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| Celgene Reports Record Second Quarter 2008 Product Sales and Operating Profits |
SUMMIT, N.J.--(BUSINESS WIRE)--July 24, 2008-- 2008 Second Quarter Financial Results Year-Over-Year
2008 Financial Outlook Update
Recent Developments/Highlights
2008 Objectives
Celgene Corporation (NASDAQ: CELG) reported non-GAAP net income for the quarter ended June 30, 2008, of $172.7 million, or non-GAAP earnings per diluted share of $0.37. Based on U.S. Generally Accepted Accounting Principles (GAAP), Celgene reported net income of $119.9 million, or diluted earnings per share of $0.26 for the quarter ended June 30, 2008. The second quarter of 2008 included the after-tax impact of share-based employee compensation expense of $21.0 million. GAAP net income for the second quarter of 2007 was $54.9 million, or diluted earnings per share of $0.13, including the after-tax impact of share-based employee compensation expense of $12.7 million. Non-GAAP total revenue was $566.6 million for the quarter ended June 30, 2008, an increase of 63 percent from 2007. GAAP total revenue was $571.5 million. The increase in total revenue was driven by REVLIMID net sales of $325.8 million, an increase of 80 percent over the same period in 2007. Global Thalidomide and VIDAZA net sales reached $131.6 million and $59.7 million, respectively. ALKERAN(R) net sales for the second quarter of 2008 were $20.4 million compared to $18.7 million in the second quarter of 2007. Revenue from Focalin(TM) and the Ritalin(R) family of drugs totaled $26.2 million for the second quarter of 2008 compared to $24.8 million over the same period last year. For the first six months of 2008, non-GAAP total revenue was $1.028 billion, an increase of 60 percent year-over-year. REVLIMID net sales for the first six months of 2008 reached $612.6 million compared to $327.2 million in 2007, an increase of 87 percent year-over-year. Global Thalidomide and VIDAZA net sales for the first six months of 2008 were $245.5 million and $73.5 million, respectively. Celgene posted non-GAAP net income of $332.0 million or non-GAAP earnings per diluted share of $0.73 during the first six months of 2008. For the first six months of 2008, on a U.S. GAAP basis, Celgene reported a net loss of $1.521 billion, or a loss per diluted share of $3.56, compared to GAAP net income of $112.3 million or earnings per diluted share of $0.27 for the first six months of 2007. To support clinical development and to advance global regulatory filings, the Company increased R&D investments in multiple international clinical programs. For the second quarter of 2008 on a non-GAAP basis the Company incurred R&D expenses, which exclude share-based compensation expense, of $133.2 million compared to $87.4 million for the second quarter of 2007. On a GAAP basis, R&D expenses were $144.9 million compared to $90.7 million for the same quarter in 2007. These R&D expenditures continue to support ongoing clinical progress in multiple proprietary development programs for REVLIMID(R) and other IMiDs(R) compounds; for VIDAZA(R), and other epigenetic compounds; amrubicin, our lead compound for small cell lung cancer; apremilast (CC-10004), and other oral anti-inflammatory compounds; our pleiotropic pathway modifier program; as well as our kinase inhibitor and placental-derived stem cell programs. Non-GAAP selling, general and administrative expenses, which exclude share-based compensation expenses, were $162.5 million for the second quarter of 2008 compared to $102.5 million for the second quarter of 2007. On a GAAP basis, selling, general and administrative expenses were $176.3 million for the second quarter in 2008 compared to $110.9 million for the same quarter in 2007. The increase reflects marketing and sales expenses related to ongoing product launch activities for REVLIMID and Global Thalidomide in Europe, Canada and Australia, as well as activities in preparation for the potential relaunch of VIDAZA in the U.S. and launch in Europe. Also, the increased expenses reflect the continued expansion of the international operations of Celgene in over 60 countries. For the quarter ended June 30, 2008, non-GAAP interest and other income, net was $20.3 million compared to $23.6 million in the same period during the prior year. Celgene reported $2.257 billion in cash, cash equivalents, and marketable securities as of June 30, 2008. "This was an extraordinary quarter by all measures underscored by global contribution to solid financial and operational results," said Chairman and Chief Executive Officer Sol J. Barer, Ph.D. "The results of the quarter advance our corporate initiatives to become a premier global biopharmaceutical company." See the attached Reconciliation of GAAP to Non-GAAP Net Income (Loss) 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- and six-months ended June 30, 2008 and 2007. 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. 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. Webcast Celgene will host a conference call to discuss the results and achievements of its second quarter 2008 operating and financial performance on Thursday, July 24th 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, July 24, 2008 until midnight, EDT July 31, 2008. To access the replay, dial 1-888-203-1112 and enter reservation number 2639844. The international dial-in number is: 719-457-0820. The Company's third quarter 2008 financial and operational results will be reported on October 23, 2008. 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 Statements of Operations
(Unaudited)
(In thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ---------------------
