Celgene Reports Record Third Quarter 2009 Operating and Financial Results

October 22, 2009 7:30 AM EDT

Record Third Quarter Results Driven By Gains in Global Market Share, Duration of Therapy and Reimbursement Approvals

REVLIMID(R) Third Quarter Global Sales Increased 31% Y/Y and 13% Q/Q

REVLIMID U.S. Total Share Increased to Approximately 34%; Strong Share Gains in Second and Third Lines of Therapy in Europe

VIDAZA(R) Third Quarter Global Sales Increased 62% Y/Y and 12% Q/Q

First Interim Analysis of MM-015 Phase III Study To Be Presented at American Society of Hematology Annual Meeting

SUMMIT, N.J.--(BUSINESS WIRE)-- Celgene Corporation (NASDAQ: CELG):

2009 Third Quarter Financial Results Year-Over-Year:

    --  Non-GAAP Total Revenue Increased 18 Percent to $692 Million; GAAP Total
        Revenue $695 Million
    --  REVLIMID Net Product Sales Increased 31 Percent to $450 Million
    --  VIDAZA Net Product Sales Increased 62 Percent to $103 Million
    --  THALOMID(R)Net Product Sales Totaled $110 Million
    --  Non-GAAP Operating Income Increased 30 Percent to $292 Million; GAAP
        Operating Income $236 Million
    --  Non-GAAP Net Income Increased 40 Percent to $260 Million; GAAP Net
        Income $217 Million
    --  Non-GAAP Earnings Per Share Increased 40 Percent to $0.56 Per Diluted
        Share; GAAP Earnings $0.46 Per Diluted Share

Recent Developments And Highlights:

    --  REVLIMID(R)Reimbursement Approvals In United Kingdom And Canada
    --  Additional REVLIMID Regulatory Approvals in the Middle East and Latin
        America
    --  Lancet OncologyPublished Results From ECOG EA403 Phase III Trial,
        Demonstrating REVLIMID Plus Low-Dose Dexamethasone Is An Active Regimen
        For Patients With Newly Diagnosed Multiple Myeloma (MM)
    --  NHL-001 Study Published InJournal Of Clinical Oncology Reported REVLIMID
        Demonstrated Single Agent Activity With Durable Responses In A Heavily
        Pretreated Patient Population
    --  Advancing REVLIMID Solid Tumor Program In Prostate Cancer, Renal Cell
        Carcinoma, Pancreatic Cancer, and Colorectal Cancer
    --  Journal Of Clinical OncologyPublished Two Articles Highlighting Clinical
        Potential Of Pomalidomide As Treatment For MM and Myelofibrosis
    --  VIDAZA(R)Upgraded By National Comprehensive Cancer Network (NCCN) To
        Preferred Therapy Based On Unprecedented Survival For Intermediate-2 And
        High-Risk Myelodysplastic Syndromes (MDS)
    --  VIDAZA Now Listed By NCCN As Low Intensity Treatment Option For Patients
        With Acute Myeloid Leukemia
    --  Initiated Phase II Trial Of ACE-011 For Treatment Of Chemotherapy
        Induced Anemia In Metastatic Breast Cancer
    --  Completed Enrollment Of Phase I Proof-Of-Principle Study For Proprietary
        PDA-001 Placenta-Derived Stem Cells In Crohn's Disease
    --  Celgene Cellular TherapeuticsPatent EstateHighlighted InNature
        Biotechnology

2009 Selected Corporate Objectives:

    --  Maximize Global Clinical, Regulatory And Commercial Potential Of
        REVLIMID, VIDAZA, Pomalidomide, Apremilast, Amrubicin, ACE-011, PDA-001
        And THALOMID(R)
    --  Meet With EMEA, FDA and International Regulatory Agencies Regarding
        MM-015 Filing Strategy
    --  Commercial Launch of REVLIMID In Australia
    --  Gain Health Canada Regulatory Approval For VIDAZA In High-Risk MDS
    --  Submit REVLIMID Regulatory Filing For Del 5q MDS In Japan
    --  Advance REVLIMID Lymphoma Initiative Through More Than 60 Clinical
        Trials Worldwide, Including Novel Combinations In Multiple Patient
        Segments
    --  Advance REVLIMID Chronic Lymphocytic Leukemia (CLL) Initiative Through
        More Than 40 Clinical Trials Worldwide
    --  Complete Apremilast Phase II Study In Recalcitrant Psoriasis And Phase
        IIb Study In Moderate-To-Severe Psoriasis
    --  Complete Enrollment of Amrubicin Phase III Trial In Patients With Small
        Cell Lung Cancer

