News Column

Celgene Reports Second Quarter 2014 Operating and Financial Results

August 4, 2014



By a News Reporter-Staff News Editor at Clinical Trials Week -- Celgene Corporation (NASDAQ:CELG) reported net product sales of $1,845 million for the second quarter of 2014, an 18 percent increase from the same period in 2013. Second quarter total revenue increased 17 percent to $1,873 million compared to $1,599 million in the second quarter of 2013. Adjusted net income for the second quarter of 2014 increased 15 percent to $748 million compared to $653 million in the second quarter of 2013. For the same period, adjusted diluted earnings per share (EPS) increased 18 percent to $0.90 from $0.76, on a split-adjusted basis (see also Celgene Corporation).

Based on U.S. GAAP (Generally Accepted Accounting Principles), Celgene reported second quarter of 2014 net income of $598 million or $0.72 per diluted share. For the second quarter of 2013, net income was $478 million or $0.56 per diluted share, on a split-adjusted basis.

"Strong second quarter operating and financial results demonstrate the significant momentum of our portfolio and support raising our 2014 guidance," said Bob Hugin, Chairman and Chief Executive Officer of Celgene Corporation. "We look forward to multiple milestones in the second half of the year, including the expansion of OTEZLA® into psoriasis and the further advancement of our pipeline." Second Quarter 2014 Financial Highlights Unless otherwise stated, all comparisons are for the second quarter of 2014 compared to the second quarter of 2013. The adjusted operating expense categories presented below exclude share-based employee compensation expense and upfront collaboration payments. In June 2014, Celgene effected a two-for-one split of the Company's common stock. Adjusted diluted EPS, GAAP EPS and share counts for all periods are split-adjusted. Please see the attached Reconciliation of GAAP to Adjusted Net Income for further information. Net Product Sales Performance REVLIMID® sales for the second quarter increased 15 percent to $1,214 million and were driven by volume in both the U.S. and International markets, increased duration of therapy and continued market share leadership in multiple myeloma. U.S. sales of $716 million and International sales of $498 million increased 15 percent and 17 percent, respectively.

ABRAXANE® sales for the second quarter were $215 million, a 39 percent increase. U.S. sales of $160 million and International sales of $55 million increased 33 percent and 58 percent, respectively. The increase in sales reflects the impact of the ongoing U.S. launch in pancreatic cancer and early launch success for pancreatic cancer in Europe.

VIDAZA® second quarter sales decreased 28 percent to $152 million, reflecting the year-over-year impact of the entry of generic azacitidine in the U.S. market. U.S. sales decreased 89 percent to $10 million. International sales were $142 million, an increase of 12 percent. International sales were driven by increased demand in Europe and Japan.

POMALYST®/IMNOVID® sales were $161 million, an increase of 143%. U.S. sales were $104 million and International sales were $57 million, an increase of 81% and 567%, respectively. POMALYST®/IMNOVID® sales were driven by market share gains in the U.S. and the strong commercial launch in Europe following the August 5, 2013 approval.

OTEZLA® sales were $5 million. After launching the product for psoriatic arthritis in early April, underlying demand grew steadily and OTEZLA® ended the quarter sharing the market share lead for new patient starts. The overall market access position is favorable and trending ahead of expectations. During the quarter, patients initiating therapy received a two-week sample titration pack and almost half of the patients obtained an additional two weeks of free product until they gained authorization for reimbursement.

All other product sales, which include THALOMID®, ISTODAX® and an authorized generic of VIDAZA® drug product in the U.S., were $98 million in the second quarter of 2014 compared to $80 million for the second quarter of 2013. Research and Development (R&D) Adjusted R&D expenses were $397 million for the second quarter of 2014 compared to $345 million for the second quarter of 2013. The increase was primarily due to an increase in clinical trial activity. On a GAAP basis, R&D expenses were $457 million for the second quarter of 2014 and $458 million for the same period in 2013 reflecting the increased clinical trial activity which was offset by lower upfront collaboration expense. Selling, General, and Administrative (SG&A) Adjusted SG&A expenses were $440 million for the second quarter of 2014 compared to $384 million for the second quarter of 2013. The increase was primarily due to investments in support of the launch of OTEZLA® for psoriatic arthritis in the U.S., pre-launch activities for OTEZLA® for psoriasis in the U.S. and pre-launch activities for OTEZLA® in Europe. On a GAAP basis, SG&A expenses were $492 million for the second quarter of 2014 compared to $418 million for the same period in 2013. The increase in GAAP SG&A expenses also included an increase in share-based compensation expense. Cash, Cash Equivalents, and Marketable Securities In the second quarter of 2014, Celgene purchased approximately 3.2 million of its shares on a pre-split basis at a total cost of approximately $475 million. As of June 30, 2014, the Company had $3,932 million remaining under the stock repurchase program.

In May, the Company priced a series of five-, ten- and thirty-year senior unsecured notes for an aggregate principal amount of $2,500 million that resulted in $12 million in interest expense in the second quarter of 2014. In addition, the Company purchased additional equity in Acceleron Pharma Inc. at a price above market value that resulted in an expense for the premium of $10 million. The incremental interest expense and equity premium combined accounted for a $0.02 reduction in adjusted diluted EPS.

Operating cash flow was $516 million in the second quarter of 2014. Celgene ended the quarter with $6,213 million in cash, cash equivalents and marketable securities. 2014 Guidance Total revenue raised to approximately $7,600 million from $7,500 million, an increase of approximately 17 percent year-over-year

Total Net Product Sales raised to above $7,500 million from the previous range of $7,300 million to $7,400 million, an increase of approximately 18 percent over 2013 Total Net Product Sales

REVLIMID® Net Product Sales narrowed to approximately $4,950 million from the previous range of $4,900 million to $5,000 million, an increase of approximately 16 percent over 2013 REVLIMID® Net Product Sales

ABRAXANE® Net Product Sales expected to be in the range of $850 million to $900 million

Adjusted diluted EPS raised to a range of $3.60 to $3.65 from the previous range of $3.50 to $3.60, an increase of approximately 22% over 2013 adjusted diluted EPS

GAAP diluted EPS is expected to be in the range of $2.46 to $2.55 from the previous range of $2.47 to $2.59 Business Update Celgene announced that Robert Hershberg, M.D., Ph.D. is joining the Company to lead Celgene's research and early development efforts in immuno-oncology and a newly formed Celgene Immuno-Oncology Center of Excellence to be based in Seattle, Washington. His arrival anchors strategic positioning of the Company's current and expanding immuno-oncology pipeline assets, including approved IMiD® products, emerging preclinical assets targeting innate immunity, T-cell checkpoints and collaborative CAR-T projects. Dr. Hershberg brings a depth of translational and clinical development experience from former positions at Corixa, Dendreon, and as founder and current CEO, President and Director of VentiRx. Dr. Hershberg completed his undergraduate degree in molecular biology and M.D. at UCLA, and his Ph.D. in Biology at the Salk Institute. Key Accomplishments in First Half of 2014 Hematology Submitted REVLIMID® for newly diagnosed multiple myeloma (NDMM) in the U.S. and Europe. FDA assigned a U.S. Prescription Drug User Fee Act (PDUFA) goal date of February 22, 2015 for REVLIMID® in NDMM

Completed enrollment in the phase III REMARC trial with REVLIMID® as maintenance in diffuse large B-cell lymphoma (DLBCL)

Began enrollment in the phase III AUGMENTTM (NHL-007) trial with REVLIMID® in relapsed and/or refractory follicular lymphoma and the phase IIIb MAGNIFYTM (NHL-008) trial with REVLIMID® in patients with relapsed and/or refractory indolent lymphoma

Presented phase II data on the combination of REVLIMID® with R-CHOP in patients with non-germinal center (non-GCB) phenotype newly diagnosed DLBCL at the American Society of Clinical Oncology meeting

Achieved the primary endpoint of progression free survival in the pivotal randomized phase II MCL-002 trial with REVLIMID® in patients with relapsed and/or refractory mantle cell lymphoma

Achieved the primary endpoint of RBC-transfusion independence for at least 8 weeks in the phase III MDS-005 trial with REVLIMID® in patients with non-del5q low-risk/Intermediate-1 transfusion-dependent myelodysplastic syndrome

Presented results of the phase III AML-001 trial with VIDAZA® in elderly patients with newly diagnosed acute myeloid leukemia at the European Hematology Association (EHA) meeting

Data presented from a phase I trial of AG-221 in patients with advanced hematologic malignancies with an isocitrate dehydrogenase-2 (IDH2) mutation at the American Association for Cancer Research and EHA meetings. Celgene exercised the option to an exclusive worldwide license to AG-221 in June

Data presented from two phase II trials of sotatercept and ACE-536 in patients with both transfusion dependent and non-transfusion dependent beta-thalassemia at the EHA meeting Oncology Began enrollment in the phase III APACT (PANC-003) trial with ABRAXANE® as an adjuvant treatment in patients with surgically resected pancreatic cancer

Began enrollment in a phase III trial with ABRAXANE® as maintenance therapy in patients with squamous cell non-small cell lung cancer (NSCLC)

Keywords for this news article include: Therapy, Genetics, Lymphoma, Oncology, Hematology, Gastroenterology, Pancreatic Cancer, Lymphatic Diseases, Celgene Corporation, Pancreatic Neoplasms, Investment and Finance, Clinical Trials and Studies, Immunoproliferative Disorders, Lymphoproliferative Disorders.

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Source: Clinical Trials Week


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