Analyst Conference Summary



conference date: January 28, 2010 @ 6:00 AM Pacific Time
for quarter ending: December 31, 2009 (fourth quarter)

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Forward-looking statements

Overview: Another record quarter.

Basic data (GAAP):

Revenue was $761.0 million, up 9% sequentially from $695.1 million and up 21% from $628.3 million in the year-earlier quarter.

Net income was $254.2 million, up 17% sequentially from $216.8 million, and up from a net loss of $149.3 million year earlier.

EPS (earnings per share) were $0.54, up 17% sequentially from $0.46, and up from negative $0.33 year-earlier.


2010 total revenue between $3.2 and $3.3 billion. Revlimid sales range $2.1 to $2.2 billion. Non-GAAP EPS $2.55 to $2.60. R&D expense to increase 20% over 2009. SG&A expense up 5% over 2009. Expect $1.2 billion in cash generation.

Conference Highlights:

2009 was a transformative year for Celgene, with extraordinary process across all facets of the business. Pipeline has extraordinary value with multiple therapies showing continuing promise. Plans to continue to invest in pipeline from the bottom up.

Increased revenues are due to continuing rollout and market share gains for Revlimid, including inreased time of treatment, and Vidaza. Australian Revlimid launch took place in late December.

2010 goals include expanding product approvals, reimbursements, and global market share, including Revlimid for multiple myeloma in Japan. Plans to file in Europe for Revlimid for newly diagnosed multiple myeloma. Vidaza rollout continues. Istotax for CTCL needs to be launched in the U.S. Expecting results from multiple Revlimid Phase III trials this year.

Revlimid revenues were $497 million, up 35% y/y and up 11% sequentially. $291 million was from U.S. sales, $206 million was international.

Thalomid revenues were $108 million down 15% y/y.

Vidaza (for MDS) revenues were $117 million, up 68% y/y. Reimbursement being pursued in Canada, Australia, and South America.

Focalin and Ritalin segment revenues were $27.6 million, down slightly y/y.

Non-GAAP numbers: revenue was $758 million, up 22% y/y. Operating income $337 million $337 million. Net income was $290.3 million. EPS $0.62. Product gross margin was 92%.

Cash, equivalents and securities balance ended at $2.997 billion.

Cost of goods sold was $49.0 million. Research and development expense was $201.7 million. Selling, general and administrative ws $211.6 million. Amortization $16 million. Total costs and expenses $478.3 million, leaving operating income of $282.7 million. Interest income $22 million. Income taxes $50.4 milion.


R&D expense was up almost $30 million from year-earlier. Continuing research on Revlimid, pomalidomide and other IMiDs and Vidaza. Amrucin for small cell lung cancer is in enrollment for a Phase III trial. Apremilast should start Phase III studies in 2010. ACE-011 for chemotherapy induced anemia has initiated a Phase II trial. A total of 12 compounds are now in clinical development, with an additional 16 preclinical programs.

There will be an R&D day on March 4th to go into greater detail.


What caused increased SG&A expense in the quarter? It has a seasonally higher spend because of ASH and funding for some patient co-pay groups.

Revlimid inventory? There was a modest Revlimid channel inventory increase in Q4, less than the usual Q4.

Revlimid guidance parts? Japan is in the forecast in a modest way; we hope for approval in the middle of the year, but then need to get pricing and reimbursement. There is some dependence on healthcare reform effects on pricing and reimbursement.

Q1? Economic concerns were greater last year, but economy is not robust now either. We are not giving Q1 guidance, but hope for sequential growth. The first quarter is always challenging because patient policies reset.

Thalomid revenues? It continues to be an important therapy. As patients progress they will look at thalomid, but mainly at 3rd, 4th, or 5th line therapy. We hope pomalidomide will become a major late-line therapy.

Frontline strategy for multiple myeloma in Europe? We have a great opportunity to get a label on newly diagnosed MM, which would give us revenue gains over 4 or 5 years. The trial was done to European agency specifications. 70% of events have been compiled, we need to get that adjudicated. We hope to get that to review in later 2010.

Insurance companies do sometimes challenge continuing therapy with Revlimid, but almost all patients do get reimbursement.

In Apremilast we anticipate doing four Phase III trials, and may up dose to 30 mg from 20 mg, as there are indications of more activity without safety concerns.

Strength of Revlimid patents? We have composition of matter patents, and have been preparing a strategy for a long time. We are not aware of any generic filing.

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Copyright 2008 William P. Meyers