Celgene Corporation (NASDAQ: CELG) announced non-GAAP (Generally Accepted Accounting Principles) net income of $259.8 million, or non-GAAP earnings per diluted share of $0.56 for the quarter ended September 30, 2009. Non-GAAP net income for the third quarter of 2008 was $185.9 million, or non-GAAP earnings per diluted share of $0.40. Based on U.S. GAAP, Celgene reported net income of $216.8 million, or earnings per diluted share of $0.46 for the quarter ended September 30, 2009. GAAP net income for the third quarter of 2008 was $136.8 million, or earnings per diluted share of $0.29.

Celgene posted non-GAAP net income of $681.0 million or non-GAAP earnings per diluted share of $1.46 during the first nine months of 2009 as compared to non-GAAP net income of $517.9 million and non-GAAP earnings per diluted share of $1.13 in 2008. On a GAAP basis, Celgene reported net income of $522.5 million or earnings per diluted share of $1.12 for the first nine months of 2009, compared to GAAP net loss of $1.384 billion or a loss per diluted share of $3.17 in 2008, which was primarily due to an in-process research and development charge associated with the acquisition of Pharmion Corporation in March 2008.

"All key functional areas - commercial, clinical, regulatory, and operations - executed as planned globally and delivered an exceptional quarter," said Chairman and Chief Executive Officer Sol J. Barer, Ph.D. "We are looking forward to sharing significant clinical data with you across a broad range of Celgene compounds in the fourth quarter that will demonstrate the extraordinary global potential of our deep and diverse clinical pipeline."

Product Sales Performance

Non-GAAP total revenue was a record $692.2 million for the quarter ended September 30, 2009, an increase of 18 percent from 2008. GAAP total revenue was $695.1 million for the quarter ended September 30, 2009. The increase in total revenue was driven by global market share gains, reimbursement approvals, increased duration of therapy of REVLIMID(R) and the global growth of VIDAZA(R). REVLIMID net sales were $449.6 million, an increase of 31 percent over the same period in 2008. THALOMID(R) net sales (inclusive of Thalidomide Pharmion(TM) and Thalidomide Celgene(TM)) were $110.0 million. VIDAZA net sales were $103.1 million, an increase of 62 percent over sales in the third quarter of 2008. Revenue from Focalin(R) and the Ritalin(R) family of drugs totaled $25.8 million for the third quarter of 2009 compared to $23.8 million over the same period last year.

For the first nine months of 2009, non-GAAP total revenue was a record $1.919 billion, an increase of 19 percent year-over-year. GAAP total revenue was $1.929 billion for the nine months ended September 30, 2009. REVLIMID net sales for the first nine months of 2009 reached $1.209 billion, an increase of 27 percent over $955.2 million for the same period in 2008. THALOMID net sales for the first nine months of 2009 were $329.2 million. Vidaza net sales for the first nine months of 2009 reached $270.5 million, an increase of 97 percent over the same period in 2008, which excludes 2008 Vidaza sales prior to the March 7 acquisition of Pharmion.

Research and Development

To support clinical development and to advance global regulatory filings, the company increased R&D investments in multiple international clinical programs. For the third quarter of 2009, non-GAAP R&D expenses, which exclude share-based employee compensation expense, were $178.2 million compared to $149.9 million for the third quarter of 2008. These R&D expenditures continue to support ongoing clinical progress in multiple proprietary development programs for REVLIMID(R), pomalidomide and other IMiDs(R) compounds; VIDAZA(R); amrubicin, our lead compound for small cell lung cancer; apremilast and our other oral anti-inflammatory compounds; our kinase inhibitor programs; our Activin inhibitor program with ACE-011 and placenta-derived stem cell programs. On a GAAP basis, R&D expenses were $193.4 million for the third quarter of 2009 and $160.9 million for the same period in 2008.

Selling, General, and Administrative

Non-GAAP selling, general and administrative expenses, which exclude share-based employee compensation expense, were $172.3 million for the third quarter of 2009 compared to $152.0 million for the third quarter of 2008. The increase in expenses was due primarily to unrestricted donations to non-profit organizations for co-pay assistance. On a GAAP basis, selling, general and administrative expenses were $192.5 million for the third quarter of 2009 compared to $168.6 million for the third quarter of 2008.

Interest and Other Income, Net

For the quarter ended September 30, 2009, interest and other income, net, was $34.9 million compared to $21.6 million in the same period in 2008.

Cash, Cash Equivalents, and Marketable Securities

Celgene reported $2.764 billion in cash, cash equivalents, and marketable securities as of September 30, 2009.

Non-GAAP Financial Information

See the attached Reconciliation of GAAP to Non-GAAP Net Income (Loss) for an explanation of the amounts excluded and included to arrive at non-GAAP net income and non-GAAP earnings per share amounts for the three- and nine-month periods ended September 30, 2009 and 2008. Non-GAAP financial measures provide investors and management with supplemental measures of operating performance and trends that facilitate comparisons between periods before and after certain items that would not otherwise be apparent on a GAAP basis. Certain unusual or non-recurring items that management does not believe affect the company's basic operations do not meet the GAAP definition of unusual or non-recurring items. Non-GAAP net income and non-GAAP earnings per share are not, and should not be viewed as a substitute for similar GAAP items. We define non-GAAP diluted earnings per share amounts as non-GAAP net income divided by the weighted average number of diluted shares outstanding. Our definition of non-GAAP net income and non-GAAP diluted earnings per share may differ from similarly named measures used by others.

Conference Call and Webcast Information

Celgene will host a conference call to discuss the results and achievements of its third quarter 2009 and its operating and financial performance on October 22, 2009, at 9 a.m. EDT. The conference call will be available by webcast at www.celgene.com. An audio replay of the call will be available from noon October 22, 2009, until midnight EDT October 29, 2009. To access the replay, in the U.S. dial 888-203-1112; outside the U.S. dial 719-457-0820; and enter reservation number 9504107. The Company's fourth quarter 2009 financial and operational results will be reported on January 28, 2010.

About Celgene

Celgene Corporation, headquartered in Summit, New Jersey, is an integrated global biopharmaceutical company engaged primarily in the discovery, development and commercialization of novel therapies for the treatment of cancer and inflammatory diseases through gene and protein regulation. For more information, please visit the company's Web site at www.celgene.com.

This release contains certain forward-looking statements which involve known and unknown risks, delays, uncertainties and other factors not under the Company's control, which may cause actual results, performance or achievements of the Company to be materially different from the results, performance or other expectations implied by these forward-looking statements. These factors include results of current or pending research and development activities, actions by the FDA and other regulatory authorities, and those factors detailed in the Company's filings with the Securities and Exchange Commission such as Form 10-K, 10-Q and 8-K reports.

Celgene Corporation and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share data)

                           Three Months Ended            Nine Months Ended
                           September 30,                 September 30,

                           2009           2008           2009           2008

Net product sales          $ 667,967      $ 567,017      $ 1,842,353    $ 1,541,556

Collaborative
agreements and other         2,381          2,402          6,979          9,960
revenue

Royalty revenue              24,789         23,046         79,524         75,011

     Total revenue           695,137        592,465        1,928,856      1,626,527

Cost of goods sold
(excluding
amortization of              52,058         70,534         167,259        190,452
acquired intangible
assets)

Research and                 193,362        160,911        593,109        462,650
development

Selling, general and         192,512        168,607        542,264        485,345
administrative

Amortization of
acquired intangible          21,111         32,833         67,403         77,842
assets

Acquired in-process
research and                 -              -              -              1,740,000
development

     Total costs and         459,043        432,885        1,370,035      2,956,289
     expenses

Operating income             236,094        159,580        558,821        (1,329,762 )
(loss)

Equity in losses of          329            2,338          944            8,761
affiliated companies

Interest and other           34,937         21,630         113,257        70,270
income, net

Income (loss) before         270,702        178,872        671,134        (1,268,253 )
income taxes

Income tax provision         53,887         42,058         148,602        116,138

Net income (loss)          $ 216,815      $ 136,814      $ 522,532      $ (1,384,391 )

Per common share:

     Net income            $ 0.47         $ 0.30         $ 1.14         $ (3.17      )
     (loss) - basic

     Net income
     (loss) -              $ 0.46         $ 0.29         $ 1.12         $ (3.17      )
     diluted

Weighted average             458,834        456,509        459,332        437,206
shares - basic

Weighted average             467,057        468,891        467,469        437,206
shares - diluted

                           September 30,  December 31,
                           2009           2008

Balance sheet items:

     Cash, cash
     equivalents &         $ 2,764,448    $ 2,222,091
     marketable
     securities

     Total assets            5,082,286      4,445,270

     Stockholders'           4,109,099      3,491,328
     equity

Celgene Corporation and Subsidiaries

Reconciliation of GAAP to Non-GAAP Net Income (Loss)

(In thousands, except per share data)

                           Three Months Ended            Nine Months Ended
                           September 30,                 September 30,

                           2009           2008           2009           2008

Net income (loss) -        $ 216,815      $ 136,814      $ 522,532      $ (1,384,391 )
GAAP

     Before tax
     adjustments:

     Net product
     sales:

     Pharmion
     products to be  (1)     (2,902    )    (5,725    )    (9,367    )    (12,153    )
     divested

     Cost of goods
     sold (excluding
     amortization of
     acquired
     intangible
     assets):

     Share-based
     compensation    (2)     1,331          668            3,304          1,829
     expense

     Pharmion
     inventory       (3)     -              7,545          354            18,668
     step-up

     Pharmion
     products to be  (1)     1,127          2,450          5,395          5,014
     divested

     EntreMed
     intercompany    (4)     (197      )    (398      )    (197      )    (398       )
     royalty

     Research and
     development:

     Share-based
     compensation    (2)     15,178         10,964         44,841         32,264
     expense

     Upfront
     collaboration   (5)     -              -              34,500         45,000
     payments

     Selling,
     general and
     administrative:

     Share-based
     compensation    (2)     20,167         16,596         56,384         41,557
     expense

     Amortization of
     acquired        (6)     21,111         32,833         67,403         77,842
     intangible
     assets

     Acquired
     in-process      (7)     -              -              -              1,740,000
     research and
     development

     Equity in
     losses of
     affiliated
     companies:

     Equity in
     losses of       (8)     321            763            980            2,821
     EntreMed

     Net income tax  (9)     (13,115   )    (16,638   )    (45,119   )    (50,191    )
     adjustments

Net income -               $ 259,836      $ 185,872      $ 681,010      $ 517,862
non-GAAP

Per common share
-non-GAAP:

     Net income -          $ 0.57         $ 0.41         $ 1.48         $ 1.18
     basic

     Net income -    (10)  $ 0.56         $ 0.40         $ 1.46         $ 1.13
     diluted

Explanation of adjustments:

(1)  Exclude sales and costs related to former non-core Pharmion Corp. products to be
     divested.

     Exclude SFAS 123R share-based compensation expense for the third quarter totaling
     $36,676 in 2009 and $28,228 in 2008. The after tax net impact reduced GAAP net
     income for the third quarter by $28,585, or $0.06 per diluted share in 2009 and
(2)  $22,253, or $0.05 per diluted share in 2008. Exclude SFAS 123R share-based
     compensation expense for the nine-month periods totaling $104,529 in 2009 and
     $75,650 in 2008. The after tax net impact reduced GAAP net income for the
     nine-month periods by $81,048, or $0.17 per diluted share in 2009 and $60,800, or
     $0.14 per diluted share in 2008.

(3)  Exclude acquisition-related Pharmion Corp. inventory step-up adjustment to fair
     value expensed during the period.

(4)  Exclude the Company's share of THALOMID royalties payable to EntreMed, Inc.

     Exclude upfront payments for research and development collaboration arrangements
(5)  with GlobeImmune, Inc. and Array BioPharma Inc. of $30,000 and $4,500,
     respectively, for the nine-month period in 2009 and Acceleron Pharma, Inc. of
     $45,000 for the nine-month period in 2008.

     Exclude amortization of acquired intangible assets for the third quarter of 2009
     and 2008 resulting from the acquisition of Pharmion Corp. of $21,111 and $32,833,
(6)  respectively. Exclude amortization of acquired intangible assets for the
     nine-month periods from the acquisition of Pharmion Corp. of $67,403 in 2009 and
     from the acquisitions of Pharmion Corp. and Penn T of $76,205 and $1,637,
     respectively, in 2008.

(7)  Exclude the in-process research and development write-off related to the
     acquisition of Pharmion Corp. in the nine-month period in 2008.

(8)  Exclude the Company's share of equity losses in EntreMed, Inc.

(9)  Net income tax adjustments reflects the tax effect of the above adjustments.

(10) Diluted net income per share for the nine-month period of 2008 was determined
     using diluted weighted average shares of 459,304.

    Source: Celgene Corporation

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