Celgene Corporation
Jan 27, 2011
PDF
Add to Briefcase

Celgene Reports Record Non-GAAP Fourth Quarter and Full Year 2010 Operating and Financial Results

- Record Results Driven By Gains in Market Share and Duration of Therapy, Geographic Expansion and Reimbursement Approvals

- 2010 Non-GAAP Total Revenue Increased 34 Percent Y/Y

- 2010 Non-GAAP Diluted Earnings Per Share Increased 35 Percent Y/Y

SUMMIT, N.J., Jan 27, 2011 (BUSINESS WIRE) --

Celgene Corporation (NASDAQ: CELG):

 

2010 Fourth Quarter Financial Results Year-Over-Year

2010 Full Year Financial Results Year-Over-Year

2011 Selected Clinical/Regulatory Objectives

Hematology

Oncology

Inflammation and Immunology

Celgene Corporation (NASDAQ: CELG) announced non-GAAP (Generally Accepted Accounting Principles) net income of $347.6 million, or non-GAAP diluted earnings per share of $0.73 for the quarter ended December 31, 2010. Non-GAAP net income for the fourth quarter of 2009 was $290.3 million or non-GAAP diluted earnings per share of $0.62. Based on U.S. GAAP, Celgene reported net income of $213.6 million, or diluted earnings per share of $0.45 for the quarter ended December 31, 2010. GAAP net income for the fourth quarter of 2009 was $254.2 million, or diluted earnings per share of $0.54.

Celgene posted non-GAAP net income of $1.315 billion or non-GAAP diluted earnings per share of $2.80 in 2010 as compared to non-GAAP net income of $971.3 million and non-GAAP diluted earnings per share of $2.08 in 2009. On a GAAP basis, Celgene reported net income of $884.5 million, or diluted earnings per share of $1.88 in 2010, compared to GAAP net income of $776.7 million, or diluted earnings per share of $1.66 in 2009.

"The 2010 record financial and operational results represent excellence in execution by all of our global teams," said Bob Hugin, Celgene's Chief Executive Officer. "This operating momentum, combined with our continued investment in R&D, positions us well for sustained growth in both the near and long term."

Product Sales Performance

Non-GAAP total revenue was a record $1.048 billion for the quarter ended December 31, 2010, an increase of 38 percent from 2009. GAAP total revenue was $1.066 billion for the quarter ended December 31, 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 $707.5 million, an increase of 42 percent over the same period in 2009. VIDAZA net sales were $140.4 million, an increase of 20 percent over the same period in 2009. Global THALOMID® (inclusive of Thalidomide Celgene® and Thalidomide Pharmion®) sales were $91.3 million, a 15 percent decrease over the same period in 2009. ABRAXANE® net sales, since the October 15, 2010 closing of the Abraxis BioScience, Inc. acquisition, were $71.4 million. Revenue from Focalin® and the Ritalin® family of drugs totaled $27.2 million for the fourth quarter of 2010 compared to $27.6 million over the same period in 2009.

For the full year of 2010, non-GAAP total revenue was a record $3.595 billion, an increase of 34 percent year-over-year. GAAP total revenue was $3.620 billion for 2010. Total non-GAAP net product sales reached a record $3.479 billion, an increase of 36 percent year-over-year. REVLIMID net sales for the full year reached $2.466 billion compared to $1.706 billion in 2009. Global 2010 VIDAZA and THALOMID net sales for the full year were $534.0 million and $387.3 million, respectively. Revenue from Focalin and the Ritalin family of drugs totaled $106.6 million for 2010, an increase of two percent over 2009.

Research and Development

For the fourth quarter of 2010, non-GAAP R&D expenses, which exclude share-based employee compensation expense and estimated non-core R&D operations acquired from Abraxis, were $298.5 million compared to $181.8 million for the fourth quarter of 2009. These R&D expenditures continue to support ongoing clinical progress in multiple proprietary development programs for REVLIMID, VIDAZA, ABRAXANE, ISTODAX® and pomalidomide; 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 $327.5 million for the fourth quarter of 2010 and $201.7 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, and estimated expenses from non-core selling, general, and administrative activities acquired from Abraxis, were $252.4 million for the fourth quarter of 2010 compared to $193.3 million for the fourth quarter of 2009. 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, activities acquired from Abraxis, and higher facilities costs. On a GAAP basis, selling, general and administrative expenses were $295.1 million for the fourth quarter of 2010 and $211.6 million in the same period in 2009.

Interest and Other Income, Net

For the quarter ended December 31, 2010, non-GAAP interest and other income, net, decreased to a loss of $8.0 million compared to a $22.0 million gain in the same period in 2009. The decrease was primarily due to a reduction in interest and investment income, interest expense associated with the $1.25 billion in senior notes issued in October 2010 as well as a decrease in net hedging and foreign currency revaluation gains in the quarter ended December 31, 2010, compared to the same period in 2009.

Cash, Cash Equivalents, and Marketable Securities

Celgene reported $2.601 billion in cash, cash equivalents, and marketable securities as of December 31, 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 twelve-month periods ended December 31, 2010 and 2009. 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 fourth quarter and full year 2010 operating and financial performance on January 27, 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 ET January 27, 2011, until midnight ET February 3, 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 35819129. The Company's first quarter 2011 financial and operational results are expected to be reported in late April.

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

(In thousands, except per share data)

                                                     
                                                     
                                                     
                                  Three Months Ended     Twelve Months Ended
                                  December 31,     December 31,
                                  2010       2009     2010     2009
                                                     
Net product sales                               $ 1,034,874       $ 725,001     $ 3,503,038     $ 2,567,354
Collaborative agreements and other revenue                                 3,375    

 

  6,764       10,540       13,743
Royalty revenue                                 28,039         29,272       106,767       108,796
  Total revenue                                 1,066,288         761,037       3,620,345       2,689,893
                                                     
Cost of goods sold (excluding amortization of                                                  
  acquired intangible assets)                                 114,321         49,030       307,771       216,289
Research and development                                 327,530         201,738       1,128,495       794,848
Selling, general and administrative                                 295,112         211,564       950,634       753,827
Amortization of acquired intangible assets                                 68,030         16,000       203,231       83,403
Acquisition related charges and restructuring, net                                 28,536         -       48,729       -
  Total costs and expenses                                 833,529         478,332       2,638,860       1,848,367
                                                     
Operating income                                 232,759         282,705       981,485       841,526
                                                     
Equity in losses of affiliated companies                                 1,182         159       1,928       1,103
Interest and other income (expense), net                                 (5,220)         22,023       37,599       135,280
                                                     
Income before income taxes                                 226,357         304,569       1,017,156       975,703
                                                     
Income tax provision                                 13,120         50,354       132,974       198,956
                                                     
Net income                                 213,237         254,215       884,182       776,747
                                                     
Non-controlling interest                                 320         -       320       -
                                                     
Net income attributable to Celgene                               $ 213,557       $ 254,215     $ 884,502     $ 776,747
                                                     
                                                     
Net income per common share attributable to Celgene:                                                  
  Basic                               $ 0.46       $ 0.55     $ 1.91     $ 1.69
  Diluted                               $ 0.45       $ 0.54     $ 1.88     $ 1.66
                                                     
Weighted average shares - basic                                 469,244         459,223       462,298       459,304
                                                     
Weighted average shares - diluted                                 476,709         466,965       469,517       467,354
                                                     
                                                     
                                  December 31,            
                                  2010     2009            
Balance sheet items:                                                  
  Cash, cash equivalents & marketable securities                               $ 2,601,301       $ 2,996,752            
  Total assets                                 10,079,399         5,389,311            
  Long-term debt                                 1,247,584         -            
  Stockholders' equity                                 5,976,964         4,394,606            
 
Celgene Corporation and Subsidiaries
Reconciliation of GAAP to Non-GAAP Net Income
(In thousands, except per share data)
                                                             
                                                             
                                          Three Months Ended     Twelve Months Ended
                                          December 31,     December 31,
                                          2010     2009     2010     2009
                                                             
Net income attributable to Celgene - GAAP                                       $ 213,557       $ 254,215       $ 884,502       $ 776,747  
                                                             
  Before tax adjustments:                                                          
  Net product sales:                                                          
  Sales of products to be divested:                                                          
  Pharmion                                 (1)         (1,511)         (3,286)         (8,234)         (12,654)  
  Abraxis                                 (1)         (15,864)         -         (15,864)         -  
                                                             
