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Press release from Business Wire

Celgene Reports Third Quarter 2012 Operating and Financial Results

<p class='bwalignc'> <b>—</b> <i>Total Revenue of $1.42 Billion and Net Product Sales of $1.39 Billion, Increased 14 Percent Y/Y</i> </p> <p class='bwalignc'> <b>—</b> <i>Adjusted (Non-GAAP) Diluted Earnings per Share of $1.29, Increased 26 Percent Y/Y; GAAP Diluted Earnings per Share of $0.97 Increased 20 Percent Y/Y</i> </p> <p class='bwalignc'> <b>—</b> <i>Raising 2012 Adjusted Earnings Guidance; Narrowing Revenue Guidance</i> </p> <p class='bwalignc'> <b>—</b> <i>Over 150 Data Presentations Highlighting Our Products and Science at Major Medical Meetings Expected by Year-end</i> </p>

Thursday, October 25, 2012

Celgene Reports Third Quarter 2012 Operating and Financial Results07:32 EDT Thursday, October 25, 2012 SUMMIT, N.J. (Business Wire) -- Celgene Corporation (NASDAQ: CELG) reported total revenue of $1,419 million for the third quarter of 2012, a 14 percent increase from the same period in 2011. Adjusted (Non-GAAP) net income for the third quarter of 2012 increased 20 percent to $561 million compared to $469 million in the third quarter of 2011. For the same period, adjusted diluted earnings per share increased 26 percent to $1.29 from $1.02. Based on U.S. GAAP (Generally Accepted Accounting Principles), Celgene reported third quarter 2012 net income of $424 million or $0.97 per diluted share. For the third quarter of 2011, net income was $373 million or $0.81 per diluted share. “During the third quarter we generated excellent financial results and advanced major initiatives across our businesses that will serve as the foundation for future growth,” said Bob Hugin, Chairman and Chief Executive Officer of Celgene Corporation. “Positive results from late-stage studies for ABRAXANE, apremilast and pomalidomide create a solid path toward significant expansion of our portfolio and vital new options for patients in the future.” Raising 2012 Earnings Outlook; Narrowing Revenue Guidance Adjusted diluted EPS is expected to increase approximately 29 percent year-over-year to a range of $4.85 to$4.90, up from a previous range of $4.80 to$4.85. Total revenue is expected to increase approximately 14 percent year-over-year to a range of $5,450 to $5,550 million. The previous range was $5,400 to $5,600 million. REVLIMID® net product sales are expected to increase approximately 18 percent year-over-year to a range of $3,750 to $3,800 million. The previous range was $3,750 to $3,850 million. Third Quarter 2012 Financial Highlights Unless otherwise stated, all comparisons are for the third quarter of 2012 compared to the third quarter of 2011. The adjusted operating expenses presented below exclude share-based employee compensation expense, upfront collaboration payments, non-core operations acquired from Abraxis and IPR&D impairments. Net Product Sales Performance Net product sales increased 14% to $1,388 million and reflect volume growth in the U.S., Europe and Japan. U.S. and international net product sales of $775 million and $613 million increased 11 percent and 19 percent, respectively. REVLIMID sales for the third quarter increased 18 percent to $970 million and were driven by overall market share gains, increased duration of therapy and geographic expansion. U.S. sales of $547 million and international sales of $423 million increased 17 percent and 20 percent, respectively. ABRAXANE® sales for the third quarter were $106 million, a 6 percent decrease. U.S. sales of $81 million declined 14 percent. In 2011, sales were positively impacted by generic paclitaxel shortages in the U.S. International sales of $25 million increased 29 percent due to volume growth and distributor purchasing patterns. VIDAZA® third quarter sales increased 15 percent to $220 million. U.S. sales increased 13 percent to $83 million. International sales increased 16 percent to $137 million, driven by gains in market share. THALOMID® sales were $75 million in the third quarter, representing a 10 percent decrease. Research and Development (R&D) Adjusted R&D expenses were $328 million for the third quarter compared to $307 million for the third quarter of 2011. The change is primarily due to increased clinical costs associated with advancing the mid- to late-stage pipeline and the absorption of the Avila Therapeutics acquisition which closed in March 2012. On a GAAP basis, R&D expenses were $442 million for the third quarter of 2012 and $357 million for the same period in 2011. Selling, General and Administrative (SG&A) Adjusted SG&A expenses were $323 million for the third quarter of 2012 compared to $276 million for the third quarter of 2011. The change was primarily due to increased ABRAXANE and REVLIMID marketing, in addition to pomalidomide pre-launch activities. On a GAAP basis, SG&A expenses were $355 million for the third quarter of 2012 compared to $303 million for the same period in 2011. Cash, Cash Equivalents and Marketable Securities Operating cash flow was $1,528 million