Analyst Conference Summary

conference date: January 31, 2008 @ 6:00 AM Pacific Time
for quarter ending: December 31, 2007 (4th quarter)

Forward-looking statements

Overview: Another outstanding quarter of growth. Now merger issues loom.

Basic data:

Revenues were $414.6 million, up 18% sequentially from $349.9 million and up 51% from $275.0 million year-earlier.

Net income was $75.3 million, up 94% sequentially from $38.8 million and more than tripling $22.9 million year-earlier

EPS (earnings per share) were $0.18, up 100% sequentially from $0.09 and tripling the $0.06 earned year-earlier.

Guidance:

Excluding Pharmion acquisition:

Full 2008 revenues of about $1.8 billion, up 30% from 2007. Revlimid will provide $1.25 billion, up 60%. Adjusted (non-GAAP) earnings range of $1.50 to $1.55. $900 million cash generation expected in 2008.

Conference Highlights:

Revlimid sales were up 100% y/y to $247.4 million.
Thalomid sales increased to $112.6 million.
Alkeran sales were $20 million versus $15.4 million year-earlier.
Focalin and Ritalin sales were $28.4 million versus $19.6 million year-earlier.

Product sales were $380.5 million, royalties and collaboration $34.0 million.

Non-GAAP numbers: operating income $156.5 million, up 97% y/y. Net income $132.8 million, up 78% y/y. EPS $0.31, up 72%. Excludes (compared to GAAP numbers) $17.2 million of stock-based compensation; $2.3 million Penn T Limited amortization; EntreMed losses; taxes of $37.5 million.

Pharmion acquisition to close in March 2008; cost is $2.9 billion in cash and stock. Believes combination "makes exceptional strategic sense." See Pharmion pipeline.

Revlimid has received marketing authorization in Australia for multiple myeloma and in Canada for deletion 5q MDS. But rejected in Europe for deletion 5q MDS; will re-apply. Revlimid was commercialized in several countries. ECOG Phase III trial for Revlimid with dexamethasone for newly diagnosed multiple myeloma showed great 87% two year survival rate. Other Phase III studies showed overall survival advantage for patients previously treated for multiple myeloma. Celgene has many other trials for Revlimid and other therapies underway.

Operating expenses were increased to support increased development and sales. Cost of goods sold were $45.4 million, R&D 98.5 million, selling general and administrative were $133.2 million, for total expenses of $277.1 million. Leaving GAAP operating income of $137.5 million. Interest income was $28.1 million. Tax provision was $89.2 million, but there was a non-GAAP benefit of $37.5 million.

Product Gross margin was 90.1%, up 4.7% from year-earlier. Expect to improve to 91% in 2008.

Cash and equivalents ended at $2.74 billion, up $209.2 million in the quarter.

Revlimid sales outside U.S. began in June 2007, so non-U.S. revenue growth rate is high and new countries will continue to come online for some time.

Q&A:

Gross margins flattish, why? Elkerin contract has adjustments built in for costs, which was the main hit on gross margins.

SG&A ramp up? Mostly just getting ready for global expansion. Did make some contributions for co-pays to non-profits.

Guidance is for Celgene alone, not Pharmion. CLL and RLL results are striking and we tend to move forward aggressively, so higher R&D expense.

Revlimid duration in U.S. is much better than Thalomid. Median is now above 8 months. It is the perfect drug for long-term therapy. Pushing hard for growth in U.S. for myeloma. Don't expect much U.S. growth for MDS.

Market share dynamics in Europe? In Europe typically they start a new drug in salvage, then move towards newly diagnosed cases. Physicians have more leeway in Europe because of reimbursement policies. So we might see 10% market share for frontline, but we are focusing on 2nd line.

Compendia issues? Reimbursement is a big question, especially in the U.S. Lots of issues going on with Medicare. We are happy with physicians who want to prescribe for newly diagnosed patients. Medicare does give full coverage under Part D today, so we think we are in good shape.

R&D plans? We intend to invest aggressively in major opportunities, but also in early-stage compounds. Our pipeline is so big we can't go into it in detail here. We don't have guidelines that hamstring or restrict us; we are motivated for long-term growth.

Revlimid market share? In U.S. 3rd and 4th line 40% market share 2nd line 30%.

4047? Most potent imid we've found so far. An order of magnitude more potent than Revlimid.

Seasonality? We had concerns when Medicare Part D started because of donut hole. The negative effects of first two Decembers was less than we expected. In fact vacations effect sales more.

Japan Revlimid market potential? Second largest cancer market in world. For multiple myeloma has higher prevalence than U.S. with good reimbursement policies. Expect a rapid uptake when we get approval.

OpenIcon Analyst Conference Summaries Main Page

Celgene Investor Relations page

My Celgene main page

Search

More Analyst Conference Pages: