted non-GAAP net income of $967.7 million or non-GAAP diluted earnings per share of $2.07 during the first nine months of 2010 as compared to non-GAAP net income of $681.0 million and non-GAAP diluted earnings per share of $1.46 in 2009. On a GAAP basis, Celgene reported net income of $670.9 million, or diluted earnings per share of $1.44 for the first nine months of 2010, compared to GAAP net income of $522.5 million, or diluted earnings per share of $1.12 in 2009.

“Our third quarter results reflect outstanding operational execution by our global team,” said Bob Hugin, Celgene's Chief Executive Officer. “Our expanding portfolio of innovative therapies in oncology and immune-inflammatory diseases further positions us for sustained growth and value creation in the near and long term.”

Product Sales Performance

Non-GAAP total revenue was a record $908.1 million for the quarter ended September 30, 2010, an increase of 31 percent from 2009. GAAP total revenue was $910.1 million for the quarter ended September 30, 2010. The increase in total revenue was driven by global market share gains and increased duration of therapy of REVLIMID® and VIDAZA®. Net sales of REVLIMID were $641.3 million, an increase of 43 percent over the same period in 2009. VIDAZA® net sales were $141.4 million, an increase of 37 percent from 2009. Global THALOMID® (inclusive of Thalidomide Celgene® and Thalidomide Pharmion®) sales were $94.2 million, a 14 percent decrease from 2009. Revenue from Focalin® and the Ritalin® family of drugs totaled $22.6 million for the third quarter of 2010 compared to $25.8 million over the same period in 2009.

For the first nine months of 2010, non-GAAP total revenue was a record $2.547 billion, an increase of 33 percent year-over-year. GAAP total revenue was $2.554 billion for the nine months ended September 30, 2010. REVLIMID net sales for the first nine months of 2010 were $1.759 billion, an increase of 45 percent over $1.209 billion for the same period in 2009. VIDAZA net sales for the first nine months of 2010 were $393.6 million, an increase of 46 percent over the same period in 2009. THALOMID net sales for the first nine months of 2010 were $296.0 million, a decrease of 10 percent from the same period in 2009. Revenue from Focalin and the Ritalin family of drugs totaled $79.3 million for the first nine months of 2010, an increase of 3 percent over the same period in 2009.

Research and Development

For the third quarter of 2010, non-GAAP R&D expenses, which exclude upfront collaboration payments and share-based employee compensation expense, were $232.3 million compared to $178.2 million for the third quarter of 2009. These R&D expenditures continue to support ongoing clinical progress in multiple proprietary development programs for REVLIMID, pomalidomide, and other compounds; VIDAZA; ISTODAX®; amrubicin; apremilast and our oral anti-inflammatory compounds; our kinase inhibitor programs; our activin inhibitor program with ACE-011; and cellular therapy programs. On a GAAP basis, R&D expenses were $253.5 million for the third quarter of 2010 and $193.4 million in the same period in 2009.

Selling, General, and Administrative

Non-GAAP selling, general and administrative expenses, which exclude share-based employee compensation expense, were $204.1 million for the third quarter of 2010 compared to $172.3 million for the third quarter of 2009. The increase was primarily due to higher marketing and sales related expenses resulting from ongoing product launch activities of VIDAZA in Europe and ISTODAX in the United States as well as higher facilities costs. On a GAAP basis, selling, general and administrative expenses were $228.3 million for the third quarter of 2010 and $192.5 million in the same period in 2009.

Interest and Other Income, Net

For the quarter ended September 30, 2010, interest and other income, net, decreased to $20.8 million compared to $34.9 million in the same period in 2009. The decrease was primarily due to a reduction in interest and investment income as well as a decrease in net hedging and foreign currency revaluation gains in the quarter ended September 30, 2010, compared to the same period in 2009.

Cash, Cash Equivalents, and Marketable Securities

Celgene reported $3.530 billion in cash, cash equivalents, and marketable securities as of September 30, 2010.

