Celgene Reports Record Second Quarter 2011 Operating and Financial Results07:30 EDT Thursday, July 28, 2011 SUMMIT, N.J. (Business Wire) -- Celgene Corporation (NASDAQ: CELG): 2011 Second Quarter Financial Results Year-Over-Year Non-GAAP Total Revenue Increased 38 Percent to $1.18 Billion; GAAP Total Revenue $1.18 Billion Global REVLIMID Net Product Sales Increased 35 Percent to $795 Million Global VIDAZA® Net Product Sales Increased 23 Percent to $162 Million Global ABRAXANE® Net Product Sales Reached $95 Million Non-GAAP Operating Income Increased 33 Percent to $518 Million; GAAP Operating Income $319 Million Non-GAAP Net Income Increased 29 Percent to $417 Million; GAAP Net Income $279 Million Non-GAAP Diluted Earnings Per Share Increased 29 Percent to $0.89; GAAP Diluted Earnings Per Share $0.59 2011 Financial Outlook Update Non-GAAP Total Revenue Expected to Increase Approximately 29 Percent Year-Over-Year to a Range of $4.60 to $4.70 Billion, Up From a Previous Range of $4.45 to $4.55 Billion REVLIMID Net Product sales Anticipated to Increase Approximately 30 Percent Year-Over-Year to a Range of $3.15 to $3.25 Billion, Up From a Previous Range of $3.05 to $3.15 Billion Non-GAAP Diluted Earnings Per Share Expected to Increase Approximately 25 Percent Year-Over-Year to a Range of $3.45 to $3.55, Up From a Previous Range of $3.35 to $3.40 Recent Developments and Highlights Overall Survival Benefit with REVLIMID As Continuous Therapy for Patients with Multiple Myeloma (MM) Achieved In Intergroup Phase III Study CALGB 100104 FDA Granted Accelerated Approval of ISTODAX® As Treatment for Patients with Peripheral T-Cell Lymphoma (PTCL) Who Have Received at Least One Prior Therapy GELA, the Premier Cooperative Group in Adult Lymphoma Research, Chose REVLIMID for Major Study, ”RELEVANCE”, in Newly-Diagnosed Follicular Lymphoma Scheduled to Start 2011 Launched ABRAXANE for Metastatic Breast Cancer in the European Union ABRAXANE Phase III Trial in Melanoma, CA033, Fully Enrolled Phase II Trial Data of REVLIMID in Combination Therapy in Metastatic Castrate-Resistant Prostate Cancer Reported 86% of Patients Achieved a 50% Reduction in PSA Phase II Trial Data of REVLIMID Plus Rituximab for Untreated Indolent B-Cell Lymphoma Reported a 91% Overall Response Rate and 65% Complete Remission Rate and Patients with Follicular Lymphoma Achieved an 85% Complete Remission Rate ACE-011(Sotatercept) Phase II/III Trial in Chemotherapy Induced Anemia in Non-Small Cell Lung Cancer (NSCLC) Initiated Phase I Study of Oral Azacitidine in Myelodysplastic Syndromes, Chronic Myelomonocytic Leukemia, and Acute Myeloid Leukemia Published in Journal of Clinical Oncology2H 2011 Selected ObjectivesHematology Submit REVLIMID Newly Diagnosed Multiple Myeloma Regulatory Filing With FDA Submit REVLIMID del 5q Myelodysplastic Syndromes Regulatory Filing With European Medicines Agency Launch ISTODAX in PTCL in the United States Complete Enrollment of Pivotal Phase II Trials Evaluating REVLIMID in Mantle Cell Lymphoma Initiate Phase II/III Combination Study of REVLIMID and VIDAZA in Patients with Acute Myeloid Leukemia Oncology Submit ABRAXANE NSCLC Supplemental New Drug Application (sNDA) to FDA Complete Enrollment of ABRAXANE Phase III Trial in Pancreatic Cancer Complete Enrollment of ABRAXANE Phase II Trials in Melanoma, Bladder and Ovarian Cancer Complete Enrollment of REVLIMID Phase III Trial in Metastatic Castrate Resistant Prostate Cancer Advance Development Program of TORKi (mTOR Kinase Inhibitor) CC-223 Advance Development Program of Oral Azacitidine in Solid Tumors Inflammation and Immunology Present Phase II Data with Apremilast in Ankylosing Spondylitis Complete Enrollment of Six Phase III Trials Evaluating Apremilast in Psoriatic Arthritis (n = 2,000), and in Moderate-to-Severe Psoriasis (n = 1,200) Advance Phase II Apremilast Trial in Rheumatoid Arthritis Advance Development Program of Cellular Therapy PDA-001 in Crohn's Disease, Multiple Sclerosis, Rheumatoid Arthritis, and Other Diseases Advance Tanzisertib (CC-930) Phase II Study in Idiopathic Pulmonary Fibrosis Advance Development of Pomalidomide in Systemic Sclerosis Celgene Corporation (NASDAQ: CELG) announced non-GAAP (Generally Accepted Accounting Principles) net income of $417 million, or non-GAAP diluted earnings per share of $0.89, for the quarter ended June 30, 