2008 2007 2008 2007
---------- ---------- ------------ --------
Net product sales $ 543,165 $ 318,945 $ 974,539 $588,741
Collaborative agreements
and other revenue 2,789 5,100 7,557 9,904
Royalty revenue 25,510 23,862 51,965 42,677
---------- ---------- ------------ --------
Total revenue 571,464 347,907 1,034,061 641,322
Cost of goods sold
(excluding amortization
expense) 75,194 28,698 119,918 50,774
Research and development 144,861 90,733 301,739 170,500
Selling, general and
administrative 176,287 110,940 316,737 215,933
Amortization of acquired
intangible assets 35,167 2,250 45,009 4,465
In-process research and
development - - 1,740,000 -
---------- ---------- ------------ --------
Total costs and
expenses 431,509 232,621 2,523,403 441,672
Operating income (loss) 139,955 115,286 (1,489,342) 199,650
Equity in losses of
affiliated companies 1,343 949 6,423 2,232
Interest and other income,
net 20,304 18,757 48,640 41,774
---------- ---------- ------------ --------
Income (loss) before taxes 158,916 133,094 (1,447,125) 239,192
Income tax provision 39,033 78,224 74,080 126,913
---------- ---------- ------------ --------
Net income (loss) $ 119,883 $ 54,870 $(1,521,205) $112,279
========== ========== ============ ========
Per Common Share:
Net income (loss)
-basic $ 0.27 $ 0.14 $ (3.56) $ 0.30
Net income (loss)
-diluted $ 0.26 $ 0.13 $ (3.56) $ 0.27
Weighted average shares
-basic 442,640 381,086 427,451 379,350
========== ========== ============ ========
Weighted average shares
-diluted 466,687 431,377 427,451 430,346
========== ========== ============ ========
June 30 December
31,
2008 2007
---------- ----------
Balance Sheet Items:
Cash, cash equivalents
& marketable
securities $2,257,272 $2,738,918
Total assets 4,134,891 3,611,284
Convertible notes - 196,555
Stockholders' equity 3,426,801 2,843,944
Celgene Corporation and Subsidiaries
Reconciliation of GAAP to Non-GAAP Net Income (Loss)
(In thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ---------------------
2008 2007 2008 2007
--------- -------- ------------ --------
Net income (loss) as
reported $ 119,883 $ 54,870 $(1,521,205) $112,279
Before tax adjustments:
Net product sales:
Pharmion products to
be divested (1) (4,849) - (6,427) -
Cost of goods sold:
Share-based
compensation
expense (2) 632 408 1,160 797
Pharmion inventory
step-up (3) 8,605 - 11,123 -
Pharmion products
to be divested (1) 1,965 - 2,564 -
Research and
development:
Share-based
compensation
expense (2) 11,685 3,343 21,300 5,945
Upfront
collaboration
payment (4) - - 45,000 -
Selling, general and
administrative:
Share-based
compensation
expense (2) 13,828 8,424 24,961 15,006
Amortization of
acquired intangible
assets (5) 35,167 2,250 45,009 4,465
In-process research
and development (6) - - 1,740,000 -
Equity in losses of
affiliated companies:
Equity in losses
of EntreMed (7) 1,317 1,060 2,058 2,042
Interest and other
income, net
Share-based
compensation
expense (2) - 4,806 - 4,806
Income tax adjustment (8) (15,511) (4,384) (33,553) (5,477)
--------- -------- ------------ --------
Net income as adjusted $ 172,722 $ 70,777 $ 331,990 $139,863
========= ======== ============ ========
Per Common Share as
adjusted:
Net income -basic $ 0.39 $ 0.19 $ 0.78 $ 0.37
Net income -diluted (9)$ 0.37 $ 0.17 $ 0.73 $ 0.33
Explanation of Adjustments:
(1) Exclude sales and cost of sales related to former non-core
Pharmion products to be divested.
(2) Exclude SFAS 123R share-based compensation expense for the second
quarter totaling $26,145 in 2008 and $16,981 in 2007. The after
tax net impact reduced GAAP net income for the second quarter by
$21,011, or $0.05 per diluted share in 2008 and $12,718, or $0.03
per diluted share in 2007. Exclude SFAS 123R share-based
compensation expense for the six-month period totaling $47,421 in
2008 and $26,554 in 2007. The after tax net impact reduced GAAP
net income for the six-month period by $38,502, or $0.09 per
diluted share in 2008 and $20,509, or $0.05 per diluted share in
2007.
(3) Exclude Pharmion inventory step-up adjustment to fair value
resulting from acquisition.
(4) Exclude upfront payment for research and development collaboration
arrangement with Acceleron Pharma, Inc.
(5) Exclude amortization of acquired intangible assets for the second
quarter resulting from the acquisitions of Pharmion of $35,167 in
2008 and Penn T of $2,250 in 2007. Exclude amortization for the
six-month period from the acquisitions of Pharmion and Penn T of
$43,372 and $1,637, respectively, in 2008 and Penn T of $4,465 in
2007.
(6) Exclude the in-process research and development write-off related
to the acquisition of Pharmion.
(7) Exclude the Company's share of equity losses in EntreMed, Inc.
(8) The income tax adjustment reflects the tax effect of the above
adjustments.
(9) Diluted net income per share for the six months ended June 30,
2008 was determined using 454,405 weighted average shares.
Adjusted net income and earnings per share on both a basic and diluted basis have been revised for the three- and six-month periods ended June 30, 2007 to conform to the current year's presentation basis. Amounts reported in the previous year for the three-month period ended June 30, 2007 were $110,435, $0.29 and $0.26, respectively. Amounts reported in the previous year for the six-month period ended June 30, 2007 were $196,066, $0.52 and $0.46, respectively. The current year basis eliminates certain immaterial adjustments and revises the method for determining the tax impact of pro-forma adjustments. The 2007 adjusted income tax provision previously reported reflected a pro-forma annual income tax rate of 28.0%.
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