Analyst Conference Summary


conference date: April 30, 2009 @ 6:00 AM Pacific Time
for quarter ending: March 31, 2009 (1st quarter)

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Forward-looking statements

Overview: Continued strong year/year revenue, although down from Q4, and profit growth led by global expansion.

Basic data (GAAP):

Revenues were $605 million, down 4% sequentially from $628 million, and up 31% from $463 million year-earlier.

Net income was $163 million, up sequentially from negative $149 million, and up from a loss of $1.606 billion year earlier.

EPS (earnings per share) were $0.35, up sequentially from negative $0.33, and up from a loss of $3.98 per share year-earlier.

Both Q4 and year earlier net income and EPS results were skewed by one time events.


2009 full year revenue expected near $2.6 billion. Revlimid revenue about $1.7 billion, Vidaza revenue $400 million. Non-GAAP EPS at least $2.05.

The five year guidance of annual compound revenue growth of about 20% was reaffirmed.

Conference Highlights:

Revlimid for Multiple Myeloma (MM) continued to gain market share. Vidaza for MDS (Myelodysplastic Syndromes) gained market share in the U.S. and is undergoing a country by country launch in 2009 in Europe.

Aggressive management of inventories by pharmacies and currency exchange rates had negative impacts on revenues.

Non-GAAP numbers: revenue $601.1 million; operting income $217.3 million; net income $205.1 million; EPS $0.44, up 22% y/y. Non-GAAP gross margin 89%; expected to improve 2% by end of 2009.

For GAAP time comparisons, note that $1.74 billion was expensed in the first quarter of 2008 for acquired R&D. Also in Q4 2008 there was a $425 million expense to purchase the future royalty stream for Vidaza.

Revlimid revenues were $362.5 million, up 26% y/y. Revlimid data continues to be released and to strengthen its market conditions. New U.S. myeloma Revlimid patients grew 10% sequentially, total market share grew to around 30%, and duration of use continues to increase.

Thalomid revenues were $114.0 million. Thalomid is launching in Europe, but at a lower price than in the U.S.

Vidaza revenues were $75.4 million, up 8% from Q4. Only MDS therapy to show an overall survival advantage. More indications seem to merit additional study.

Focalin & Ritalin combined had $26.8 million in revenue.

Alkeran revenues were $19.9 million. On March 31, 2009 Celgene handed over Alkeran to GlaxoSmithKline.

Apremilast for psoriatic arthritis Phase II study was completed; results around mid year; it is also in Phase II for psoriasis and is being tested for other inflammatory diseases. CC-930 for serious fibrotic diseases completed Phase Ib dosing study. Azacitidine for hematologic malignancies initiated Phase I/II study. PDA001 Phase I study for Crohn's Disease is now enrolling. The IND for ACE-011 for chemotherapy-induced anemia was approved by the FDA. Amrubicin for SCLC is enrolling both Phase I and Phase II trials. Multiple Revlimid for CLL trials continue.

At the end of the quarter Celgen had $2.393 billion in cash and marketable securities, up $171.3 million in the quarter.

Cost of goods sold was $64.3 million. Research and Development expense $181.2 million. Selling, general and administrative $173.4 million. Amortization $23.6 million. Total costs and expenses were $442.6 billion, leaving GAAP operating income of $162.4 million. Equity loss was $0.7 million. Interest and other income $$49.6 million.

Currency hedging program is fully implemented.

Stock repurchase program set up to offset dilution from non-cash stock-based compensation programs.


Revlimid growth drivers for 2009? January is tough for Medicare Part D patients, so we should not see so much of that in other quarters. Having reimbursement approvals in UK, we expect actual revenues to ramp up. New data may help convince payers of the value proposition fo Revlimid. We do have a lot of work to do to achieve the guidance.

Currency effect was less than $1 million on revenue because of our hedging activities.

Revlimid maintenance studies are not Celgene sponsored, but IFM. Hopefully the data will be positive and come some time in 2009.

Is the market contracting, or is it just that reimbursements being delayed? 12 month rolling averages are quite positive for Revlimid, and shorter term market data shows acceleration in first quarter, but she be treated as preliminary. Offset by inventory tightening in January.

Linearity? Trend seemed to be positive January to March, and also in April.

Free drug programs impact? We did see an increase in Q4, and Q1 was 1.5% higher than anticipated and 2% higher than long-term trend.

AZA001 Vidaza publication is now getting to physicians and should be a differentiating factor.

We are excited about Apremilast. It has a different mechanism of action than current biologics. It will be used in a different manner, and might be lower in price. Safety appears to be very good.

Revlimid for AML? So many trials are going on, we don't know what data will be presented short term.

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Copyright 2008 William P. Meyers