Analyst Conference Summary


conference date: February 1, 2007 @ 6:00 AM Pacific Time
for quarter ending: December 31, 2006 (4th quarter)

Forward-looking statements

Overview: Revenues continued to climb rapidly.

Basic data:

Revenues of $275 million, up 84.1% over Q4 2005.

Net income was $22.9 million or $0.06 per share, which included $17.9 million in shared-based compensation expense. Non-GAAP net income was $74.5 million or $0.18 per share.

$2 billion in cash and marketable securities, up from $1.3 billion year-earlier, mostly from proceeds of $1.0 billion stock offering.


2007 full year increase in revenue of 45% to $1.3 billion and adjusted (non-GAAP) EPS to $1.00.

Conference Highlights:

Increased revenues driven by sales of Revlimid ($123.8 million, up over 20% sequentially), Thalomid ($110.2 million) and Alkeran ($15.4 million). Focalin and Ritalin family of drugs had sales of $19.6 million.

Reiterated previously-announced drug study results and pipeline situtation.

Product sales totalled $251.9 million, collaborative revenue $5.3 million, royalty revenue $17.8 million, for total revenue of $275 million.

GAAP cost of goods sold $34.7 million; R&D $80.3 million; SG&A (selling, general and admin) $100.2 million. Operating income was $59.7 million. Interest income $17.2 million. Income before taxes $73.9 million. Income tax provision was $51 million.

29% estimated 2006 tax rate.

High expenses in quarter were to support builds for coming launches. Increased R&D for studies over a broad range of cancers. Myeloma market gains for Revlimid. Positioned for strong growth in 2007 due to numerous positive reports of high response rates in multiple trials. Patient support programs were expanded to help navigate reimbursement issues. Confident of European approval and preparing for marketing and distribution.


EAP roll off to commercial? Most rolled over in Q3, 60-65%. Rest in Q4. Just a few in Q1.

Split of Revlimid presciptions? Q4 percentages 65% myeloma, 30% MDS, 5% other, a slight shift towards myeloma.

After European approval will have better sense for timing and pricing, which may affect 2007 revenue projections. Expects to hear around end of Q1.

One time events in Q4? In SG&A there was the European build. Contributions to non-profits accelerated in Q4, and Q1 tends to be highest for that. Tax rate in 2006 used pro-forma because actual tax rate would have been negligible. Expect high 20s in 2007.

How much of Europe in 2007 guidance? In 2006 it was between 5 and 10%. Depends on timing. Sounded like not expecting to be much more significant during 2007.

CLL (chronic lymphocytic leukemia) data? Nothing out until 2008, has 300 patients.

European buildout complete? Not complete. Some specific countries are behind others.

Newly diagnosed myeloma trials? A major priority, but too early to give guidance.

CLL and NHL reimbursement? Prior authorizations are required, works hard to get reimbursements to support physician decisions. Appears they are getting reimbursement.

Price increases for 2007? Does not give guidance. Did increase Revlimid for inflation early in 2006. Examine prices on regular basis, but has no plans.

Inventory? Quarter to quarter increase higher if inventory included. When MDS approved in Q4 2005, only certain doses were approved. In July 2006 15 & 20 mg approved. In Q3 $5 to $10 million was due to inventory loading. Retail pharmacy side set up for minimal inventory with overnight shipping.

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Disclaimer: Our analyst summaries may include both our condensations of statements made by company representatives and our own analysis. They are not covered by any warranty. We cannot guarantee anything said by company representatives is true. We try not to make errors, but it is possible. Before making or terminating an investment you should always verify any factual basis of your decision.

Copyright 2007 William P. Meyers