for the first nine months of 2012, an increase of 14 percent compared to 2011. Under our authorized stock repurchase program, we purchased approximately 10.8 million shares during the third quarter of 2012 at a total cost of approximately $744 million. As of September 30, 2012, we had $2,417 million remaining under the existing stock repurchase program. During the third quarter of 2012, we issued an aggregate of $1,500 million in five- and ten-year bonds. We ended the third quarter with $3,833 million in cash and marketable securities. Products & Pipeline: We are conducting over 25 late-stage clinical trials. REVLIMID is in several phase III trials across a range of hematological malignancies that include newly diagnosed multiple myeloma and maintenance, lymphomas, chronic lymphocytic leukemia, and non deletion 5q myelodysplastic syndromes (MDS). Phase III trials with pomalidomide in relapsed refractory multiple myeloma and myelofibrosis, in addition to VIDAZA for acute myeloid leukemia, are also underway. In solid tumors, we are evaluating ABRAXANE in phase III trials for metastatic melanoma and pancreatic cancer. Our lead product candidate in Inflammation & Immunology, apremilast, is being evaluated in a broad phase III program for psoriatic arthritis, psoriasis, and ankylosing spondylitis. Beyond our phase III programs is a growing early-to-mid-stage pipeline of novel therapies addressing significant unmet medical needs, including CC-292 (BTK inhibitor), CC-223 (dual TORK inhibitor), CC-115 (dual TORK/DNA PK inhibitor), CC-122 (pleiotropic pathway modulator), CC-486 (oral azacitidine), CC-220 (anti-inflammatory), PDA-001 (cellular therapies), in addition to partnered molecules ACE-11 (ActR fusion protein), ACE-536 (GDF trap), and EPZ-5676 (DOT1L inhibitor). Key Updates:Hematology REVLIMID: We are advancing REVLIMID into new hematological malignancies. The pivotal phase II EMERGE trial in relapsed refractory mantle cell lymphoma achieved the endpoints outlined in the Special Protocol Assessment (SPA). Based upon these results, we will submit a supplemental new drug application (sNDA) to the Food and Drug Administration (FDA) by year-end. Presentation of the EMERGE data are expected at the American Society of Hematology (ASH) meeting in December. During the first half of 2013, we expect a decision by the Committee for Medicinal Products for Human Use (CHMP) on REVLIMID for MDS deletion 5q and to complete enrollment in the phase III ORIGIN (CLL-008) trial in chronic lymphocytic leukemia. Pomalidomide: The international phase III trial (MM-003) comparing pomalidomide with low-dose dexamethasone to high-dose dexamethasone in relapsed refractory multiple myeloma patients recently achieved the primary endpoint of progression-free survival, in addition to the key secondary endpoint of overall survival. The Phase I/II dose-ranging trial (MM-005) evaluating the combination of pomalidomide, dexamethasone and bortezomib continues with data expected at this year's ASH meeting. The regulatory reviews of pomalidomide for relapsed refractory multiple myeloma are progressing with an FDA decision expected in February 2013 and a CHMP decision expected during the second half of 2013. Oncology ABRAXANE: We are executing on the strategy to expand the label for ABRAXANE beyond the initial indication of metastatic breast cancer. In October, the FDA approved the second indication of ABRAXANE 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. The phase III trial evaluating ABRAXANE in metastatic melanoma achieved its primary endpoint of demonstrating a statistically significant improvement in progression-free survival compared to dacarbazine. Data will be presented at the Society for Melanoma Research meeting on November 11. Future regulatory and clinical strategies are being evaluated. Results from the phase III trial in metastatic pancreatic cancer are expected in the fourth quarter of 2012. This trial randomized over 840 patients to receive gemcitabine with or without ABRAXANE. The primary endpoint is overall survival. If successful, this trial would support a sNDA submission in 2013. Inflammation & Immunology Apremilast: The PALACE program (PALACE-1, 2 and 3) demonstrated a robust and statistically significant clinical benefit in previously treated psoriatic arthritis (PsA) patients. Overall safety was consistent with previous experience in the phase II program with an improved tolerability profile. We anticipate presenting the PALACE-1 data at a medical meeting before year-end. Results from PALACE-4 in treatment-naïve psoriatic arthritis are expected during the first half of 2013. The phase II trial (BCT-001) in patients with Behçet's disease achieved its primary endpoint of demonstrating a statistically significant improvement in the number of oral ulcers at day 85 between apremilast and placebo. Behçet's disease is a rare chronic inflammatory disorder with high unmet medical need that is characterized by recurrent oral and genital ulcers. We are currently reviewing future regulatory and clinical strategies in light