Analyst Conference Summary

conference date: October 27, 2011 @ 6:00 AM Pacific Time
for quarter ending: September 30, 2011 (third quarter, Q3 2011)

Forward-looking statements

Overview: Record quarter.

Basic data (GAAP):

Revenue was $1.22 billion, up 3% sequentially from $1.18 billion and up 41% from $886 million in the year-earlier quarter.

Net income was $373.0 million, up 34% sequentially from $279.2 million and up 33% from $281.2 million year-earlier.

EPS (earnings per share) were $0.81, 37% sequentially from $0.59 and up 35% from $0.60 year-earlier.

Comparisons:

Q2 2011 Celgene summary
Q3 2010 Celgene summary

Guidance:

Raised full year 2011 guidance again. Total revenue now expected between $4.8 and $4.85 billion, with Revlimid accounting for $3.2 to $3.25 billion of that. Non-GAAP EPS between $3.78 and $3.80.

Quarter Highlights:

Record results and "our investments in over 25 late-stage clinical trials are designed to support multiple regulatory submissions over the next 18 months to sustain long-term growth."

Non-GAAP numbers: EPS $1.02. 46.8% operating margin.

REVLIMID revenues were $820 million, up 28% y/y. U.S. sales were up 25% to $467 million, while international sales were up 32% to $353 million. Duration of therapy continues to increase. Believes application to extend to newly diagnosed multiple myeloma in Europe should be decided on by mid 2012. Chinese application for relapsed and refractory multiple myeloma decision due by end of 2011. Russian reimbursement due in 2012. Phase II prostate cancer trial is now fully accrued.

VIDAZA revenues were $191 million, up 35% y/y. Sales increased 10% to $73 million in the U.S. despite loss of exclusivity. International sales were up 58% to $118 million. Received reimbursement permission in Scotland.

ABRAXANE revenues were $114 million, up 20% sequentially. A Phase III trial comparing it to decarbazine for metastatic melanoma is expecting to read out data in mid 2012. Phase III Pancreatic cancer trial should complete enrollment in Q1 2012. Received reimbursement permission in Greece and Czech Republic.

THALOMID revenues were $83 million, down 12% y/y.

Royalty and collaboration revenue was $30.6 million.

Cash and equivalents balance ended at $2.58 billion. Cash flow from operations was $602 million. $885 million was spent on share repurchases.

Pomalidomide Phase II data for relapsed and refractory myeloma will be presented at ASH in December. The company is conducting a broad clinical program to support global registrations for pomalidomide.

Apremilast completed enrollment of patients in Phase III trials for psoriasis and psoriatic arthritis, with three more Phase III trials to complete enrollment by year-end. Phase II trial data for ankylosing spondylitis will be presented in November.

20 compounds are now in pre-clinical or clinical development. See also Celgene product pipeline.

Cost of goods sold was $94.6 million. Research and development expense was $356.8 million; selling, general and administrative expense $303.3 million; amortization was $75.0 million. Other charges including restructuring showed a gain of $11.2 million. Leaving operating income of $431.1 million. Equity gain $1.7 million. Other expense $16.8 million. Income tax provision $39.7 million.

SG&A expense has been trending down post the Abraxis acquisition.

Q&A:

U.S. buying patterns for Revlimid? At the end of the quarter, the last few days, some buyers lightened their buying. We think it was balance sheet management. The impact may have been $10 to $15 million. The general trend is very much on track.

There has not been a change to the review process in Europe for Revlimid for newly diagnosed multiple myeloma, we are just putting together the best package possible, given more data has come in from some trials. We want to apply the newly diagnosed label as broadly as possible around the world, including the U.S.

Price pressure in EU? We see across the board price declines of 5 to 7% per year, which is why the revenue growth is even more impressive.

Taxane / Taxotere shortage may have helped Abraxane by a few million in the quarter.

ML 020 is an event driven analysis, but Revlimid trials have often been stopped early. We want the trial to answer definitely the questions we have.

You seem to be a lot more confident about apremilast. Why? The Phase III data is what will matter. Accrual is accelerating. If the side effect profile stays constant there is a very attractive market for Apremilast, given Phase III efficacy. We'll get a lot of data in 2012.

We did see a post ASCO small use of Abraxane in lung cancer. We expect if we get approval for NSCLC we will see much greater use.

R&D expense outlook, given trials fully accruing? With this many Phase III trials hitting peak enrollment, with so much analysis and filing preparation ahead, it does not mean that R&D spend will come down in 2012. By 2013 we should have more capacity for trials in the pipeline. If we don't take on new projects, there could be some leverage as revenues climb. The earlier stage trials we have now should drive continued rapid growth beyond 2020.

We believe new data will help demostrate Revlimid's value proposition, which should help in pricing discussions in Europe and elsewhere.

China? It is important because of the size of the market and growing wealth, but it is a unique market. Hematology professionals in China see the importance of Revlimid. We already have a sales force in place because Abraxane is sold there. We will have a better idea of the potential by the end of next year.

Pomalidomide strategy? Even if we get an accelerated filing based on Phase II data, you need a Phase III follow up. We believe the pomalidomide data is very compelling.

We fully accrued the prostate cancer trial, but approval and revenue are not included in our outlook yet. Approval would result in a major revenue driver.

Generic Vidaza timing? We have no unique information on that.

OpenIcon Analyst Conference Summaries Main Page

Celgene Investor Relations page

My Celgene main page

Search

More Analyst Conference Pages: