Analyst Conference Summary

conference date: October 25, 2007 @ 6:00 AM Pacific Time
for quarter ending: September 30, 2007 (3rd quarter)

Forward-looking statements

Overview: Sequential decrease in GAAP earnings, but revenues continue to climb and non-GAAP earnings continue to rise.

Basic data:

Revenues were $349.9 million, up 0.6% sequentially from $347.9 million and up 42.9% from $223.1 million year-earlier.

GAAP net income was $38.8 million, down 29% sequentially from $54.9 million, but up % from $20.4 million year-earlier.

EPS (earnings per share) were $0.09, down 41% sequentially from $0.13, but up 80% from $0.05 year-earlier.

Guidance:

Full 2007 adjusted (non-GAAP) earnings per share about $1.05. Total revenue target around $1.375 billion.

Conference Highlights:

$331 million in product sales.

Adjusted (non-GAAP) net income was $124.1 million, up 13% sequentially from $110 million and up 109% from $59.4 million year-earlier. Adjusted EPS was $0.29, up 11% sequentially from $0.26 and up 93% from $0.15 year-earlier.

Revlimid sales were $199 million, up 97% from year earlier and had a 10% sequential increase despite minimal MDS growth and an inventory drawdown. Many new nations will begin sales in the coming year.

Thalomid sales were $111 million, up from $108 million year earlier and down slightly sequentially. Expect it to decline as Revlimid ramps. Generic version litigation continues, but formulation patent was issued.

$18.9 million Alkeran revenues.

Revenue was $15.8 million for Focalin and Ritalin drug family.

90% gross profit margin.

Over $2.5 billion in cash and marketable securities, up about $200 million sequentially.

R&D increased to $84 million as we build to expand Revlimid sales. $85.7 million SG&A, which was down sequentially because of lower launch costs in Europe. In Q4 predict SG&A of $94 to $97 million, again due to European launch costs.

Revlimid was approved in Switzerland for multiple myeloma. Reimbursement developments in France and Ireland mean Revlimid revenues will continue to grow. 20% for MDS (myelodysplastic syndromes), 75% for multiple myeloma, 5% for others. Average capsules per script decreased, as label for myeloma calls for less than MDS. Off-label reimbursement is decreasing. German launch went well. Expects to hit over $1 billion in Revlimid revenues in 2008.

Drug trials for new indications or label expansions of Revlimid and Thalomid continue. CC-10004 and CC-4047 trials continue. Stem cell work continues.

Q&A:

Slowed growth in quarter? An inventory correction, increased use of lower doses of Revlimid.

Growth going forward? Q4 will depend on data that comes out and international expansion country by country. Tends to go in spurts and plateaus. In U.S. depends on movement to earlier stage in disease and the positive trend in duration of treatment.

Pricing? We want to keep things fair and equitable. Reimbursement in Europe is only available for the approved indications.

Revlimid frontline use? Gives promise to delay or limiting transplant. Ideal for those not eligible for transplant. Intend to go after transplant-eligible patients over time. There are different strategies for different sectors or newly diagnosed market, but we believe Revlimid will be shown effective for all segments.

Array (sp?) deal fits into our strategy and says nothing about confidence in internal pipeline.

In U.S. Revelimid MDS prescriptions rose slightly, myeloma rose 10% but with with some decreased dosage. Doctors in U.S. can get reimbursement for first line use, but we cannot recommend it at this time.

CLL trials? They are showing profound activity, but we need to find effective doses and there is no change in timelines.

Is MDS no longer a growth oportunity for Revlimid? It is the drug of choice currently for 5Q population. For non-5Q we now have very encouraging results, though not as striking as for 5Q. Not on compendia listing yet for non-5Q, so still is a reimbursement issue.

Is domestic sales trend for Revlimid down? We are growing in U.S. in myeloma. Q3 may just be a lumpy quarter. We are not half way to where we can be in U.S., and internationally we are just getting started.

How is international introduction going? We are doing better than we expected in Europe, but it is country by country.

Newly diagnosed myeloma compendia listing? In two major compendia listings, in late September.

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