of these data. Results from the phase III ESTEEM program (ESTEEM 1 and 2) in moderate-to-severe psoriasis are expected by year-end and early 2013. We plan to submit a NDA for PsA in the first quarter of 2013 followed by a sNDA for moderate-to-severe psoriasis in the second half of 2013 pending positive results from the ESTEEM program. A combined Marketing Authorization Application (MAA) submission to the European Medicines Agency (EMA) for PsA and moderate-to-severe psoriasis is planned for the second half of 2013. Third Quarter 2012 Conference Call and Webcast Information We are hosting a conference call to discuss the third quarter 2012 operating and financial performance on Thursday, October 25, 2012, at 9:00 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 October 25, 2012, until midnight ET November 1, 2012. To access the replay, in the U.S. dial 800-585-8367; international dial 404-537-3406; and Participant Passcode 38153623. Our fourth quarter 2012 financial and operational results are expected to be reported in late January 2013. 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. About ABRAXANE In the U.S., ABRAXANE for Injectable Suspension (paclitaxel protein-bound particles for injectable suspension) is indicated for the treatment of breast cancer after failure of combination chemotherapy formetastatic disease or relapse within six months of adjuvant chemotherapy. Prior therapy should have included an anthracycline unless clinically contraindicated. In addition, ABRAXANE is 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 VIDAZA In the U.S., VIDAZA is indicated for treatment of patients with the following French-American-British (FAB) myelodysplastic syndrome subtypes: refractory anemia (RA) or refractory anemia with ringed sideroblasts (RARS) (if accompanied by neutropenia or thrombocytopenia or requiring transfusions), refractory anemia with excess blasts (RAEB), refractory anemia with excess blasts in transformation (RAEB-T), and chronic myelomonocytic leukemia (CMMoL). 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 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. 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 nine-month periods ended September 30, 2012 and 2011, and for the projected amounts for the year ending December 31, 2012.     Celgene Corporation and SubsidiariesCondensed Consolidated Statements of Income(Unaudited)(In thousands, except per share data)                       Three-Month Periods Ended September 30, Nine-Month Periods Ended September 30, 2012 2011 2012 2011   Net product sales $ 1,388,013 $ 1,219,118 $ 3,970,102 $ 3,457,055 Other revenue   31,238     30,619     89,201     101,118   Total revenue   1,419,251     1,249,737     4,059,303     3,558,173     Cost of goods sold (excluding amortization of acquired intangible assets) 74,622 94,645 218,994 348,356 Research and development 441,595 356,839 1,250,737 1,163,837 Selling, general and administrative 354,644 303,303 1,003,449 911,207 Amortization of acquired intangible assets 46,157 75,044 132,065 214,181 Acquisition related (gains) charges and restructuring, net   649     (11,209 )   28,864     (117,430 ) Total costs and expenses   917,667     818,622     2,634,109     2,520,151     Operating income 501,584 431,115 1,425,194 1,038,022   Other income (expense), net   (25,082 )   (18,474 )   (34,006 )   (20,162 )   Income before income taxes 476,502 412,641 1,391,188 1,017,860   Income tax provision   52,347     39,657     198,123     110,582     Net income 424,155 372,984 1,193,065 907,278   Non-controlling interest   -     -     -     694     Net income attributable to Celgene $ 424,155   $ 372,984   $ 1,193,065   $ 907,972       Net income per share attributable to Celgene: Basic $ 0.99 $ 0.83 $ 2.75 $ 1.97 Diluted $ 0.97 $ 0.81 $ 2.69 $ 1.94   Weighted average shares: Basic 427,209 452,019 434,062 460,161 Diluted 436,272 459,530 443,432 467,052     September 30, December 31, 2012 2011 Balance sheet items: Cash, cash equivalents & marketable securities $ 3,832,936 $ 2,648,154 Total assets 11,608,827 10,005,910 Short-term borrowings 324,895 526,684 Long-term debt 2,769,313 1,275,585 Total stockholders' equity 5,728,710 5,512,727     Celgene Corporation and SubsidiariesReconciliation of GAAP to Adjusted Net Income(In thousands, except per share data)                     Three-Month Periods Ended September 30, Nine-Month Periods Ended September 30, 2012 2011 2012 2011   Net income attributable to Celgene - GAAP $ 424,155 $ 372,984 $ 1,193,065 $ 907,972   Before tax adjustments: Total revenues: Sales of products exited or to be exited (1) - (1,468 ) - (24,936 ) Abraxis non-core other revenues (2) - - - (1,714 )   Cost of goods sold (excluding amortization of acquired intangible assets): Share-based compensation expense (3) 3,314 2,627 9,173 7,054 Abraxis inventory step-up (4) - 6,945 - 90,278 Products exited or to be exited (2) (13 ) 4,008 (1,994 ) 19,288   Research and development: Share-based compensation expense (3) 27,274 24,527 75,858 79,999 Abraxis non-core activities (2) - - - 8,728 IPR&D impairments (5) 31,202 - 53,353 118,000 Upfront collaboration payments (6) 55,000 25,000 130,000 65,982   Selling, general and administrative: Share-based compensation expense (3) 32,119 27,198 86,010 75,905 Abraxis non-core activities (2) - - - 15,065   Amortization of acquired intangible assets (7) 46,157 75,044 132,065 214,181   Acquisition related (gains) charges and restructuring, net: Change in fair value of contingent consideration (8) 649 (11,377 ) 26,287 (122,547 ) Acquisition and restructuring costs (8) - 168 2,577 5,117   Other income (expense), net EntreMed, Inc. equity method loss (9) - 53 - 542 Abraxis non-core activities (2) - - - 2,036 Gain on divestment of non-core activities (10) - - - (2,931 )   Non-controlling interest -Abraxis (2) - - - (694 )   Net income tax adjustments (11)   (58,566 )   (56,455 )   (116,122 )   (177,475 )   Net income attributable to Celgene - Adjusted $ 561,291   $ 469,254   $ 1,590,272   $ 1,279,850     Net income per share attributable to Celgene -Adjusted: Basic $ 1.31 $ 1.04 $ 3.66 $ 2.78 Diluted $ 1.29 $ 1.02 $ 3.59 $ 2.74   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 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 aa Adjusted net income and adjusted earnings per share amounts for the three- and nine-month periods ended September 30, 2012 and 2011, and for the projected amounts for the year ending December 31, 2012.     Celgene Corporation and SubsidiariesReconciliation of GAAP to Adjusted Net Income   Explanation of adjustments: (1) Exclude sales related to non-core former Pharmion Corp., or Pharmion, products to be exited and Abraxis BioScience Inc., or Abraxis, products that have been exited. (2) Exclude the estimated impact of activities arising from the acquisition of Abraxis that are not related to core nab technology and were divested in 2011, including other miscellaneous revenues, cost of goods sold (excluding amortization of acquired intangible assets), operating expenses and other costs related to such activities. Exclude the net (benefit) cost of activities arising from the acquisition of Pharmion that are planned to be exited. (3) Exclude share-based compensation expense totaling $62,707 for the three-month period ended September 30, 2012 and $54,352 for the three-month period ended September 30, 2011. Exclude share-based compensation expense totaling $171,041 for the nine-month period ended September 30, 2012 and $162,958 for the nine-month period ended September 30, 2011. (4) Exclude acquisition-related inventory step-up adjustments to fair value which were expensed for Abraxis in 2011. (5) Exclude in-process research and development, or IPR&D, impairment for the three-and nine-month periods ended September 30, 2012 related to obtaining approval for ISTODAX for the treatment of peripheral T-cell lymphoma, or PTCL, in the European Union. Exclude IPR&D impairment for the nine-month period ended September 30, 2011 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. (7) Exclude amortization of intangible assets acquired from the acquisitions of Pharmion, Gloucester Pharmaceuticals, Inc., or Gloucester, Abraxis and Celgene Avilomics Research, Inc. (formerly known as Avila Therapeutics), or Avila. (8) Exclude acquisition related charges and restructuring related to Gloucester, Abraxis and Avila. (9) Exclude the Company's share of EntreMed, Inc. equity losses in 2011. (10) Exclude the 2011 gain recognized on divestment of non-core activities obtained in the acquisition of Abraxis. (11) 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 changes in tax law, acquisition related matters, an adjustment to the amount of unrecognized tax benefits and deferred taxes on unremitted foreign earnings.                 Celgene Corporation and SubsidiariesReconciliation of Full-Year 2012 Projected GAAP to Adjusted Net Income(In thousands, except per share data)   Range   Low High   Projected net income - GAAP $ 1,622,000 $ 1,674,000   Before tax adjustments: Cost of goods sold (excluding amortization of acquired intangible assets): Share-based compensation expense 13,000 11,000   Research and development: Share-based compensation expense 104,000 93,000 IPR&D impairments 53,000 53,000 Upfront collaboration payments 165,000 160,000   Selling, general and administrative: Share-based compensation expense 115,000 104,000   Amortization of acquired intangible assets 200,000 194,000   Acquisition related (gains) charges and restructuring, net: Change in fair value of contingent consideration 29,000 29,000 Acquisition and restructuring costs 3,000 3,000   Net income tax adjustments   (160,000 )   (155,000 )   Projected net income - Adjusted $ 2,144,000   $ 2,166,000     Projected net income per diluted common share - GAAP $ 3.67 $ 3.79   Projected net income per diluted common share - Adjusted $ 4.85 $ 4.90   Projected weighted average diluted shares 442,000 442,000   Celgene CorporationInvestors:Patrick E. Flanigan III, 908-673-9969Vice PresidentInvestor RelationsorMedia:Brian P. Gill, 908-673-9530Vice PresidentCorporate Communications