Celgene Corporation
Apr 29, 2010
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Celgene Reports Record First Quarter 2010 Operating and Financial Results

Record First Quarter Results Driven By Gains in Market Share and Duration of Therapy Across Global Markets

REVLIMID® First Quarter Global Net Product Sales Increased 46% Y/Y

VIDAZA® First Quarter Global Net Product Sales Increased 60% Y/Y Non-GAAP Diluted Earnings Per Share Increased 43% Y/Y

SUMMIT, N.J., Apr 29, 2010 (BUSINESS WIRE) --Celgene Corporation (NASDAQ: CELG):

2010 First Quarter Financial Results Year-Over-Year

2010 Financial Outlook Update

Recent Developments and Highlights

2010 Selected Corporate Objectives

Celgene Corporation (NASDAQ: CELG) announced non-GAAP (Generally Accepted Accounting Principles) net income of $294.6 million, or non-GAAP diluted earnings per share of $0.63 for the quarter ended March 31, 2010. Non-GAAP net income for the first quarter of 2009 was $205.1 million or non-GAAP diluted earnings per share of $0.44. Based on U.S. GAAP, Celgene reported net income of $234.4 million, or diluted earnings per share of $0.50 for the quarter ended March 31, 2010. GAAP net income for the first quarter of 2009 was $162.9 million, or diluted earnings per share of $0.35.

"Our exceptional first quarter operating results represent the collective efforts of our Celgene team worldwide as we not only continue our global expansion, but also continue our efforts to discover and deliver new therapies," said Chairman and Chief Executive Officer Sol J. Barer, Ph.D. "To this end we highlighted the next generations of Celgene therapies at our recent R&D day and we are aggressively investing in this pipeline to ensure sustainable growth."

Product Sales Performance

Non-GAAP total revenue was a record $788.9 million for the quarter ended March 31, 2010, an increase of 31 percent from 2009. GAAP total revenue was $791.3 million for the quarter ended March 31, 2010. The increase in total revenue was driven by global market share gains and increased duration of therapy of REVLIMID®. Net sales of REVLIMID were $530.5 million, an increase of 46 percent over the same period in 2009. Global THALOMID® (inclusive of Thalidomide Celgene and Thalidomide Pharmion) and VIDAZA® net sales were $104.0 million and $120.3 million, respectively. Revenue from Focalin® and the Ritalin® family of drugs totaled $29.7 million for the first quarter of 2010 compared to $27.0 million over the same period in 2009.

Healthcare Reform Legislation

Recently passed U.S. healthcare reform legislation negatively impacted first quarter 2010 revenues by approximately $4 million. The full year 2010 revenue impact is expected to be approximately $35-$40 million. The primary components of the legislation that are expected to impact the Company's business during 2010 include an increase in the Medicaid rebate from 15.1% to 23.1% and an extension of that rebate to Medicaid Managed Care Organizations.

Research and Development

For the first quarter of 2010, non-GAAP R&D expenses, which exclude share-based employee compensation expense, were $185.5 million compared to $166.5 million for the first quarter of 2009. These R&D expenditures continue to support ongoing clinical progress in multiple proprietary development programs for REVLIMID, pomalidomide and other IMiDs® compounds; VIDAZA; ISTODAX®; amrubicin, our lead compound for small cell lung cancer; 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 $204.7 million for the first quarter of 2010 and $181.2 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, were $188.0 million for the first quarter of 2010 compared to $156.6 million for the first quarter of 2009. The increase was primarily due to marketing and sales expenses related to product launch activities of VIDAZA® in Europe and the continued expansion of our international commercial activities. On a GAAP basis, selling, general and administrative expenses were $208.0 million for the first quarter of 2010 and $173.4 million in the same period in 2009.

Interest and Other Income, Net

For the quarter ended March 31, 2010, interest and other income, net, decreased to $17.4 million compared to $49.6 million in the same period in 2009. The decrease was primarily due to reduced net hedging and foreign currency revaluation gains.

Cash, Cash Equivalents, and Marketable Securities

Celgene reported $2.954 billion in cash, cash equivalents, and marketable securities as of March 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 periods ended March 31, 2010 and 2009. See the attached Reconciliation of Full-Year 2010 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, 2010. 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 first quarter 2010 and its operating and financial performance on April 29, 2010, at 9 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 April 29, 2010, until midnight EDT May 6, 2010. To access the replay, in the U.S. dial 800-642-1687; outside the U.S. dial 706-645-9291; and enter reservation number 60959184. The Company's second quarter 2010 financial and operational results will 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 Operations
(Unaudited)
(In thousands, except per share data)
             
             
             
        Three Months Ended
        March 31,
        2010   2009
             
Net product sales       $ 759,411     $

576,232

 

