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| Celgene Reports Record Second Quarter Product Sales and Operating Profits |
2007 Second Quarter Financial Results Year-Over-Year: 2007 Financial Outlook: Recent Highlights: 2007 Milestones: SUMMIT, N.J.--(BUSINESS WIRE)--July 26, 2007--Celgene Corporation (NASDAQ: CELG) announced adjusted net income of $110.4 million, or adjusted earnings per diluted share of $0.26 for the quarter ended June 30, 2007. Based on U.S. Generally Accepted Accounting Principles (GAAP), Celgene reported net income of $54.9 million, or diluted earnings per share of $0.13 for the quarter ended June 30, 2007, including after-tax share-based employee compensation expense of $12.7 million, compared to net income in the prior year period of $9.6 million or diluted earnings per share of $0.03, including after-tax share-based employee compensation expense of $20.7 million. Total revenue was a record $347.9 million for the quarter ended June 30, 2007, an increase of 76.4% over the same period in 2006. The increase in total revenue was driven by REVLIMID net sales of $180.9 million, an increase of 187.2% over the same period in 2006. THALOMID(R) net sales reached $117.7 million. ALKERAN(R) net sales for the second quarter of 2007 were $18.7 million compared to $4.5 million in the second quarter of 2006. Revenue from Focalin(TM) and the Ritalin(R) family of drugs totaled $24.8 million for the second quarter of 2007 compared to $17.7 million over the same period last year. For the six-month period of 2007, total revenue was a record $641.3 million, an increase of 69.2% year-over-year. Total net product sales reached a record $588.7 million, an increase of 74.9% year-over-year. REVLIMID net sales for the six-month period of 2007 reached $327.2 million compared to $95.5 million in 2006. THALOMID net sales for the six-month period of 2007 were $223.7 million compared to $214.4 million in 2006. Celgene posted adjusted net income of $196.1 million or adjusted earnings per diluted share of $0.46 during the six-month period of 2007, compared to adjusted net income of $76.2 million or adjusted earnings per diluted share of $0.20 for the six-month period of 2006. For the six-month period of 2007 on a U.S. GAAP basis, Celgene reported net income of $112.3 million or earnings per diluted share of $0.27, compared to net income of $25.6 million or earnings per diluted share of $0.07 in 2006. See the attached Condensed Consolidated Statements of Operations and Reconciliation of GAAP Earnings to Adjusted Earnings for an explanation of the amounts excluded and included to arrive at adjusted net income, adjusted per share amounts and adjusted pro-forma income tax rate, for the three-month and six-month periods ended June 30, 2007 and 2006. Adjusted or Non-GAAP financial measures provide investors and management with supplemental measures of operating performance and trends that facilitate comparisons between periods before, during 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. Adjusted net income and adjusted earnings per share are not, and should not be viewed as a substitute for similar GAAP items. We define adjusted diluted earnings per share amounts as adjusted net income divided by the GAAP weighted average number of diluted shares outstanding. Our definition of adjusted net income and adjusted diluted earnings per share may differ from similarly named measures used by others. To support clinical development and to advance global regulatory filings the Company increased R&D investments in multiple international clinical programs evaluating REVLIMID(R) and other IMIDs(R) compounds. For the second quarter of 2007, the Company incurred adjusted R&D expenses of $86.6 million. These R&D expenditures support ongoing clinical progress in multiple proprietary development programs for REVLIMID and other IMiDs compounds; for our lead oral anti-inflammatory compounds; our pleiotropic pathway modifier program; as well as our kinase and ligase inhibitor programs and placental-derived stem cell program. On a GAAP basis, R&D expenses were $89.9 million for the second quarter of 2007. Adjusted selling, general and administrative expenses increased to $103.3 million for the second quarter in 2007. SG&A include increased spending for marketing and sales expenses related to product launch activities in Europe and continued expansion of Celgene International in nearly 35 countries, including Europe, Japan, Australia and Canada. Marketing and sales expenses are expected to remain flat in the third and fourth quarters of 2007. On a reported GAAP basis, selling, general and administrative expenses were $114.0 million for the second quarter in 2007. For the quarter ended June 30, 2007, adjusted net interest and other net income (expense) increased to $23.6 million from $7.7 million over the same period in 2006. Celgene reported more than $2.3 billion in cash and marketable securities as of June 30, 2007, an increase of $207 million over the sequential quarter ended March 31, 2007. "This was a historic quarter by all measures underscored by extraordinary financial and operational results," said Celgene Chairman and Chief Executive Officer Sol J. Barer. "We are building a world leading hematology-oncology Company with a major presence in inflammatory diseases. As a result of the strong momentum established in the second quarter we have made significant progress towards accomplishing that mission." Webcast Celgene will host a conference call to discuss the results and achievements of its second quarter 2007 operating and financial performance on July 26, 2007 at 9:00 a.m. EDT. The conference call will be available by webcast at www.celgene.com. An audio replay of the call will be available from noon EDT July 26, 2007 until midnight EDT August 2, 2007. To access the replay, dial 1-888-203-1112 and enter reservation number 5815904. The Company's third quarter 2007 financial and operational results will be reported on Thursday, October 25, 2007. 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 website 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, which may cause actual results, performance or achievements of the Company to be materially different from the results, performance or other expectations implied by these forward-looking statements. These factors include results of current or pending research and development activities, actions by the FDA and other regulatory authorities, and those factors detailed in the Company's filings with the Securities and Exchange Commission such as Form 10-K, 10-Q and 8-K reports.
Celgene Corporation and Subsidiaries
Condensed Consolidated Statement of Operations and
Reconciliation of GAAP Earnings to Adjusted Earnings
(Unaudited)
(In thousands, except per share data)
Three Months Ended
June 30, 2007
-------------------------------------
GAAP Adjustments(1) "Adjusted"
-------- ---------------- -----------
Net product sales $318,945 $318,945
Collaborative agreements and
other revenue 5,100 5,100
Royalty revenue 23,862 23,862
-------- -----------
Total revenue 347,907 347,907
Cost of goods sold 28,701 (408) (2) 28,293
Research and development 89,934 (3,343) (2) 86,591
Selling, general and
administrative 113,986 (10,674) (2) (3) 103,312
-------- -------- -----------
Total costs and expenses 232,621 (14,425) 218,196
-------- -------- -----------
Operating income 115,286 14,425 129,711
Equity in losses (income) of
affiliated companies 949 (1,060) (4) (111)
Interest and other income
(expense), net 18,757 4,803 (2) (5) 23,560
-------- -------- -----------
Income before taxes 133,094 20,288 153,382
Income tax provision (benefit) 78,224 (35,277) (6) 42,947
-------- -------- -----------
Net income $54,870 $55,565 110,435
======== ======== ===========
Per common share:
Net income - basic $0.14 $0.15 (7) $0.29
======== ======== ===========
Net income - diluted $0.13 $0.13 (7) $0.26
======== ======== ===========
Weighted average shares
outstanding-basic 381,086 381,086
======== ===========
Weighted average shares
outstanding-diluted 431,377 431,377
======== ===========
Three Months Ended
June 30, 2006
------------------------------------
GAAP Adjustments(1) "Adjusted"
-------- ---------------- ----------
Net product sales $176,401 $176,401
Collaborative agreements and
other revenue 4,323 4,323
Royalty revenue 16,515 16,515
-------- ----------
Total revenue 197,239 197,239
Cost of goods sold 26,799 (461) (2) 26,338
Research and development 57,018 (3,401) (2) 53,617
Selling, general and
administrative 83,036 (19,116) (2) (3) 63,920
-------- -------- ----------
Total costs and expenses 166,853 (22,978) 143,875
-------- -------- ----------
Operating income 30,386 22,978 53,364
Equity in losses (income) of
affiliated companies 1,375 (1,375) (4) -
Interest and other income
(expense), net 7,332 378 (5) 7,710
-------- -------- ----------
Income before taxes 36,343 24,731 61,074
Income tax provision (benefit) 26,735 (8,211) (6) 18,524
-------- -------- ----------
Net income $9,608 $32,942 $42,550
======== ======== ==========
Per common share:
Net income - basic $0.03 $0.09 (7) $0.12
======== ======== ==========
Net income - diluted $0.03 $0.08 (7) $0.11
======== ======== ==========
Weighted average shares
outstanding-basic 347,696 347,696
======== ==========
Weighted average shares
outstanding-diluted 370,360 403,381
======== ==========
Notes to Reconciliation of GAAP Earnings to "Adjusted" Earnings
(1)Adjusted net income and adjusted per share amounts for the three-
month periods ended June 30, 2007 and 2006 eliminate the effects
of charges for share-based employee compensation expense
associated with the application of the Statement of Financial
Accounting Standards, or SFAS, No. 123 (revised 2004), "Share-
Based Payment", or SFAS 123(R). The after tax net impact of share-
based employee compensation expense reduced GAAP net income by
$12.7 million, or $0.03 per diluted share, for the three-month
period ended June 30, 2007 and $14.2 million, or $0.03 per diluted
share, for the three-month period ended June 30, 2006. Adjusted
net income and per share amounts for the three-month periods ended
June 30, 2007 and 2006 also exclude amortization of acquisition
intangibles resulting from the acquisition of Penn T Limited,
charges to record our share of equity losses in EntreMed, Inc.,
charges recorded for changes in the estimated value of our
investment in EntreMed, Inc. warrants and adjustments to the
income tax provision to reflect an estimated pro-forma income tax
rate. Also, the three-month period ended June 30, 2006 excludes
accelerated depreciation expense related to the Company's
corporate headquarters relocation. See below for a description of
line item adjustments.
Line Item Adjustments:
----------------------------------------------------------------------
(2)To exclude SFAS 123(R) share-based compensation expense totaling
$16,981 and $20,717 for the three-month periods ended June 30,
2007 and 2006, respectively.
(3)To exclude the amortization of acquisition intangibles resulting
from the acquisition of Penn T Limited in the amount of $2,250 in
2007 and $2,160 in 2006 and to exclude accelerated depreciation
expense related to the relocation of the Company's corporate
headquarters in the amount of $101 in 2006.
(4)To exclude the Company's share of equity losses in EntreMed, Inc.
(5)To exclude the charge recorded for changes in the estimated value
of the Company's investment in EntreMed, Inc. warrants.
(6)The adjusted income tax provision reflects an annualized 28.0%
estimated pro-forma income tax rate for 2007 and a 32.0% estimated
pro-forma income tax rate for 2006. The tax rates for both years
was computed by taking the Company's GAAP earnings in each taxable
jurisdiction in which the Company operates and making adjustments
required to arrive at taxable income ("book-tax adjustments").
Taxable income is increased to add-back the tax deduction for the
exercise of employee stock options. In jurisdictions where net
operating losses are available for carry forward, taxable income
is reduced by the amount of net operating loss carry forwards that
the Company believes will be deductible and sustainable upon
audit. Taxable income, after the adjustments for employee stock
options and net operating loss carryforwards, is multiplied by the
applicable statutory tax rate to arrive at estimated taxes due.
Estimated taxes due are divided by the Company's adjusted income
before taxes to arrive at the pro-forma income before taxes to
arrive at the pro-forma income tax rates.
(7)Adjusted per share amounts represent adjusted net income divided by
the GAAP weighted average number of shares outstanding.
Celgene Corporation and Subsidiaries
Condensed Consolidated Statement of Operations and
Reconciliation of GAAP Earnings to Adjusted Earnings
(Unaudited)
(In thousands, except per share data)
Six Months Ended
June 30, 2007
-------------------------------------
GAAP Adjustments(1) "Adjusted"
-------- ----------------- ----------
Net product sales $588,741 $588,741
Collaborative agreements and
other revenue 9,904 9,904
Royalty revenue 42,677 42,677
-------- --------- --------
Total revenue 641,322 - 641,322
Cost of goods sold 50,756 (797) (2) 49,959
Research and development 169,509 (5,945) (2) 163,564
Selling, general and
administrative 221,407 (19,471) (2) (3) 201,936
-------- --------- --------
Total costs and expenses 441,672 (26,213) 415,459
-------- --------- --------
Operating income 199,650 26,213 225,863
Equity in losses of affiliated
companies 2,232 (2,043) (4) 189
Interest and other income
(expense), net 41,774 4,865 (2) (5) 46,639
-------- --------- --------
Income before taxes 239,192 33,121 272,313
Income tax provision (benefit) 126,913 (50,666) (6) 76,247
-------- --------- --------
Net income $112,279 $ 83,787 196,066
======== ========= ========
Per common share:
Net income - basic $ 0.30 $ 0.22 (7) $ 0.52
======== ========= ========
Net income - diluted $ 0.27 $ 0.19 (7) $ 0.46
======== ========= ========
Weighted average shares
outstanding-basic 379,350 379,350
======== ========
Weighted average shares
outstanding-diluted 430,346 430,346
======== ========
Six Months Ended
June 30, 2006
-------------------------------------
GAAP Adjustments(1) "Adjusted"
-------- ----------------- ----------
Net product sales $336,644 $336,644
Collaborative agreements and
other revenue 8,216 8,216
Royalty revenue 34,220 34,220
-------- --------- ----------
Total revenue 379,080 - 379,080
Cost of goods sold 56,943 (919) (2) 56,024
Research and development 111,542 (7,349) (2) 104,193
Selling, general and
administrative 149,903 (31,667) (2) (3) 118,236
-------- --------- ----------
Total costs and expenses 318,388 (39,935) 278,453
-------- --------- ----------
Operating income 60,692 39,935 100,627
Equity in losses of affiliated
companies 4,466 (4,466) (4) -
Interest and other income
(expense), net 11,183 271 (5) 11,454