Non-GAAP Financial Information

See the attached Reconciliation of GAAP to Non-GAAP Net Income for an explanation of the amounts excluded and included to arrive at non-GAAP net income and non-GAAP earnings per share amounts for the three-month and nine-month periods ended September 30, 2010 and 2009. See the attached Reconciliation of Full-Year 2010 Projected GAAP to Non-GAAP Net Income for an explanation of the amounts excluded and included to arrive at projected non-GAAP net income and non-GAAP earnings per share amounts for the year ending December 31, 2010. Non-GAAP financial measures provide investors and management with supplemental measures of operating performance and trends that facilitate comparisons between periods before and after certain items that would not otherwise be apparent on a GAAP basis. Certain unusual or non-recurring items that management does not believe affect the company's basic operations do not meet the GAAP definition of unusual or non-recurring items. Non-GAAP net income and non-GAAP earnings per share are not, and should not be viewed as a substitute for similar GAAP items. We define non-GAAP diluted earnings per share amounts as non-GAAP net income divided by the weighted average number of diluted shares outstanding. Our definition of non-GAAP net income and non-GAAP diluted earnings per share may differ from similarly named measures used by others.

Conference Call and Webcast Information

Celgene will host a conference call to discuss the results and achievements of its third quarter 2010 and its operating and financial performance on October 28, 2010, at 9 a.m. ET. The conference call will be available by webcast at www.celgene.com. An audio replay of the call will be available from noon October 28, 2010, until midnight ET November 4, 2010. To access the replay, in the U.S. dial 800-642-1687; outside the U.S. dial 706-645-9291; and enter reservation number 14345864. The Company's fourth quarter and full year 2010 financial and operational results are expected to be reported in late January.

About Celgene

Celgene Corporation, headquartered in Summit, New Jersey, is an integrated global biopharmaceutical company engaged primarily in the discovery, development and commercialization of novel therapies for the treatment of cancer and inflammatory diseases through gene and protein regulation. For more information, please visit the company's Web site at www.celgene.com.

This release contains certain forward-looking statements which involve known and unknown risks, delays, uncertainties and other factors not under the Company's control. The Company's actual results, performance, or achievements could be materially different from those projected by these forward-looking statements. The factors that could cause actual results, performance, or achievements to differ from the forward-looking statements are discussed in the Company's filings with the Securities and Exchange Commission, such as the Company's Form 10-K, 10-Q and 8-K reports. Given these risks and uncertainties, you are cautioned not to place undue reliance on the forward-looking statements.

 
Celgene Corporation and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)
                                                     
                                                     
                                                     
                            Three Months Ended       Nine Months Ended
                            September 30,       September 30,
                            2010       2009       2010       2009
                                                     
Net product sales                           $   885,656       $   667,967       $   2,468,164       $   1,842,353
Collaborative agreements and other revenue                               2,241           2,381           7,165           6,979
Royalty revenue                               22,214           24,789           78,728           79,524
Total revenue                               910,111           695,137           2,554,057           1,928,856
                                                     
Cost of goods sold (excluding amortization of                                                    
acquired intangible assets)                               63,542           52,058           193,450           167,259
Research and development                               253,547           193,362           800,965           593,109
Selling, general and administrative                               228,281           192,512           655,522           542,264
Amortization of acquired intangible assets                               46,540           21,111           135,201           67,403
Acquisition related charges                               7,495           -           20,193           -
Total costs and expenses                               599,405           459,043           1,805,331           1,370,035
                                                     
Operating income                               310,706           236,094           748,726           558,821
                                                     
Equity in losses of affiliated companies                               1,384           329           746           944
Interest and other income, net                               20,840           34,937           42,819           113,257
                                                     
Income before income taxes                               330,162           270,702           790,799           671,134
                                                     
Income tax provision                               49,011           53,887           119,854           148,602
                                                     
Net income                           $   281,151       $   216,815       $   670,945       $   522,532
                                                     
Net income per common share:                                                    
Basic                           $   0.61       $   0.47       $   1.46       $   1.14
Diluted                           $   0.60       $   0.46       $   1.44       $   1.12
                                                     
Weighted average shares - basic                               459,653           458,834           459,957           459,332
                                                     
Weighted average shares - diluted                               466,332           467,057           467,137           467,469
                                                     
                                                     
                            September 30,       December 31,                
                            2010       2009                
Balance sheet items:                                                                  

Posted: October 2010


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