  Collaborative agreements and other revenue:                                                          
  Abraxis non-core revenues                                 (2)         (943)         -         (943)         -  
                                                             
  Cost of goods sold (excluding amortization                                                          
  of acquired intangible assets):                                                          
  Share-based compensation expense                                 (3)         1,867         1,140         6,776         4,444  
  Abraxis and Pharmion inventory step-up                                 (4)         34,722         -         34,722         354  
  Cost of products to be divested:                                                          
  Pharmion                                 (2)         1,569         2,866         9,783         8,262  
  Abraxis                                 (2)         9,298         -         9,298         -  
  EntreMed intercompany royalty                                 (5)         (202)         (388)         (283)         (585)  
                                                             
  Research and development:                                                          
  Share-based compensation expense                                 (3)         21,725         19,910         82,097         64,751  
  Upfront collaboration payments                                 (6)         -         -         121,176         34,500  
  Abraxis non-core activities                                 (2)         7,338         -         7,338         -  
                                                             
  Selling, general and administrative:                                                          
  Share-based compensation expense                                 (3)         27,647         18,240         93,924         74,624  
  Abraxis non-core activities                                 (2)         15,089         -         15,089         -  
                                                             
  Amortization of acquired intangible assets:                                                          
  Pharmion                                 (7)         39,832         16,000         159,750         83,403  
  Gloucester                                 (7)         6,550         -         21,833         -  
  Abraxis                                 (7)         21,648         -         21,648         -  
                                                             
  Acquisition related charges and restructuring, net:                        
  Gloucester contingent liability accretion                                 (8)         5,997         -         22,694         -  
  Abraxis acquisition costs                                 (8)         16,907         -         20,403         -  
  Abraxis restructuring costs                                 (8)         18,614         -         18,614         -  
  Change in fair value of contingent value                                                          
  rights issued as part of Abraxis acquisition                                 (8)         (12,982)         -         (12,982)         -  
                                                             
  Equity in losses of affiliated companies:                                                          
  EntreMed, Inc.                                 (5)         352         469         1,295         1,449  
  Abraxis non-core activities                                 (2)         1,307         -         1,307         -  
                                                             
  Interest and other income (expense), net:                                                          
  Abraxis non-core activities                                 (2)         (2,774)         -         (2,774)         -  
                                                             
  Non-controlling interest:                                                          
  Abraxis non-core activities                                 (2)         (320)         -         (320)         -  
                                                             
  Net income tax adjustments                                 (9)         (61,830)         (18,854)         (175,553)         (63,973)  
Net income attributable to Celgene - non-GAAP                                       $ 347,593       $ 290,312       $ 1,315,296       $ 971,322  
                                                             
Net income per common share attributable to Celgene -non-GAAP:                  
  Basic                                       $ 0.74       $ 0.63       $ 2.85       $ 2.11  
  Diluted                                       $ 0.73       $ 0.62       $ 2.80       $ 2.08  
 
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 fourth quarter totaling $51,239 in 2010 and $39,290 in 2009. The after
    tax net impact reduced GAAP net income for the fourth quarter by $38,797, or $0.08 per diluted share in 2010 and $30,371, or $0.07
   

per diluted share in 2009. Exclude share-based compensation expense for the twelve-month period totaling $182,797 in 2010

    and $143,819 in 2009. The after tax net impact reduced GAAP net income for the twelve-month period by $140,448, or $0.30 per
    diluted share in 2010 and $111,419, or $0.24 per diluted share in 2009.
(4)   Exclude acquisition-related inventory step-up adjustments to fair value which were expensed for Abraxis in 2010 and Pharmion in 2009.
(5)   Exclude the Company's share of EntreMed, Inc. THALOMID royalties and equity losses.
(6)   Exclude upfront payments for research and development collaboration arrangements with Agios Pharmaceuticals, Inc. for the twelve-month
    period in 2010 and GlobeImmune, Inc. and Array BioPharma Inc. of $30,000 and $4,500, respectively for the twelve-month period in 2009.
(7)   Exclude amortization of acquired intangible assets from the acquisitions of Pharmion, Gloucester Pharmaceuticals, Inc., or Gloucester and Abraxis.
(8)   Exclude acquisition and restructuring related charges for Gloucester and Abraxis.
(9)   Net income tax adjustments reflects the estimated tax effect of the above adjustments.

SOURCE: Celgene Corporation

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