Celgene Corporation
Apr 28, 2011
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Celgene Reports Record First Quarter 2011 Operating and Financial Results

- Non-GAAPTotal Revenue of $1.11 Billion Increased 40 Percent Y/Y

- Non-GAAP First Quarter Diluted Earnings Per Share of $0.83 Increased 32 Percent Y/Y

- REVLIMID® First Quarter Global Net Product Sales of $738 Million Increased 39 Percent Y/Y

SUMMIT, N.J., Apr 28, 2011 (BUSINESS WIRE) --

Celgene Corporation (NASDAQ: CELG):

2011 First Quarter Financial Results Year-Over-Year

2011 Financial Outlook Update

Recent Developments and Highlights

2011 Selected Clinical/Regulatory Objectives

Hematology

Oncology

Inflammation and Immunology

Celgene Corporation (NASDAQ: CELG) announced non-GAAP (Generally Accepted Accounting Principles) net income of $393 million, or non-GAAP diluted earnings per share of $0.83 for the quarter ended March 31, 2011. Non-GAAP net income for the first quarter of 2010 was $295 million or non-GAAP diluted earnings per share of $0.63. Based on U.S. GAAP, Celgene reported net income of $256 million, or GAAP diluted earnings per share of $0.54 for the quarter ended March 31, 2011. GAAP net income for the first quarter of 2010 was $234 million, or GAAP diluted earnings per share of $0.50.

"The results for the quarter were outstanding and they reflect the ongoing momentum that Celgene is creating as we leverage our business model and position our Company for long-term success," said Bob Hugin, Chief Executive Officer of Celgene Corporation.

Product Sales Performance

Non-GAAP total revenue was a record $1.11 billion for the quarter ended March 31, 2011, an increase of 40 percent over 2010. GAAP total revenue was $1.13 billion for the quarter ended March 31, 2011. The increase in total revenue was driven by global market share gains, geographic expansion and increased duration of therapy of REVLIMID® and VIDAZA®.Net sales of REVLIMID were $738 million, an increase of 39 percent over the same period in 2010. VIDAZA® net sales were $163 million, an increase of 36 percent from 2010. Global THALOMID® (inclusive of Thalidomide Celgene® and Thalidomide Pharmion®) net sales were $85 million, an 18 percent decrease from 2010. ABRAXANE® net sales were $74 million.

Research and Development

For the first quarter of 2011, non-GAAP R&D expenses, which exclude share-based employee compensation expense, non-core R&D operations acquired from Abraxis and an impairment of acquired IPR&D, were $278 million compared to $186 million for the first quarter of 2010. These R&D expenditures continue to support ongoing clinical progress in multiple proprietary development programs for REVLIMID, VIDAZA, ABRAXANE, ISTODAX®, pomalidomide, apremilast and our oral anti-inflammatory compounds; our kinase inhibitor program; our activin inhibitor program with ACE-011; and our cellular therapy programs. On a GAAP basis, R&D expenses were $435 million for the first quarter of 2011 and $205 million in the same period in 2010.

Selling, General, and Administrative

Non-GAAP selling, general and administrative expenses, which exclude share-based employee compensation expense, and expenses from non-core selling, general, and administrative activities acquired from Abraxis, were $270 million for the first quarter of 2011 compared to $188 million for the first quarter of 2010. The increase was primarily due to higher marketing and sales related expenses resulting from ongoing product launch activities, including REVLIMID in Japan, VIDAZA in Europe and ISTODAX in the United States, launch of ABRAXANE, as well as Abraxis integration and higher facilities costs. On a GAAP basis, selling, general and administrative expenses were $302 million for the first quarter of 2011 and $208 million in the same period in 2010.

Interest and Other Income, Net

For the quarter ended March 31, 2011, non-GAAP interest and other income, net, decreased to a slight loss compared to a $17 million gain in the same period in 2010. The decrease was primarily due to interest expense associated with the $1.25 billion in senior notes issued in October 2010, as well as a decrease in interest income earned in the quarter ended March 31, 2011, compared to the same period in 2010.

Cash, Cash Equivalents, and Marketable Securities

Celgene reported $2.43 billion in cash, cash equivalents, and marketable securities as of March 31, 2011. Celgene repurchased 8.5 million shares during the first quarter for approximately $450 million.

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 periods ended March 31, 2011 and 2010. See the attached Reconciliation of Full-Year 2011 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, 2011. 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. We exclude certain items that management does not believe affect our basic operations and 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 first quarter 2011 and its operating and financial performance on April 28, 2011, 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 April 28, 2011, until midnight ET May 5, 2011. To access the replay, in the U.S. dial 800-642-1687; outside the U.S. dial 706-645-9291; and enter reservation number 58936690. The Company's second quarter financial and operational results are expected to be reported in late July.

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 Income
(Unaudited)
(In thousands, except per share data)
           
           
      Three Months Ended
      March 31,
        2011       2010  
           
Net product sales   $ 1,083,609     $ 759,411  
Collaborative agreements and other revenue     9,303       2,380  
Royalty revenue     32,369       29,463  
  Total revenue     1,125,281       791,254  
           
Cost of goods sold (excluding amortization of        
  acquired intangible assets)     127,268       61,915  
Research and development     435,478       204,657  
Selling, general and administrative     302,261       207,978  
Amortization of acquired intangible assets     69,050       41,593  
Acquisition related (gains) charges and restructuring, net     (96,744)       4,862  
  Total costs and expenses     837,313       521,005  
           
Operating income     287,968       270,249  
           
Equity in (gains) losses of affiliated companies     556       (741)  
Interest and other income (expense), net     (604)       17,369  
           
Income before income taxes     286,808       288,359  
           
Income tax provision     31,722       53,917  
           
Net income     255,086       234,442  
           
Non-controlling interest     504       -  
           
Net income attributable to Celgene   $ 255,590     $ 234,442  
           
           
Net income per common share attributable to Celgene:        
  Basic   $ 0.55     $ 0.51  
  Diluted   $ 0.54     $ 0.50  
           
Weighted average shares - basic     465,993       459,914  
           
Weighted average shares - diluted     472,235       467,655  
           
           
      March 31,   December 31,
        2011       2010  
Balance sheet items:        
  Cash, cash equivalents & marketable securities   $ 2,430,619     $ 2,601,301  
  Total assets     9,844,353       10,177,162  
  Long-term debt     1,247,420       1,247,584  
  Total equity     5,878,837       5,995,472  
                 
Celgene Corporation and Subsidiaries
Reconciliation of GAAP to Non-GAAP Net Income
(In thousands, except per share data)
                   
              Three Months Ended
              March 31,
                2011       2010  
                   
Net income attributable to Celgene - GAAP           $ 255,590     $ 234,442  
                   
  Before tax adjustments:                
  Net product sales:                
  Sales of products to be divested:                
  Pharmion     (1)         (1,072)       (2,374)  
  Abraxis     (1)         (15,831)       -  
                   
  Collaborative agreements and other revenue:                
  Abraxis non-core revenues     (2)         (905)       -  
                   
  Cost of goods sold (excluding amortization                
  of acquired intangible assets):                
  Share-based compensation expense     (3)         2,007       1,520  
  Abraxis inventory step-up     (4)         41,667       -  
  Cost of products to be divested:                
  Pharmion     (2)         1,001       4,286  
  Abraxis     (2)         9,549       -  
                   
  Research and development:                
  Share-based compensation expense     (3)         32,592       19,129  
  Abraxis non-core activities     (2)         6,849       -  
  IPR&D impairment     (5)         118,000       -  
                   
  Selling, general and administrative:                
  Share-based compensation expense     (3)         23,094       19,931  
  Abraxis non-core activities     (2)         9,208       -  
                   
  Amortization of acquired intangible assets:                
  Pharmion     (6)         39,937       39,937  
  Gloucester     (6)         6,550       1,656  
  Abraxis     (6)         22,563       -  
                   
  Acquisition related (gains) charges and restructuring, net:                
  Gloucester contingent liability accretion     (7)         6,053       4,862  
  Abraxis acquisition costs     (7)         49       -  
  Abraxis restructuring costs     (7)         2,742       -  
  Change in fair value of contingent value                
  rights issued as part of Abraxis acquisition     (7)         (105,588)       -  
                   
  Equity in (gains) losses of affiliated companies:                
  EntreMed, Inc.     (8)         255       385  
  Abraxis non-core activities     (2)         1,845       -  
                   
  Interest and other income (expense), net:                
  Abraxis non-core activities     (2)         98       -  
                   
  Non-controlling interest:                
  Abraxis non-core activities     (2)         (504)       -  
                   
  Net income tax adjustments     (9)         (62,360)       (29,213)  
Net income attributable to Celgene - non-GAAP           $ 393,389     $ 294,561  
                   
Net income per common share attributable to Celgene -non-GAAP:                
  Basic           $ 0.84     $ 0.64  
  Diluted           $ 0.83     $ 0.63  
 
Celgene Corporation and Subsidiaries
Reconciliation of GAAP to Non-GAAP Net Income
     
     
Explanation of adjustments:
(1)   Exclude sales related to non-core former Pharmion Corp., or Pharmion, and Abraxis BioScience Inc., or Abraxis, products to be divested.
(2)   Exclude the estimated impact of activities arising from the acquisitions of Abraxis that are not related to core nab technology and
    of Pharmion that are planned to be divested, including other miscellaneous revenues, the cost of goods sold for products to be divested as well as
    operating expenses and other costs related to such activities.
(3)   Exclude share-based compensation expense for the first quarter totaling $57,693 in 2011 and $40,580 in 2010. The after
    tax net impact reduced GAAP net income for the first quarter by $42,241, or $0.09 per diluted share in 2011 and $31,373, or $0.07
    per diluted share in 2010.
(4)   Exclude acquisition-related inventory step-up adjustments to fair value which were expensed for Abraxis in 2011.
(5)   IPR&D impairment related to a reduction in the probability of obtaining progression free survival labeling for the treatment of
    non-small cell lung cancer for ABRAXANE in the United States.
(6)   Exclude amortization of acquired intangible assets from the acquisitions of Pharmion, Gloucester Pharmaceuticals, Inc., or Gloucester and Abraxis.
(7)   Exclude acquisition related (gains) charges and restructuring for Gloucester and Abraxis.
(8)   Exclude the Company's share of EntreMed, Inc. equity losses.
(9)   Net income tax adjustments reflects the estimated tax effect of the above adjustments.
         
Celgene Corporation and Subsidiaries
Reconciliation of Full-Year 2011 Projected GAAP to Non-GAAP Net Income
(In thousands, except per share data)
           
           
      Range
      Low   High
           
Projected net income - GAAP   $ 1,160,000     $ 1,208,000  
           
  Before tax adjustments:        
  Total Revenue:        
  Revenue from products to be divested     (26,000)       (24,000)  
           
  Cost of goods sold (excluding amortization        
  of acquired intangible assets):        
  Share-based compensation expense     7,000       6,000  
  Abraxis inventory step-up     90,000       90,000  
  Cost of products to be divested     16,000       14,000  
           
  Research and development:        
  Share-based compensation expense     128,000       116,000  
  Abraxis non-core activities     10,000       9,000  
  IPR&D impairment     118,000       118,000  
           
  Selling, general and administrative:        
  Share-based compensation expense     91,000       83,000  
  Abraxis non-core activities     13,000       12,000  
           
  Amortization of acquired intangible assets     285,000       285,000  
           
  Acquisition related (gains) charges and restructuring, net:        
  Gloucester contingent liability accretion     16,000       16,000  
  Abraxis restructuring costs     6,000       5,000  
  Change in fair value of contingent value        
  rights issued as part of Abraxis acquisition     (106,000)       (106,000)  
           
  Equity in (gains) losses of affiliated companies:        
  Abraxis non-core activities     3,000       2,000  
           
  Non-controlling interest:        
  Abraxis non-core activities     (1,000)       (1,000)  
           
  Net income tax adjustments     (230,000)       (230,000)  
           
Projected net income - non-GAAP   $ 1,580,000     $ 1,603,000  
           
Projected net income per diluted common share - GAAP   $ 2.46     $ 2.56  
           
Projected net income per diluted common share - non-GAAP   $ 3.35     $ 3.40  
           
Projected weighted average diluted shares     471,500       471,500  

SOURCE: Celgene Corporation

Celgene Corporation
Jacqualyn A. Fouse, 908-673-9956
Sr. Vice President and Chief Financial Officer
or
Tim Smith, 908-673-9951
Director
Investor Relations