Collaborative agreements and other revenue         2,380       2,244  
Royalty revenue         29,463       26,577  
Total revenue         791,254       605,053  
             

Cost of goods sold (excluding amortization of acquired intangible assets)

        61,915       64,299  
Research and development         204,657       181,248  
Selling, general and administrative         207,978       173,440  
Amortization of acquired intangible assets         41,593       23,625  
Acquisition related charges         4,862       -  
Total costs and expenses         521,005       442,612  
             
Operating income         270,249       162,441  
             
Equity in (gains) losses of affiliated companies         (741)       771  
Interest and other income, net         17,369       49,599  
             
Income before income taxes         288,359       211,269  
             
Income tax provision         53,917       48,386  
             
Net income       $ 234,442     $ 162,883  
             
Net income per common share:            
Basic       $ 0.51     $ 0.35  
Diluted       $ 0.50     $ 0.35  
             
Weighted average shares - basic         459,914       459,583  
             
Weighted average shares - diluted         467,655       468,105  
             
             
        March 31,   December 31,
        2010   2009
Balance sheet items:            
Cash, cash equivalents & marketable securities   $ 2,953,950     $ 2,996,752  
Total assets         5,985,623       5,389,311  
Stockholders' equity         4,764,406       4,394,606  
                     
 
Celgene Corporation and Subsidiaries
Reconciliation of GAAP to Non-GAAP Net Income
(In thousands, except per share data)
             
             
        Three Months Ended
        March 31,
        2010   2009
             
Net income - GAAP       $ 234,442     $ 162,883  
             
Before tax adjustments:            
Net product sales:            
Pharmion products to be divested   (1)     (2,374)       (3,951)  
             

Cost of goods sold (excluding amortization of acquired intangible assets):

           
Share-based compensation expense   (2)     1,520       971  
Pharmion inventory step-up   (3)     -       354  
Pharmion products to be divested   (1)     4,286       2,267  
             
Research and development:            
Share-based compensation expense   (2)     19,129       14,699  
             
Selling, general and administrative:            
Share-based compensation expense   (2)     19,931       16,854  
             
Amortization of acquired intangible assets:            
Pharmion   (4)     39,937       23,625  
Gloucester   (4)     1,656       -  
             
Acquisition related charges - Gloucester   (5)     4,862       -  
             
Equity in losses of affiliated companies - EntreMed   (6)     385       338  
             
Net income tax adjustments   (7)     (29,213)       (12,892)  
Net income - non-GAAP       $ 294,561     $ 205,148  
             
Net income per common share -non-GAAP:            
Basic       $ 0.64     $ 0.45  
Diluted       $ 0.63     $ 0.44  
Explanation of adjustments:
(1)

Exclude sales and costs related to former non-core Pharmion Corp., or Pharmion, products to be divested.

   
(2)

Exclude share-based compensation expense for the first quarter totaling $40,580 in 2010 and $32,524 in 2009. The after tax net impact reduced GAAP net income for the first quarter by $31,373, or $0.07 per diluted share in 2010 and $25,147, or $0.05 per diluted share in 2009.

   
(3) Exclude acquisition-related Pharmion inventory step-up adjustment to fair value expensed during the period.    
(4) Exclude amortization of acquired intangible assets from the acquisitions of Pharmion and Gloucester Pharmaceuticals, Inc., or Gloucester.    
(5) Exclude the accretion of contingent liabilities related to the acquisition of Gloucester.    
(6) Exclude the Company's share of equity losses in EntreMed, Inc.    
(7) Net income tax adjustments reflects the estimated tax effect of the above adjustments.    
       
 
Celgene Corporation and Subsidiaries
Reconciliation of Full-Year 2010 Projected GAAP to Non-GAAP Net Income
(In thousands, except per share data)
         
         
    Range
    Low   High
         
Projected net income - GAAP   $ 834,000     $ 868,000  
         
Before tax adjustments:        
         
Share-based compensation expense     175,000       168,000  
         
Amortization of acquired intangible assets:        
Pharmion     160,000       160,000  
Gloucester     22,000       22,000  
         
Upfront collaboration payments     125,000       120,000  
         
Acquisition related charges - Gloucester     23,000       23,000  
         
Pharmion products to be divested     (7,000)       (7,000)  
         
Net income tax adjustments     (113,000)       (111,000)  
Projected net income - non-GAAP   $ 1,219,000     $ 1,243,000  
         
Projected net income per diluted common share - GAAP   $ 1.78     $ 1.85  
         
Projected net income per diluted common share - non-GAAP   $ 2.60     $ 2.65  
         
Projected weighted average diluted shares     469,000       469,000  

SOURCE: Celgene Corporation

Celgene Corporation
David Gryska, 908-673-9059
Sr. Vice President and Chief Financial Officer
or
Tim Smith, 908-673-9951
Director, Investor Relations