Market Overview

Celgene Reports Second Quarter 2018 Operating and Financial Results

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— Strong total net product sales of $3.8 billion, increased 17% Y/Y

— Raising full-year total revenue guidance to ~$15 billion and
REVLIMID
® net sales to ~$9.7 billion

— Advancing late-stage next-generation growth drivers

Celgene Corporation (NASDAQ:CELG) reported net product sales of $3,808
million for the second quarter of 2018, a 17 percent increase from the
same period in 2017. Celgene reported second quarter 2018 total revenue
of $3,814 million, a 17 percent increase compared to $3,271 million in
the second quarter of 2017.

Based on U.S. GAAP (Generally Accepted Accounting Principles), Celgene
reported net income of $1,045 million and diluted earnings per share
(EPS) of $1.43 for the second quarter of 2018. For the second quarter of
2017, GAAP net income was $1,101 million and diluted EPS was $1.36.

Adjusted net income for the second quarter of 2018 increased 5 percent
to $1,585 million compared to $1,514 million in the second quarter of
2017. For the same period, adjusted diluted EPS increased 16 percent to
$2.16 (including dilution from the Juno Therapeutics acquisition) from
$1.87.

"We continued to deliver strong operating performance in the second
quarter, leading us to update our 2018 financial guidance," said Mark J.
Alles, Chairman and Chief Executive Officer of Celgene Corporation. "Our
next innovation cycle is underway. We are meaningfully advancing our
pipeline, while strengthening the organization to maximize future growth
opportunities."

Second Quarter 2018 Financial Highlights

Unless otherwise stated, all comparisons are for the second quarter of
2018 compared to the second quarter of 2017. The adjusted operating
expense categories presented below exclude share-based employee
compensation expense, collaboration-related upfront expense and a
litigation-related loss contingency accrual expense. Please see the
attached Use of Non-GAAP Financial Measures and Reconciliation of GAAP
to Adjusted Net Income for further information relevant to the
interpretation of adjusted financial measures and reconciliations of
these adjusted financial measures to the most comparable GAAP measures,
respectively.

Net Product Sales Performance

  • REVLIMID® sales for the second quarter increased 21 percent
    to $2,453 million. REVLIMID® sales continue to grow, driven
    by increases in market share and extended treatment duration. U.S.
    sales of $1,586 million and international sales of $867 million
    increased 17 percent and 28 percent year-over-year, respectively.
    International sales were also favorably impacted by customer buying
    patterns and sales of product for use in clinical trials.
  • POMALYST®/IMNOVID® sales for the second quarter
    were $507 million, an increase of 30 percent year-over-year. U.S.
    sales were $341 million and international sales were $166 million, an
    increase of 41 percent and 11 percent year-over-year, respectively.
    POMALYST®/IMNOVID® sales growth was driven
    primarily by increases in market share and treatment duration.
  • OTEZLA® sales for the second quarter were $375 million, a 5
    percent increase year-over-year. Second quarter U.S. sales of $291
    million and international sales of $84 million decreased 5 percent and
    increased 62 percent year-over-year, respectively. OTEZLA®
    sales in the U.S. were driven primarily by increasing demand with
    continued access pull-through in contracted health plans that was
    offset by lower customer inventory levels at the end of the second
    quarter of 2018. The strong momentum of OTEZLA® adoption
    continued in key international markets with significant growth
    acceleration in Japan.
  • ABRAXANE® sales for the second quarter were $243 million, a
    4 percent decrease year-over-year. U.S. sales were $152 million and
    international sales were $91 million, a decrease of 6 percent and 2
    percent year-over-year, respectively.
  • In the second quarter, all other product sales, which include IDHIFA®,
    THALOMID®, ISTODAX®, VIDAZA® and an
    authorized generic version of VIDAZA® drug product
    primarily sold in the U.S., were $230 million compared to $222 million
    in the second quarter of 2017.

Research and Development (R&D)

On a GAAP basis, R&D expenses were $1,251 million for the second quarter
of 2018 compared to $835 million for the same period in 2017. Adjusted
R&D expenses were $948 million for the second quarter of 2018 compared
to $690 million for the second quarter of 2017. The increase was driven
by the inclusion of R&D expenses associated with the acquisition of Juno
and regulatory submission-related work on multiple programs. Additional
R&D expenses only included on a GAAP basis increased in 2018, as
outlined in the attached Reconciliation of GAAP to Adjusted Net Income.

Selling, General and Administrative (SG&A)

On a GAAP basis, SG&A expenses were $790 million for the second quarter
of 2018 compared to $939 million for the same period in 2017. Adjusted
SG&A expenses were $672 million for the second quarter of 2018 compared
to $532 million for the second quarter of 2017. The current period
included an increase in SG&A expense associated with the acquisition of
Juno and marketing-related expenses. Additional SG&A expenses only
included on a GAAP basis decreased in 2018, as outlined in the attached
Reconciliation of GAAP to Adjusted Net Income.

Cash, Cash Equivalents, Marketable Debt Securities and
Publicly-Traded Equity Securities

Operating cash flow was $1.2 billion in the second quarter of 2018,
compared to $1.6 billion for the second quarter of 2017. In May 2018, we
entered into an accelerated share repurchase (ASR) agreement to
repurchase an aggregate of $2 billion of our common stock. During the
second quarter of 2018, we purchased 32.8 million of our shares for $3.3
billion, including the $2 billion paid for the ASR for which we have
received a partial delivery of approximately 18 million shares. We
anticipate the remaining shares from the ASR will be received in the
third quarter of 2018. As of June 30, 2018, Celgene had approximately
$2.8 billion remaining under its stock repurchase program. Celgene ended
the quarter with approximately $3.4 billion in cash, cash equivalents,
marketable debt securities and publicly-traded equity securities.

Celgene Expects Volume-Driven Product Sales and
Earnings Growth in 2018

    Previous 2018 guidance     Updated 2018 guidance
Total Revenue   ~$14.8B     ~$15.0B
REVLIMID® Net Product Sales ~ $9.5B ~$9.7B
POMALYST®/IMNOVID® Net Product Sales ~ $2.0B Unchanged
OTEZLA® Net Product Sales ~$1.5B Unchanged
ABRAXANE® Net Product Sales ~$1.0B Unchanged
GAAP Operating Margin ~ 38% ~35%
GAAP Diluted EPS ~ $6.31 $5.95-$6.25
Adjusted Operating Margin

Adjusted Diluted EPS

~56.0%

~$8.45

Unchanged

$8.70-$8.75

Adjusted Tax Rate ~17% Unchanged
Weighted Average Diluted Shares ~755M ~735M
 

Portfolio Updates

  • In July, Celgene announced that the phase III AUGMENT®
    trial evaluating REVLIMID® in combination with rituximab (R2)
    in patients with relapsed and/or refractory follicular lymphoma and
    marginal zone lymphoma met the primary endpoint of progression-free
    survival (PFS). Data from the AUGMENT® trial will be
    submitted to a future medical meeting. Global regulatory submissions
    are planned for the first quarter of 2019.
  • In June and July, Celgene and Acceleron Pharma announced that
    luspatercept achieved all primary and key secondary endpoints in the
    phase III MEDALIST® and BELIEVE® trials in
    patients with low-to-intermediate risk myelodysplastic syndromes (MDS)
    and transfusion-dependent beta-thalassemia, respectively. Data from
    the MEDALIST® and BELIEVE® trials will be
    submitted to a future medical meeting in 2018. Regulatory applications
    for luspatercept in the United States and Europe are planned for the
    first half of 2019.
  • At the 2018 American Society of Clinical Oncology (ASCO) Annual
    Meeting in June, data were presented on Celgene's pipeline assets and
    marketed products including:
    • Updated durability and safety data from the TRANSCEND NHL-001
      trial evaluating liso-cel (JCAR017) in patients with relapsed
      and/or refractory aggressive non-Hodgkin lymphoma (NHL).
    • In collaboration with partner bluebird bio, updated data from the
      CRB-401 phase I trial evaluating bb2121 in patients with relapsed
      and/or refractory multiple myeloma (RRMM).
    • Results from the phase III OPTIMISMM® trial evaluating
      POMALYST® in combination with bortezomib and
      dexamethasone (PVd) in patients with second-line multiple myeloma.
    • Results from the phase III RELEVANCE® trial evaluating
      REVLIMID® in combination with rituximab in patients
      with previously untreated follicular lymphoma (FL).
    • Results from the Merck sponsored phase III KEYNOTE-407 trial
      evaluating KEYTRUDA® (pembrolizumab) in combination
      with ABRAXANE® as first-line treatment for metastatic
      squamous non-small cell lung cancer (NSCLC).
    • PFS and safety analysis from the Genentech-sponsored phase III
      IMpower131 trial evaluating TECENTRIQ® (atezolizumab)
      plus chemotherapy (carboplatin and ABRAXANE®) as
      first-line treatment in patients with advanced squamous NSCLC.
  • In May, Roche announced that the phase III IMpower130 trial evaluating
    TECENTRIQ® plus chemotherapy (carboplatin and ABRAXANE®)
    in patients with metastatic non-squamous NSCLC met its co-primary
    endpoints of overall survival and PFS. Additionally, in July, Roche
    announced that the phase III IMpassion130 trial with ABRAXANE®
    in combination with TECENTRIQ® in patients with metastatic
    or locally advanced triple negative breast cancer met its co-primary
    endpoint of PFS. Data from these trials will be presented at a future
    medical meeting.
  • The phase I TRANSCEND CLL-004 trial evaluating liso-cel in patients
    with relapsed and/or refractory chronic lymphocytic leukemia (CLL)
    continues to enroll. The phase III TRANSFORM (BCM-003) trial
    evaluating liso-cel as second-line therapy in patients with diffuse
    large B-cell lymphoma (DLBCL) who are eligible for transplantation is
    initiating. In addition, the phase II trial (PILOT) evaluating
    liso-cel as second-line therapy in patients with DLBCL who are not
    eligible for transplantation was initiated in May.

Organizational Updates

  • In May, Celgene announced the hiring of David V. Elkins as Executive
    Vice President (EVP) and Chief Financial Officer (CFO) and the
    appointment of Peter N. Kellogg to EVP, Chief Corporate Strategy
    Officer until his retirement planned for mid-2019. Mr. Elkins joined
    Celgene as EVP on July 1, 2018 and will succeed Peter Kellogg as CFO
    effective August 1, 2018.
  • In June, Celgene announced the appointment of Jonathan Biller as EVP
    and General Counsel effective July 3, 2018, following the departure of
    Gerald F. Masoudi.

Second Quarter 2018 Conference Call and Webcast Information

Celgene will host a conference call to discuss the second quarter of
2018 operational and financial performance on Thursday, July 26, 2018,
at 9 a.m. ET. The conference call will be available by webcast at http://www.celgene.com.
An audio replay of the call will be available from noon July 26, 2018,
until midnight ET August 2, 2018. To access the replay in the U.S., dial
(855) 859-2056; outside the U.S. dial (404) 537-3406. The participant
passcode is 2194616.

About Celgene

Celgene Corporation, headquartered in Summit, New Jersey, is an
integrated global biopharmaceutical company engaged primarily in the
discovery, development and commercialization of innovative therapies for
the treatment of cancer and inflammatory diseases through
next-generation solutions in protein homeostasis, immuno-oncology,
epigenetics, immunology and neuro-inflammation. For more information,
please visit www.celgene.com.
Follow Celgene on Social Media: @Celgene,
Pinterest,
LinkedIn,
Facebook
and YouTube.

About REVLIMID®

In the U.S., REVLIMID® (lenalidomide) in combination with
dexamethasone is indicated for the treatment of patients with multiple
myeloma. REVLIMID® as a single agent is also indicated as a
maintenance therapy in patients with multiple myeloma following
autologous hematopoietic stem cell transplant. REVLIMID® is
indicated for patients with transfusion-dependent anemia due to low- or
intermediate-1-risk myelodysplastic syndromes (MDS) associated with a
deletion 5q cytogenetic abnormality with or without additional
cytogenetic abnormalities. REVLIMID® is approved in the U.S.
for the treatment of patients with mantle cell lymphoma (MCL) whose
disease has relapsed or progressed after two prior therapies, one of
which included bortezomib. Limitations of Use: REVLIMID® is
not indicated and is not recommended for the treatment of chronic
lymphocytic leukemia (CLL) outside of controlled clinical trials.

About ABRAXANE®

In the U.S., ABRAXANE® for Injectable Suspension (paclitaxel
protein-bound particles for injectable suspension) (albumin-bound) is
indicated for the treatment of metastatic breast cancer after failure of
combination chemotherapy for metastatic disease or relapse within six
months of adjuvant chemotherapy. Prior therapy should have included an
anthracycline unless clinically contraindicated. ABRAXANE® is
indicated for the first-line treatment of locally advanced or metastatic
non-small cell lung cancer, in combination with carboplatin, in patients
who are not candidates for curative surgery or radiation therapy.
ABRAXANE® is also indicated for the first-line treatment of
metastatic adenocarcinoma of the pancreas in combination with
gemcitabine.

About POMALYST®

In the U.S., POMALYST® (pomalidomide) is indicated for
patients with multiple myeloma who have received at least two prior
therapies including lenalidomide and a proteasome inhibitor and have
demonstrated disease progression on or within 60 days of completion of
the last therapy.

About OTEZLA®

In the U.S., OTEZLA® (apremilast) is indicated for the
treatment of adult patients with active psoriatic arthritis. OTEZLA®
is indicated in the U.S. for the treatment of patients with moderate to
severe plaque psoriasis who are candidates for phototherapy or systemic
therapy.

Forward-Looking Statement

This press release contains forward-looking statements, which are
generally statements that are not historical facts.
Forward-looking
statements can be identified by the words "expects," "anticipates,"
"believes," "intends," "estimates," "plans," "will," "outlook" and
similar expressions.
Forward-looking statements are based on
management's current plans, estimates, assumptions and projections, and
speak only as of the date they are made.
We undertake no
obligation to update any forward-looking statement in light of new
information or future events, except as otherwise required by law.
Forward-looking
statements involve inherent risks and uncertainties, most of which are
difficult to predict and are generally beyond our control.
Actual
results or outcomes may differ materially from those implied by the
forward-looking statements as a result of the impact of a number of
factors, many of which are discussed in more detail in our Annual Report
on Form 10-K and our other reports filed with the Securities and
Exchange Commission.

Hyperlinks are provided as a convenience and for informational
purposes only. Celgene bears no responsibility for the security or
content of external websites.

Use of Non-GAAP Financial Measures

In addition to financial information prepared in accordance with U.S.
GAAP, this document also contains certain non-GAAP financial measures
based on management's view of performance including:

  • Adjusted research and development expense
  • Adjusted selling, general and administrative expense
  • Adjusted operating margin
  • Adjusted net income
  • Adjusted earnings per share

Management uses such measures internally for planning and forecasting
purposes and to measure the performance of the Company. We believe these
adjusted financial measures provide useful and meaningful information to
us and investors because they enhance investors' understanding of the
continuing operating performance of our business and facilitate the
comparison of performance between past and future periods. These
adjusted financial measures are non-GAAP measures and should be
considered in addition to, but not as a substitute for, the information
prepared in accordance with U.S. GAAP. When preparing these supplemental
non-GAAP financial measures we typically exclude certain GAAP items that
management does not consider to be normal, recurring cash operating
expenses but that may not meet the definition of unusual or
non-recurring items. Other companies may define these measures in
different ways. The following categories of items are excluded from
adjusted financial results:

Acquisition and Divestiture-Related Costs: We exclude the impact
of certain amounts recorded in connection with business combinations and
divestitures from our adjusted financial results that are either
non-cash or not normal, recurring operating expenses due to their
nature, variability of amounts, and lack of predictability as to
occurrence and/or timing. These amounts may include non-cash items such
as the amortization of acquired intangible assets, amortization of
purchase accounting adjustments to inventories, intangible asset
impairment charges and expense or income related to changes in the
estimated fair value measurement of contingent consideration and success
payments. We also exclude transaction and certain other cash costs
associated with business acquisitions and divestitures that are not
normal, recurring operating expenses, including severance costs which
are not part of a formal restructuring program.

Share-Based Compensation Expense: We exclude share-based
compensation from our adjusted financial results because share-based
compensation expense, which is non-cash, fluctuates from period to
period based on factors that are not within our control, such as our
stock price on the dates share-based grants are issued.

Collaboration-Related Upfront Expenses: We exclude
collaboration-related upfront expenses from our adjusted financial
results because we do not consider them to be normal, recurring
operating expenses due to their nature, variability of amounts, and lack
of predictability as to occurrence and/or timing. Upfront payments to
collaboration partners are made at the commencement of a relationship
anticipated to continue for a multi-year period and provide us with
intellectual property rights, option rights and other rights with
respect to particular programs. The variability of amounts and lack of
predictability of collaboration-related upfront expenses makes the
identification of trends in our ongoing research and development
activities more difficult. We believe the presentation of adjusted
research and development, which does not include collaboration-related
upfront expenses, provides useful and meaningful information about our
ongoing research and development activities by enhancing investors'
understanding of our normal, recurring operating research and
development expenses and facilitates comparisons between periods and
with respect to projected performance. All expenses incurred subsequent
to the initiation of the collaboration arrangement, such as research and
development cost-sharing expenses/reimbursements and milestone payments
up to the point of regulatory approval are considered to be normal,
recurring operating expenses and are included in our adjusted financial
results.

Research and Development Asset Acquisition Expense: We exclude
costs associated with acquiring rights to pre-commercial compounds
because we do not consider such costs to be normal, recurring operating
expenses due to their nature, variability of amounts, and lack of
predictability as to occurrence and/or timing. Research and development
asset acquisition expenses includes expenses to acquire rights to
pre-commercial compounds from a collaboration partner when there will be
no further participation from the collaboration partner or other
parties. The variability of amounts and lack of predictability of
research and development asset acquisition expenses makes the
identification of trends in our ongoing research and development
activities more difficult. We believe the presentation of adjusted
research and development, which does not include research and
development asset acquisition expenses, provides useful and meaningful
information about our ongoing research and development activities by
enhancing investors' understanding of our normal, recurring operating
research and development expenses and facilitates comparisons between
periods and with respect to projected performance.

Restructuring Costs: We exclude costs associated with
restructuring initiatives from our adjusted financial results. These
costs include amounts associated with facilities to be closed, employee
separation costs and costs to move operations from one location to
another. We do not frequently undertake restructuring initiatives and
therefore do not consider such costs to be normal, recurring operating
expenses.

Certain Other Items: We exclude certain other significant items
that may occur occasionally and are not normal, recurring cash operating
expenses from our adjusted financial results. Such items are evaluated
on an individual basis based on both the quantitative and the
qualitative aspect of their nature and generally represent items that,
either as a result of their nature or magnitude, we would not anticipate
occurring as part of our normal business on a regular basis. While not
all-inclusive, examples of certain other significant items excluded from
adjusted financial results would be: significant litigation-related loss
contingency accruals and expenses to settle other disputed matters and,
effective for fiscal year 2018, changes in the fair value of our equity
securities upon the adoption of ASU 2016-01 (Financial
Instruments-Overall: Recognition and Measurement of Financial Assets and
Financial Liabilities).

Estimated Tax Impact From Above Adjustments: We exclude the net
income tax impact of the non-tax adjustments described above from our
adjusted financial results. The net income tax impact of the non-tax
adjustments includes the impact on both current and deferred income
taxes and is based on the taxability of the adjustment under local tax
law and the statutory tax rate in the tax jurisdiction where the
adjustment was incurred.

Non-Operating Tax Adjustments: We exclude the net income tax
impact of certain other significant income tax items, which are not
associated with our normal, recurring operations ("Non-Operating Tax
Items"), from our adjusted financial results. Non-Operating Tax Items
include items which may occur occasionally and are not normal, recurring
operating expenses (or benefits), including adjustments related to
acquisitions, divestitures, collaborations, certain adjustments to
the amount of unrecognized tax benefits related to prior year tax
positions, the impact of tax reform legislation commonly referred to as
the Tax Cuts and Jobs Act (2017 Tax Act), and other similar items. We
also exclude excess tax benefits and tax deficiencies that arise upon
vesting or exercise of share-based payments recognized as income tax
benefits or expenses due to their nature, variability of amounts, and
lack of predictability as to occurrence and/or timing.

See the attached Reconciliations of GAAP to Adjusted Net Income for
explanations of the amounts excluded and included to arrive at the
adjusted measures for the three- and six-month periods ended June 30,
2018 and 2017, and for the projected amounts for the twelve-month period
ending December 31, 2018.

