conference date: January 29, 2009 @ 6:00 AM Pacific Time
for quarter ending: December 31, 2008 (4th quarter)
Overview: Rapid revenue growth continues. GAAP net income hit by $425 million purchase of all future royalty payments for VIDAZA, but non-GAAP net income was good.
Basic data (GAAP):
Revenues were $628 million, up 6% sequentially from $592 million and up % from $415 million year-earlier.
Net income was negative $149 million. In Q3 it had been positive $137 million; year-earlier it was $75 million. See also non-GAAP net income below.
EPS (earnings per share) were negative $0.33, reversing positive $0.29 in Q3 and $0.18 year-earlier.
For 2009, non-GAAP revenue up 20% to $2.6 to $2.7 billion. Non-GAAP up 35% to $2.05 to $2.15 per share. Expects R&D expense to expand 10% to 15% during year. 90% gross margin because of Vidaza buyout.
SG&A expense should dip slightly in Q1, but increase for 2009. Pharmion acquisition expenses are complete.
Non-GAAP numbers: revenue was $623 million. Net income was $201 million; EPS $0.43. Operating income was $228 million. Mainly differs from GAAP numbers because $425 million spent on buying future royalties for VIDAZA, which was put in R&D expense.
Revlimid net product sales were $369 million, up 49% from year-earlier. Revlimid is now the number one therapy for multiple myeloma globally. Average duration of therapy increased and gained market share. In 2009 sales are expected to hit about $1.7 billion for the full year. Additional special protocol assessment agreement Phase III trials for Chronic Lymphocytic Leukemia (CLL) were approved, and numerous other trials are planned or underway. Hopes in 2009 to expand Revlimid label to newly diagnosed myeloma.
Thalomid/Thalidomide net sales were $127 million.
Vidaza product sales $70 million. The European launch of Vidaza is starting, and in 2009 sales should hit about $400 million for the year. In 2009 plans to launch Vidaza for higher-risk MDS (Myelodysplastic Syndromes) and AML (Acute Myeloid Leukemia) in "rest of" European union. It is the first drug approved for MDS in Europe. Also seeking reimbursement approvals in multiple countries.
Alkeran sales were $24.4 million, but Celgene will cease sales on March 31. Focalin and Ritalin revenues were $27.9 million, down slightly from year-earlier.
Patent protection of Revlimid and Thalomid improved. A patent was issued to Celgene for Placenta-derived adherent cells (PDAC).
R&D expenses were ramped up. Non-GAAP R&D was $154 million. GAAP R&D, including the Vidaza buyout, was $469 million.
Cost of goods sold was $68 million. Sales and general expense $200 million. Amortization $26 million. Total costs $763 million, leading to a GAAP operating loss of $134 million. Interest income was $35 million. Income taxes $49 million.
Multiple advances in pipeline were made and are planned for 2009, notably for Apremilast anti-inflammatory therapy.
Over next 5 years expects 25% to 30% annual growth. Hematology (blood cancers) and oncology, stem-cell therapies, and anti-inflammatory will be the areas of concentration.
Foreign exchange had a negative impact of about 3.5% on revenues, despite hedging. In 2007 will hedge 60% to 70% of Euro earnings.
Balance of cash and equivalents ended at $2.2 billion. In 2009 expect to generate $1 billion in cash.
Co-pay assistance expenses in 2009? We do not have that expense, assistance is provided by non-profit organizations. We do support these organizations with significant contributions, and guidance includes increased contributions in 2009.
Myeloma, how much is maintenance? We are seeing encouraging signs that as patients respond the results are durable, so patients are staying on the therapy longer. We think myeloma can become a chronic disease when treated with Revlimid. This is being evaluated in clinical trials, in particular post stem-cell transplant.
Difference between analyst consensus and guidance, is it mainly due to foreign exchange impact? Had a positive impact of $20 million on expenses due to hedging, partly offsetting impact of negative 3% on revenues. We did not hedge all of 2008, but plan to hedge all of 2009. Thalomid expected lower in 2009 due to shift from mainly frontline therapy to 3rd or 4th line, but as to generics we are defending our patents vigorously.
Revlimid pricing in Europe? We did better in pricing than we thought in some countries, in others there were caps on spending for the fiscal year. Overall we came in about where we forecasted. We made the same type of forecast for 2009, and includes possible caps in some nations. The value of the product to patients is very well established in Europe. We hope we can meet or exceed our guidance.
ECOG data? We believe we have the data, we have a meeting scheduled with FDA to see if the data will support a filing. It is less probable that 015 trial.
Growth in U.S.? We still see increases in U.S. with Revlimid and Vidaza, but not in Thalidomide. December trends were very encouraging.
Revlimid price in Germany is about 350 Euros.
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