Analyst Conference Summary

conference date: April 27, 2017 @ 6:00 AM Pacific Time
for quarter ending: March 31, 2017 (first quarter, Q1)

Forward-looking statements

Overview: Another great quarter, raised 2017 EPS guidance.

Basic data (GAAP):

Revenue was $2.96 billion, down 1% sequentially from $2.98 billion, and up 18% from $2.51 billion in the year-earlier quarter.

Net income was $941 million, up 119% sequentially from $428.9 million, and up 17% from $801 million year-earlier.

EPS (earnings per share, diluted) were $1.21, up 128% sequentially from $0.53, and up 22% from $0.99 year-earlier.

Guidance:

Increased for full year 2017, based on a higher operating margin of 46% GAAP (up from 45.5%) and 57.0% non-GAAP. Resulting in GAAP EPS range raised to $5.95 to $6.29 and non-GAAP EPS raised to $7.15 to $7.30.

Quarter Highlights:

Scott Smith is the new Celgene CEO.

"Our significant first quarter operational, financial and strategic progress strengthen our confidence and outlook for 2017," said Mark J. Alles. "Our business momentum is increasing as we continue to generate meaningful catalysts and long-term value drivers."

Operating leverage was a little better than expected, leading us to increase guidance. Revenue growth was mainly from volume, with price increases offset by currency fluctuations.

The FDA and EMA approved for Revlimid as a maintenance treatment, post-autologous stem-cell transplant, in Multiple Myeloma, in February. The potential from maintenance treatment is substantial in both the U.S. and Europe.

Non-GAAP numbers: net income $1.36 billion, up 5% sequentially from $1.29 billion and up 28% from $1.06 billion year-earlier. Diluted EPS was $1.68, up 4% sequentially from $1.61, and up 27% from $1.32 year-earlier. Non-GAAP numbers exclude share-based compensation of $153 million, collaboration upfront expense of $10 million, R&D asset acquisition expense of $325 million, $82 million in amortization, $39 million change infair value contingent consideration, with a tax benefit of $186 million.

Total product sales were $2.95 billion, down 1% sequentially from $2.98 billion, and up 18% from $2.50 billion year-earlier. $1.84 billion of sales were in the U.S., $1.11 billion were outside the U.S.

Other, non-product revenue was $10 million.

The U.S. psoriatic market was challenging (which Amgen also reported). But sees consistent growth in Otezla share in the market.

Cash and securities balance ended near $8.9 billion, up sequentially from $7.97 billion. Debt was $14.3 billion. Operating cash flow was $0.85 billion. $0.3 billion was spent to repurchase shares. $4.4 billion remains in share repurchase program.

For the full year 2016 revenue was $11.2 million, GAAP net income $2.0 billion, GAAP EPS $2.49. Non-GAAP net income was $4.77 billion, with adjusted EPS of $5.94.

Celgene submitted a new drug application (NDA) on March 1 to the FDA for Idhifa (was enasidenib AG-221) in relapsed and/or refractory acute myeloid leukemia (AML) with isocitrate dehydrogenase-2 (IDH2) mutation by year-end. AG-221 is licensed from Agios.

Celgene will have a strong presence at ASCO, including from partnerships.

Very excited about the potential of luzanomod? across multiple indications.

See also Celgene product pipeline. There are a large number of trials under way not mentioned in this summary. Many of these programs are "potentially transformative."

Cost of goods sold was $113 million. Research and development expense was $995 million. Selling, general and administrative expense was $620 million. Amortization of acquired intangibles was $82 million. Acquisition charges $36 million. Leaving operating income of $1,111 million. Other & interest expense was $86 million. Income tax provision $84 million.

Q&A:

Otezla seasonality? We saw contraction in the market, and minimal draw from inventory. The overall trend line is strong, as we continued to gain 40% of new patients. We see demand rebounding and so our meeting 2017 guidance.

PB 2121, have you seen durable response? At ASCO we will present updated data, including update treatment duration that will include the durability of responses. We should be able to make a pivotal decision by the end of the year.

Ozanimod should show efficacy for multiple sclerosis. We expect meaningful change in the disability index. No oral compound has shown statistically significance in the index. Phase 3trial met all key endpoints. We have not determined pricing.

Juno partnership pivotal trial for JCAR 17? We are responsible for the registrational study in Europe. We will likely do a single arm study, then have to do a confirmatory trial afterwards.

We think four of the molecules we are partnered on are multi-billion dollar opportunities. We still want to be the partner of choice in oncology and immunology.

Return on invested capital? When you lay out money, like for Receptos, it takes a while to get a return, but we are now seeing the potential of Ozanimod from that acquisition. In general we feel great about our return rate and the collaboration approach.

Revlimid market share continues to grow as we get more first-line use and increased duration as well, in both Europe and the U.S.

Ozanimod vs. Mongersin? We are excited about both assets, and could possibly combine them.

Gilenya going generic vs. Ozamimod, MS market? We look at the totality of safety data, which is differentiated in a number of places. It will hopefully be best in class.

BB 2121 trial, minimal residual disease issue in MM? The starting point is the late line population, we got complete responses in triple-refractory market. Population with high-risk genetics in first line will be something to look at. After we get our first approval we will develop a plan for addressing earlier-line populations.

Beyond 2020, if we had Phase 3 results, we could start adding that in to long-term guidance. Our guidance is not probability rated, rather based on indicating data.

OpenIcon Analyst Conference Summaries Main Page

Celgene Investor Relations page

My Celgene main page

Search

More Analyst Conference Pages: