Celgene Corporation
Jul 25, 2013
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Celgene Reports Second Quarter 2013 Operating and Financial Results

— Net Product Sales of $1.56 Billion, Increased 17 Percent Y/Y


— Adjusted Diluted Earnings Per Share of $1.52, Increased 25 Percent Y/Y; GAAP Diluted Earnings Per Share of $1.11, Increased 35 Percent Y/Y


— 2013 Adjusted Diluted Earnings Per Share and Net Product Sales Guidance Raised

SUMMIT, N.J.--(BUSINESS WIRE)--Jul. 25, 2013-- Celgene Corporation (NASDAQ: CELG) reported net product sales of $1,564 million for the second quarter of 2013, a 17 percent increase from the same period in 2012. Adjusted net income for the second quarter of 2013 increased 20 percent to $653 million compared to $545 million in the second quarter of 2012. Second quarter total revenue was $1,599 million compared to $1,367 million in second quarter of 2012. For the same period, adjusted diluted earnings per share (EPS) increased 25 percent to $1.52 from $1.22.

Based on U.S. GAAP (Generally Accepted Accounting Principles), Celgene reported second quarter of 2013 net income of $478 million or $1.11 per diluted share. For the second quarter of 2012, net income was $367 million or $0.82 per diluted share.

“In the second quarter, the Celgene team delivered outstanding results,” said Bob Hugin, Chairman and Chief Executive Officer of Celgene Corporation. “The positive outcome of the MM-020 trial along with other clinical and regulatory milestones met in the quarter represent significant advances for patients worldwide and support our commitment to our long-term growth outlook.”

2013 Adjusted Diluted EPS, Net Product Sales and REVLIMID® Net Product Sales Guidance Raised

Second Quarter 2013 Financial Highlights

Unless otherwise stated, all comparisons are for the second quarter of 2013 compared to the second quarter of 2012. The adjusted operating expenses presented below exclude share-based employee compensation expense, IPR&D impairments, if any, and upfront collaboration payments. See the attached Reconciliation of GAAP to Adjusted Net Income for further information.

Net Product Sales Performance

Research and Development (R&D)

Adjusted R&D expenses were $345 million compared to $349 million for the second quarter of 2012. On a GAAP basis, R&D expenses were $458 million for the second quarter of 2013 and $447 million for the same period in 2012. GAAP R&D expenses increased primarily due to higher 2013 upfront payments for collaborations.

Selling, General, and Administrative (SG&A)

Adjusted SG&A expenses were $384 million for the second quarter of 2013 compared to $296 million for the second quarter of 2012. The change was primarily due to the POMALYST® launch, pre-launch activities for ABRAXANE® in pancreatic cancer and investments in the Inflammation & Immunology franchise. On a GAAP basis, SG&A expenses were $418 million for the second quarter of 2013 compared to $323 million for the same period in 2012.

Cash, Cash Equivalents, and Marketable Securities

Operating cash flow was $737 million in the second quarter of 2013. During the quarter, the Celgene Board of Directors authorized the repurchase of up to an additional $3,000 million of the Company’s common stock. Year-to-date, Celgene has repurchased approximately $1,840 million of its common stock and exhausted all previous stock repurchase authorizations. Celgene purchased approximately 6.9 million shares during the second quarter of 2013 at a total cost of approximately $834 million. Celgene ended the quarter with $4,081 million in cash and marketable securities.

Key Accomplishments in First Half of 2013

Hematology

Oncology

Inflammation & Immunology

Key Milestones Expected During the Second Half of 2013

Hematology

Oncology

Inflammation & Immunology

Second Quarter 2013 Conference Call and Webcast Information

Celgene will host a conference call to discuss the second quarter of 2013 operating and financial performance on Thursday, July 25, 2013, 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 ET July 25, 2013, until midnight ET August 1, 2013. To access the replay, in the U.S. dial (855) 859-2056; international dial (404) 537-3406; and Participant Pass code 22906674. The Company’s third quarter of 2013 financial and operational results are expected to be reported on October 24.

About REVLIMID®

In the U.S., REVLIMID® (lenalidomide) in combination with dexamethasone is indicated for the treatment of multiple myeloma (MM) patients who have received at least one prior therapy. REVLIMID® is indicated for patients with transfusion-dependent anemia due to Low- or Intermediate-1-risk myelodysplastic syndromes (MDS) associated with a deletion 5q cytogenetic abnormality with or without additional cytogenetic abnormalities. REVLIMID® is approved in the U.S. for the treatment of patients with mantle cell lymphoma (MCL) whose disease has relapsed or progressed after two prior therapies, one of which included bortezomib.

About ABRAXANE®

In the U.S., ABRAXANE® for Injectable Suspension (paclitaxel protein-bound particles for injectable suspension) (albumin-bound) is indicated for the treatment of breast cancer after failure of combination chemotherapy for metastatic disease or relapse within six month of adjuvant chemotherapy. Prior therapy should have included an anthracycline unless clinically contraindicated.

ABRAXANE® is also indicated for the first-line treatment of locally advanced or metastatic non-small cell lung cancer, in combination with carboplatin, in patients who are not candidates for curative surgery or radiation therapy.

About POMALYST®

In the U.S., POMALYST® (pomalidomide) is indicated for patients with multiple myeloma who have received at least two prior therapies including lenalidomide and bortezomib and have demonstrated disease progression on or within 60 days of completion of the last therapy. Approval is based on response rate. Clinical benefit, such as improvement in survival or symptoms, has not been verified.

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.

Forward-Looking Statements

This press release contains forward-looking statements, which are generally statements that are not historical facts. Forward-looking statements can be identified by the words "expects," "anticipates," "believes," "intends," "estimates," "plans," "will," “outlook” and similar expressions. Forward-looking statements are based on management’s current plans, estimates, assumptions and projections, and speak only as of the date they are made. We undertake no obligation to update any forward-looking statement in light of new information or future events, except as otherwise required by law. Forward-looking statements involve inherent risks and uncertainties, most of which are difficult to predict and are generally beyond our control. Actual results or outcomes may differ materially from those implied by the forward-looking statements as a result of the impact of a number of factors, many of which are discussed in more detail in our Annual Report on Form 10-K and our other reports filed with the Securities and Exchange Commission.

In addition to financial information prepared in accordance with U.S. GAAP, this press release also contains adjusted financial measures that we believe provide investors and management with supplemental information relating to operating performance and trends that facilitate comparisons between periods and with respect to projected information. These adjusted financial measures are non-GAAP and should be considered in addition to, but not as a substitute for, the information prepared in accordance with U.S. GAAP. We typically exclude certain GAAP items that management does not believe affect our basic operations and that do not meet the GAAP definition of unusual or non-recurring items. Other companies may define these measures in different ways. See the attached Reconciliations of GAAP to Adjusted Net Income for explanations of the amounts excluded and included to arrive at Adjusted Net Income and Adjusted Earnings per Share amounts for the three-and six-month periods ended June 30, 2013 and 2012, and for the projected amounts for the year ending December 31, 2013.

 
Celgene Corporation and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited)
(In millions, except per share data)
                               
                               
          Three-Month Periods Ended       Six-Month Periods Ended
          June 30,       June 30,
          2013     2012       2013     2012
                               
Net product sales         $ 1,564.1       $ 1,336.6         $ 2,993.4       $ 2,582.1  
Other revenue           34.9         30.2           70.2         58.0  
Total revenue           1,599.0         1,366.8           3,063.6         2,640.1  
                               
Cost of goods sold (excluding amortization of                              
acquired intangible assets)           80.9         71.9           161.4         144.4  
Research and development           458.1         447.2           910.5         809.2  
Selling, general and administrative           418.1         323.0           787.1         648.8  
Amortization of acquired intangible assets           65.7         44.1           131.4         85.9  
Acquisition related charges and restructuring, net           12.5         39.3           45.7         28.2  
Total costs and expenses           1,035.3         925.5           2,036.1         1,716.5  
                               
Operating income           563.7         441.3           1,027.5         923.6  
                               
Other income (expense), net           (5.9)         (0.6)           (21.3)         (8.9)  
                               
Income before income taxes           557.8         440.7           1,006.2         914.7  
                               
Income tax provision           79.7         73.3           143.2         145.8  
                               
Net income         $ 478.1       $ 367.4         $ 863.0       $ 768.9  
                               
                               
Net income per common share:                              
Basic         $ 1.15       $ 0.84         $ 2.07       $ 1.76  
Diluted         $ 1.11       $ 0.82         $ 2.00       $ 1.72  
                               
Weighted average shares:                              
Basic           414.1         436.7           416.0         437.5  
Diluted           429.3         445.4           431.0         447.1  
                               
                               
          June 30,     December 31,              
          2013     2012              
Balance sheet items:                              
Cash, cash equivalents & marketable securities         $ 4,081.4       $ 3,900.3                
Total assets           11,963.7         11,734.3                
Short-term borrowings           887.8         308.5                
Long-term debt           2,730.4         2,771.3                
Total stockholders' equity           5,407.1         5,694.5                
                               
 
Celgene Corporation and Subsidiaries
Reconciliation of GAAP to Adjusted Net Income
(In millions, except per share data)
                               
          Three-Month Periods Ended       Six-Month Periods Ended
          June 30,       June 30,
          2013     2012       2013     2012
                               
Net income - GAAP         $ 478.1       $ 367.4         $ 863.0       $ 768.9  
                               
Before tax adjustments:                              
Cost of goods sold (excluding amortization                              
of acquired intangible assets):                              
Products exited or to be exited -Pharmion     (1)       -         (0.6)           -         (2.0)  
Share-based compensation expense     (2)       3.7         3.0           6.5         5.9  
                               
Research and development:                              
Share-based compensation expense     (2)       31.8         23.6           58.8         48.6  
IPR&D impairments     (3)       -         -           -         22.2  
Upfront collaboration payments     (4)       81.8         75.0           177.5         75.0  
                               
Selling, general and administrative:                              
Share-based compensation expense     (2)       34.3         27.1           70.1         53.9  
                               
Amortization of acquired intangible assets     (5)       65.7         44.1           131.4         85.9  
                               
Acquisition related charges and restructuring, net:                              
Change in fair value of contingent consideration     (6)       12.5         38.1           45.7         25.6  
Acquisition and restructuring costs     (6)       -         1.2           -         2.6  
                               
Net income tax adjustments     (7)       (55.0)         (34.3)           (108.4)         (57.6)  
Net income - Adjusted         $ 652.9       $ 544.6         $ 1,244.6       $ 1,029.0  
                               
Net income per common share - Adjusted                              
Basic         $ 1.58       $ 1.25         $ 2.99       $ 2.35  
Diluted         $ 1.52       $ 1.22         $ 2.89       $ 2.30  
                               

In addition to financial information prepared in accordance with U.S. GAAP, this press release also contains adjusted financial measures that we believe provide investors and management with supplemental information relating to operating performance and trends that facilitate comparisons between periods and with respect to projected information. These adjusted measures are non-GAAP and should be considered in addition to, but not as a substitute for, the information prepared in accordance with U.S. GAAP. We typically exclude certain GAAP items that management does not believe affect our basic operations and that do not meet the GAAP definition of unusual or non-recurring items. Other companies may define these measures in different ways.

Explanation of adjustments:
(1)     Exclude the net (benefit) cost of activities arising from the acquisition of Pharmion Corp. (Pharmion) that are planned to be exited.
(2)    

Exclude share-based compensation expense totaling $69.8 for the three-month period ended June 30, 2013 and $53.7 for the three-month period ended June 30, 2012. Exclude share-based compensation expense totaling $135.4 for the six-month period ended June 30, 2013 and $108.4 for the six-month period ended June 30, 2012.

(3)     Exclude in-process research and development impairments recorded as a result of changes in estimated probability-weighted cash flows.
(4)     Exclude upfront payments for research and development collaboration arrangements.
(5)    

Exclude amortization of intangible assets acquired in the acquisitions of Pharmion, Gloucester Pharmaceuticals, Inc. (Gloucester), Abraxis BioScience Inc. (Abraxis) and Celgene Avilomics Research, Inc. (formerly known as Avila Therapeutics)(Avila).

(6)    

Exclude acquisition related charges and restructuring, including changes in the fair value of contingent consideration, related to the acquisitions of Gloucester, Abraxis and Avila.

(7)    

Net income tax adjustments reflect the estimated tax effect of the above adjustments and the impact of certain other non-operating tax adjustments, including one-time effects of acquisition related matters, adjustments to the amount of unrecognized tax benefits and deferred taxes on unremitted foreign earnings.

       
 
Celgene Corporation and Subsidiaries
Reconciliation of Full-Year 2013 Projected GAAP to Adjusted Net Income
(In millions, except per share data)
                   
                   
            Range
            Low     High
                   
Projected net income - GAAP       (1)     $ 1,792.8       $ 1,855.0  
                   
Before tax adjustments:                  
Cost of goods sold (excluding amortization                  
of acquired intangible assets):                  
Share-based compensation expense             12.6         12.2  
                   
Research and development:                  
Share-based compensation expense             123.2         118.4  
Upfront collaboration payments             267.5         267.5  
                   
Selling, general and administrative:                  
Share-based compensation expense             163.9         157.5  
                   
Amortization of acquired intangible assets             265.4         262.8  
                   
Acquisition related charges and restructuring, net:                  
Change in fair value of contingent consideration             63.0         63.0  
                   
Net income tax adjustments             (194.4)         (199.4)  
                   
Projected net income - Adjusted           $ 2,494.0       $ 2,537.0  
                   
Projected net income per diluted common share - GAAP           $ 4.17       $ 4.31  
                   
Projected net income per diluted common share - Adjusted           $ 5.80       $ 5.90  
                   
Projected weighted average diluted shares             430.0         430.0  
                   
(1)    

Our projected earnings do not include the effect of any business combinations, collaboration agreements, asset acquisitions, intangible asset impairments, or changes in the fair value of our CVRs issued as part of the acquisition of Abraxis that may occur after the date of this press release.

 

Source: Celgene Corporation

Celgene Corporation
Investors:
Patrick E. Flanigan III, 908-673-9969
Vice President
Investor Relations
or
Media:
Brian P. Gill, 908-673-9530
Vice President
Corporate Communications