Analyst Conference Summary


conference date: July 23, 2009 @ 6:00 AM Pacific Time
for quarter ending: June 30, 2009 (2nd quarter)

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Forward-looking statements

Overview: Continued solid performance. Still both a value and a growth proposition. Revlimid for newly diagnosed Multiple Myeloma shows positive results. But net income was down sequentially.

Basic data (GAAP):

Revenue was $629 million, up 4% sequentially from $605 million, and up 10% from $571 million in year-earlier quarter.

Net income was $143 million, down 12% from $163 million, but up 19% from $120 million year-earlier.

EPS (earnings per share) were $0.31, down 11.5% from $0.35, but up 35% from $0.26 year-earlier.


Full year 2009: Non-GAAP revenue expected to be above $2.6 million. Non-GAAP EPS above $2.05. Revlimid sales about $1.65 billion. 92% gross margin.

Conference Highlights:

The quarter "was one of exceptional results," with record revenues. Sales are now taking place in more than 70 nations, and products continue to launch around the globe. Revlimid gained market share. More data from "multiple key clinical trials" will be arriving during the remainder of 2009.

Non-GAAP numbers: revenue $626 million; net income $216 million; EPS $0.46 per share. Up 24% y/y. Gross margin was 89%!

Revlimid revenues $397 million, up 10% sequentially and up 22% year/year. $244 million was from U.S. sales, $153 million international.

Thalomid revenues were $105 million, down 20% from $131.6 million year-earlier.

Vidaza (for MDS) revenues $92 million, up 22% sequentially and up 54% y/y. Rollout should reach all major European nations by the end of 2009.

NDA (new drug application) filed in Japan for Revlimid in previously treated myeloma. U.K. okayed funding for Revlimid. Expanding in eastern Europe and South America.

Apremilast for psoriatic arthritis met its primary endpoint in Phase II trial.

The Revlimid MM-015 Phase III trial for newly diagnosed multiple myeloma exceeded its interim endpoint. This was a comparison study in which Revlimid with melphalan and prednisone was significantly better than treatments with melphalan and prednisone alone. Full results will be presented in December. An early filing strategy is now possible. The results "crossed the O'Brien-Fleming boundary for superiority."

Net product sales revenue was $598 million. Collaborative revenue was $2 million. Royalty revenue was $28 million.

Cost of goods sold was $51 million. R&D expense $219 million. Selling and general expense $176 million. Amortization of acquired intangibles $23 million. Total costs and expenses $468 million, leaving operating income of $160 million. Interest income was $29 million. Income tax provision $46 million.

Pipeline is robust and broad including products for hematology, oncology (cancer) and inflamation. More results from it should be out later this year.

Inventory ended at $97 million, down due to Alkeran and Focalin discontinuation, but above expected levels for the year of $80 to $90 million. Cash and marketable securities ended at $2.5 billion, up about $100 million. Repurchased 2.2 million shares and invested $40 million in GlobeImmune collaboration.


Effect on physician practice of new Revlimid 015 trial data? We are trying to turn a fatal disease into a chronic, treatable disease. Effect may be greatest in Europe where melphalan and prednisone are widely used.

Details on 015 trial statistics? We don't have them yet. The news was from the independent data monitoring committee.

Duration difference for Revlimid between U.S. and Europe? We launched earlier in the U.S. and duration increases with time. We hope to move more towards continuous treatment with Revlimid for disease control even if there is progression, and to start treatment as early as possible.

Market shares in Europe are smaller, in particular in front-line indications for Revlimid. But then a higher second-line share after we ramp up.

We currently support third party co-payments for patients in the Medicare donut hole. So a reform that causes us to reduct prices for lower income patients would be largely offset by reduced support to third parties.

We will start a Revlimid for prostate cancer trial later this year.

Health care reform effects on Celgene? We are for health care reform. We believe our products can reduce long term costs through innovation, which should be a part of the solution. We believe the pharmaceutical industry has been a positive choice for change. It was dissappointing to hear President Obama say the $80 billion in savings was just a part, when in fact the industry had to struggle to get up to that number. It is a complicated situation.

Guidance weakness? We have seen some delays in reimbursements in certain countries, but these are just delays. We like to keep our guidance at an annual level, rather than trying to guide for particular products in particular quarters.

Long term Revlimid patients? Revlimid does not seem to accumulate toxicity. Some patients have been on the drug since it was introduced. But it is complex because of segments of disease and reimbursement rules.

Q3 seasonality? We do see a slowdown in August, especially in Europe. But July tends to be stronger. We expect seasonality consistent with the past, but 2009 has been strange. So far in July trends are in line with what we expected.

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Copyright 2008 William P. Meyers