2011. Non-GAAP net income for the second quarter of 2010 was $323 million, or non-GAAP diluted earnings per share of $0.69. Based on U.S. GAAP, Celgene reported net income attributable to Celgene of $279 million, or GAAP diluted earnings per share of $0.59, for the quarter ended June 30, 2011. GAAP net income for the second quarter of 2010 was $155 million, or GAAP diluted earnings per share of $0.33. Celgene posted non-GAAP net income of $811 million, or non-GAAP diluted earnings per share of $1.72, for the first six months of 2011 as compared to non-GAAP net income of $618 million or non-GAAP diluted earnings per share of $1.32 in 2010. On a GAAP basis, Celgene reported net income attributable to Celgene of $535 million, or diluted earnings per share of $1.14 for the first six months of 2011, compared to GAAP net income of $390 million, or diluted earnings per share of $0.83 in 2010. “The quarterly results were outstanding, and reflect the therapeutic value of our novel therapies for patients worldwide,” said Bob Hugin, Chief Executive Officer of Celgene Corporation. “We are focused on operational excellence to leverage our global potential and drive both near and long-term industry-leading growth and profitability.” Product Sales Performance Non-GAAP total revenue was a record $1.18 billion for the quarter ended June 30, 2011, an increase of 38 percent over 2010. GAAP total revenue was $1.18 billion for the quarter ended June 30, 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 $795 million, an increase of 35 percent over the same period in 2010. VIDAZA net sales were $162 million, an increase of 23 percent from 2010. Global THALOMID® (inclusive of Thalidomide Celgene® and Thalidomide Pharmion®) net sales were $88 million, a decrease of 10 percent from 2010. Global ABRAXANE net sales were $95 million. For the first six months of 2011, non-GAAP total revenue was a record $2.28 billion, an increase of 39 percent over the same period in 2010. GAAP total revenue was $2.31 billion for the first six months of 2011. REVLIMID net sales for the first six months of 2011 reached $1.53 billion, an increase of 37 percent over $1.12 billion for the same period in 2010. VIDAZA net sales for the first six months of 2011 reached $325 million, an increase of 29 percent over the same period in 2010. THALOMID net sales for the first six months of 2011 were $174 million. Global ABRAXANE net sales for the first six months of 2011 were $169 million. Research and Development For the second 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 upfront payment for an R&D collaboration agreement, were $306 million compared to $202 million for the second quarter of 2010. The increase was primarily due to support of ongoing clinical progress in multiple proprietary development programs in hematology, oncology, inflammation and immunology as well as multiple initiatives in our discovery program, peak enrollment in multiple late stage, large clinical trials and a $7 million milestone payment in the second quarter of 2011. On a GAAP basis, R&D expenses were $372 million for the second quarter of 2011 and $343 million for 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 $274 million for the second quarter of 2011 compared to $197 million for the second quarter of 2010. The increase was primarily due to higher marketing and sales related expenses resulting from multiple international medical meetings; ongoing product launch activities, including REVLIMID in Japan, VIDAZA in Europe, ISTODAX in the United States, and launch of ABRAXANE in the United States and Europe; as well as Abraxis ongoing operations and integration costs. On a GAAP basis, selling, general and administrative expenses were $306 million for the second quarter of 2011 and $219 million for the same period in 2010. Interest and Other Income, Net Non-GAAP interest and other income, net, was a net expense of $5 million for the second quarter of 2011, compared with a net benefit of $5 million for the second quarter of 2010, primarily due to interest expense associated with the $1.25 billion in senior notes issued in October 2010. Cash, Cash Equivalents, and Marketable Securities Cash, cash equivalents, and marketable securities totaled $2.79 billion as of June 30, 2011. Celgene repurchased 4.1 million shares during the second quarter for approximately $239 million. Conference Call and Webcast Information Celgene will host a conference call to discuss the results and achievements of its second quarter 2011 and its operating and financial performance on July 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 July 28, 2011, until midnight ET August 4, 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 79273910. The company's third quarter financial and operational results are expected to be reported in late October. 