-------- --------- ----------
Income before taxes 67,409 44,672 112,081
Income tax provision (benefit) 41,777 (5,911) (6) 35,866
-------- --------- ----------
Net income $ 25,632 $ 50,583 $ 76,215
======== ========= ==========
Per common share:
Net income - basic $ 0.07 $ 0.15 (7) $ 0.22
======== ========= ==========
Net income - diluted $ 0.07 $ 0.13 (7) $ 0.20
======== ========= ==========
Weighted average shares
outstanding-basic 345,841 345,841
======== ==========
Weighted average shares
outstanding-diluted 369,108 402,129
======== ==========
Notes to Reconciliation of GAAP Earnings to "Adjusted" Earnings
(1) Adjusted net income and adjusted per share amounts for the six-
month periods ended June 30, 2007 and 2006 eliminate the effects
of charges for share-based employee compensation expense
associated with the application of the Statement of Financial
Accounting Standards, or SFAS, No. 123 (revised 2004), "Share-
Based Payment", or SFAS 123(R). The after tax net impact of
share-based employee compensation expense reduced GAAP net income
by $20.5 million, or $0.05 per diluted share, for the six-month
period ended June 30, 2007 and $25.2 million, or $0.07 per
diluted share, for the six-month period ended June 30, 2006.
Adjusted net income and per share amounts for the six-month
periods ended June 30, 2007 and 2006 also exclude amortization of
acquisition intangibles resulting from the acquisition of Penn T
Limited, charges to record our share of equity losses in
EntreMed, Inc., charges recorded for changes in the estimated
value of our investment in EntreMed, Inc. warrants and
adjustments to the income tax provision to reflect an estimated
pro-forma income tax rate. Also, the six-month period ended June
30, 2006 excludes accelerated depreciation expense related to the
Company's corporate headquarters relocation. See below for a
description of line item adjustments.
Line Item Adjustments:
----------------------------------------------------------------------
(2) To exclude SFAS 123(R) share-based compensation expense totaling
$26,554 and $35,500 for the six-month periods ended June 30, 2007
and 2006, respectively.
(3) To exclude the amortization of acquisition intangibles resulting
from the acquisition of Penn T Limited in the amount of $4,465 in
2007 and $4,233 in 2006 and to exclude accelerated depreciation
expense related to the relocation of the Company's corporate
headquarters in the amount of $202 in 2006.
(4) To exclude the Company's share of equity losses in EntreMed, Inc.
(5) To exclude the charge recorded for changes in the estimated value
of the Company's investment in EntreMed, Inc. warrants.
(6) The adjusted income tax provision reflects an annualized 28.0%
estimated pro-forma income tax rate for 2007 and a 32.0%
estimated pro-forma income tax rate for 2006. The tax rates for
both years was computed by taking the Company's GAAP earnings in
each taxable jurisdiction in which the Company operates and
making adjustments required to arrive at taxable income ("book-
tax adjustments"). Taxable income is increased to add-back the
tax deduction for the exercise of employee stock options. In
jurisdictions where net operating losses are available for carry
forward, taxable income is reduced by the amount of net operating
loss carry forwards that the Company believes will be deductible
and sustainable upon audit. Taxable income, after the adjustments
for employee stock options and net operating loss carryforwards,
is multiplied by the applicable statutory tax rate to arrive at
estimated taxes due. Estimated taxes due are divided by the
Company's adjusted income before taxes to arrive at the pro-forma
income tax rates.
(7) Adjusted per share amounts represent adjusted net income divided
by the GAAP weighted average number of shares outstanding.
Celgene Corporation and Subsidiaries
Consolidated Balance Sheet Data
(Unaudited)
(In thousands, except per share data)
June 30, December 31,
2007 2006
---------- ------------
Cash, cash equivalents & marketable securities $2,321,812 $1,982,220
Total assets 3,148,610 2,735,791
Convertible notes 399,880 399,889
Stockholders' equity 2,287,227 1,976,177
CONTACT: SOURCE: Celgene Corporation |