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 StatementsThis 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 non-GAAP 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 non-GAAP measures 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 non-GAAP Net Income for explanations 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 six-month periods ended June 30, 2011 and 2010 and for the projected amounts for the year ending December 31, 2011.Celgene Corporation and SubsidiariesCondensed Consolidated Statements of Income(Unaudited)(In thousands, except per share data)               Three-Month Periods EndedJune 30, Six-Month Periods EndedJune 30,   2011     2010     2011     2010     Net product sales $ 1,154,328 $ 823,097 $ 2,237,937 $ 1,582,508 Collaborative agreements and other revenue 3,399 2,544 12,702 4,924 Royalty revenue   25,428     27,051     57,797     56,514   Total revenue   1,183,155     852,692     2,308,436     1,643,946     Cost of goods sold (excluding amortization of acquired intangible assets) 126,443 67,993 253,711 129,908 Research and development 371,520 342,761 806,998 547,418 Selling, general and administrative 305,643 219,262 607,904 427,241 Amortization of acquired intangible assets 70,087 47,068 139,137 88,661 Acquisition related (gains) charges and restructuring, net   (9,477 )   7,836     (106,221 )   12,698   Total costs and expenses   864,216     684,920     1,701,529     1,205,926     Operating income 318,939 167,772 606,907 438,020   Equity in (gains) losses of affiliated companies (1,251 ) 103 (695 ) (638 ) Interest and other income (expense), net   (1,779 )   4,610     (2,383 )   21,979     Income before income taxes 318,411 172,279 605,219 460,637   Income tax provision   39,203     16,927     70,925     70,843     Net income 279,208 155,352 534,294 389,794   Non-controlling interest   190     -     694     -     Net income attributable to Celgene $ 279,398   $ 155,352   $ 534,988   $ 389,794       Net income per common share attributable to Celgene: Basic $ 0.60 $ 0.34 $ 1.15 $ 0.85 Diluted $ 0.59 $ 0.33 $ 1.14 $ 0.83   Weighted average shares - basic   462,625     460,309     464,300     460,112     Weighted average shares - diluted   469,962     467,425     470,958     467,557       June 30,2011 December 31,2010 Balance sheet items: Cash, cash equivalents & marketable securities $ 2,789,111 $ 2,601,301 Total assets 10,051,611 10,177,162 Long-term debt 1,259,646 1,247,584 Total equity 5,994,687 5,995,472         Celgene Corporation and SubsidiariesReconciliation of GAAP to Non-GAAP Net Income(In thousands, except per share data)   Three-Month Periods EndedJune 30, Six-Month Periods EndedJune 30,   2011     2010     2011     2010     Net income attributable to Celgene - GAAP $ 279,398 $ 155,352 $ 534,988 $ 389,794   Before tax adjustments: Net product sales: Sales of products to be divested: Pharmion (1) (1,131 ) (2,301 ) (2,203 ) (4,675 ) Abraxis (1) (5,434 ) - (21,265 ) -   Collaborative agreements and other revenue: Abraxis non-core revenues (2) (809 ) - (1,714 ) -   Cost of goods sold (excluding amortization of acquired intangible assets): Share-based compensation expense (3) 2,420 1,602 4,427 3,121 Abraxis inventory step-up (4) 41,666 - 83,333 - Cost of products to be divested: Pharmion (2) 1,128 4,397 2,129 8,683 Abraxis (2) 3,602 - 13,151 -   Research and development: Share-based compensation expense (3) 22,880 20,023 55,472 39,153 Abraxis non-core activities (2) 1,879 - 8,728 - IPR&D impairment (5) - - 118,000 - Upfront collaboration payments (6) 40,982 121,176 40,982 121,176   Selling, general and administrative: Share-based compensation expense (3) 25,613 22,185 48,707 42,116 Abraxis non-core activities (2) 5,857 - 15,065 -   Amortization of acquired intangible assets: Pharmion (7) 39,938 39,991 79,875 79,928 Gloucester (7) 7,917 7,077 14,467 8,733 Abraxis (7) 22,232 - 44,795 -   Acquisition related (gains) charges and restructuring, net: Gloucester contingent liability accretion (8) 6,108 5,892 12,161 10,754 Abraxis acquisition costs (8) (375 ) 1,944 (326 ) 1,944 Abraxis restructuring costs (8) 2,533 - 5,275 - Change in fair value of contingent value rights issued as part of Abraxis acquisition (8) (17,743 ) - (123,331 ) -   Equity in (gains) losses of affiliated companies: EntreMed, Inc. (9) 234 56 489 442 Abraxis non-core activities (2) 87 - 1,932 -   Interest and other income (expense), net: Abraxis non-core activities (2) 6 - 104 - Gain on divestment of non-core activities (10) (2,931 ) - (2,931 ) -   Non-controlling interest: Abraxis non-core activities (2) (190 ) - (694 ) -   Net income tax adjustments (11)   (58,660 )   (54,130 )   (121,020 )   (83,344 ) Net income - non-GAAP $ 417,207   $ 323,264   $ 810,596   $ 617,825     Net income per common share - non-GAAP: Basic $ 0.90 $ 0.70 $ 1.75 $ 1.34 Diluted $ 0.89 $ 0.69 $ 1.72 $ 1.32   Celgene Corporation and SubsidiariesReconciliation 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 totaling $50,913 for the three-month period ended June 30, 2011 and $43,810 for the three-month period ended June 30, 2010. The after tax net impact reduced GAAP net income for the three-month period ended June 30, 2011 by $38,496, or $0.08 per diluted share and for the three-month period ended June 30, 2010 by $33,850, or $0.07 per diluted share. Exclude share-based compensation expense totaling $108,606 for the six-month period ended June 30, 2011 and $84,390 for the six-month period ended June 30, 2010.The after tax net impact reduced GAAP net income for the six-month period ended June 30, 2011 by $80,736, or $0.17 per diluted share and for the six-month period ended June 30, 2010 by $65,223, or $0.14 per diluted share. (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 upfront payments for research and development collaboration arrangements with the Institute for Advanced Health for both the three-monthand six-month periods in 2011 and with Agios Pharmaceuticals, Inc. for both the three-month and six-month periods in 2010. (7) Exclude amortization of acquired intangible assets from the acquisitions of Pharmion, Gloucester Pharmaceuticals, Inc., or Gloucester and Abraxis. (8) Exclude acquisition related (gains) charges and restructuring for Gloucester and Abraxis. (9) Exclude the Company's share of EntreMed, Inc. equity losses. (10) Exclude gain recognized on divestment of non-core activities obtained in the acquisition of Abraxis. (11) Net income tax adjustments reflects the estimated tax effect of the above adjustments.   Celgene Corporation and SubsidiariesReconciliation of Full-Year 2011 Projected GAAP to Non-GAAP Net Income(In thousands, except per share data)       Range Low High   Projected net income - GAAP $ 1,189,000 $ 1,251,000   Before tax adjustments: Total Revenue: Revenue from products to be divested (28,000 ) (25,000 )   Cost of goods sold (excluding amortization of acquired intangible assets): Share-based compensation expense 10,000 9,000 Abraxis inventory step-up 90,000 90,000 Cost of products to be divested 18,000 17,000   Research and development: Share-based compensation expense 98,000 89,000 Abraxis non-core activities 9,000 9,000 IPR&D impairment 118,000 118,000 Upfront collaboration payments 41,000 41,000   Selling, general and administrative: Share-based compensation expense 110,000 100,000 Abraxis non-core activities 15,000 15,000   Amortization of acquired intangible assets 288,000 288,000   Acquisition related (gains) charges and restructuring, net: Gloucester contingent liability accretion 16,000 16,000 Abraxis restructuring costs 6,000 6,000 Change in fair value of contingent value rights issued as part of Abraxis acquisition (123,000 ) (123,000 )   Other non-operating items (2,000 ) (2,000 )   Net income tax adjustments (233,000 ) (230,000 )     Projected net income - non-GAAP $ 1,622,000   $ 1,669,000     Projected net income per diluted common share - GAAP $ 2.53 $ 2.66   Projected net income per diluted common share - non-GAAP $ 3.45 $ 3.55   Projected weighted average diluted shares   470,000     470,000   Celgene CorporationJacqualyn A. Fouse, 908-673-9956Sr. Vice President and Chief Financial OfficerorCelgene CorporationBrian Gill, 908-673-9530Vice President, Corporate Communications