 
Celgene Corporation and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
(In millions, except per share data)
         
Three-Month Periods Ended Six-Month Periods Ended
June 30, June 30,
  2018   2017*   2018   2017*
 
Net product sales $ 3,808 $ 3,259 $ 7,339 $ 6,211
Other revenue   6     12     13     22  
Total revenue   3,814     3,271     7,352     6,233  
 
Cost of goods sold (excluding amortization of acquired intangible
assets)
126 111 261 224
Research and development 1,251 835 3,454 1,830
Selling, general and administrative 790 939 1,654 1,559
Amortization of acquired intangible assets 127 88 214 170
Acquisition related charges (income) and restructuring, net   34     (13 )   65     26  
Total costs and expenses   2,328     1,960     5,648     3,809  
 
Operating income 1,486 1,311 1,704 2,424
 
Interest and investment income, net 9 24 22 39
Interest (expense) (192 ) (126 ) (358 ) (253 )
Other income (expense), net   4     (31 )   969     (18 )
 
Income before income taxes 1,307 1,178 2,337 2,192
 
Income tax provision   262     77     446     159  
 
Net income $ 1,045   $ 1,101   $ 1,891   $ 2,033  
 
 
Net income per common share:
Basic $ 1.46 $ 1.41 $ 2.58 $ 2.61
Diluted $ 1.43 $ 1.36 $ 2.52 $ 2.51
 
Weighted average shares:
Basic 716.1 780.4 732.1 779.7
Diluted 732.6 811.7 750.6 811.5
 
* During the third quarter of 2017, we adopted ASU 2017-12 with an
initial application date of January 1, 2017. Prior to the adoption
of ASU 2017-12, we recognized all changes in the fair value of the
excluded component of a hedge in Other income (expense), net in the
Consolidated Statements of Income under a mark-to-market approach.
Pursuant to the provisions of ASU 2017-12, we no longer recognize
the adjustments to the fair value of the excluded component in Other
income (expense), net but we instead recognize the initial value of
the excluded component using an amortization approach over the life
of the hedging instrument. The results for the three- and six-month
periods ended June 30, 2017 have been recast to reflect the adoption
of ASU 2017-12. The three- and six-month periods ended June 30, 2017
include the following immaterial revisions to previously issued
financial results:
  Three-Month Period Ended     Six-Month Period Ended
June 30, 2017 June 30, 2017
As Reported   As Revised As Reported   As Revised
Net product sales $ 3,256 $ 3,259 $ 6,206 $ 6,211
Other income (expense), net (76 ) (31 ) (50 ) (18 )
Income tax provision 69 77 153 159
Net income 1,061 1,101 2,002 2,033
Diluted net income per common share $ 1.31 $ 1.36 $ 2.47 $ 2.51
 
 
June 30, December 31,
  2018     2017  
Balance sheet items:
Cash, cash equivalents, debt securities available-for-sale and equity
investments with readily determinable fair values $ 3,410 $ 12,042
Total assets 33,444 30,141
Long-term debt, including current portion 20,256 15,838
Total stockholders' equity 3,430 6,921
 
 
Celgene Corporation and Subsidiaries
Reconciliation of GAAP to Adjusted Net Income
(In millions, except per share data)
           
Three-Month Periods Ended Six-Month Periods Ended
June 30, June 30,
  2018   2017*   2018   2017*
 
Net income - GAAP $ 1,045 $ 1,101 $ 1,891 $ 2,033
 
Before tax adjustments:
Cost of goods sold (excluding amortization of acquired intangible
assets):
Share-based compensation expense (1) 9 8 18 15
 
Research and development:
Share-based compensation expense (1) 157 70 356 135
Collaboration-related upfront expense (2) 146 75 391 85
Research and development asset acquisition expense (3) - - 1,125 325
Adjustment to clinical trial and development activity wind-down
charge
(4) - - (60 ) -
 
Selling, general and administrative:
Share-based compensation expense (1) 118 92 311 173
Litigation-related loss contingency accrual expense (5) - 315 - 315
 
Amortization of acquired intangible assets (6) 127 88 214 170
 
Acquisition related charges (income) and restructuring, net:
Change in fair value of contingent consideration and success payments (7) 7 (13 ) (23 ) 26
Acquisition related charges (8) 27 - 88 -
 
Other income (expense), net:
Change in fair value of equity investments (9) 6 - (953 ) -
 
Income tax provision:
Estimated tax impact from above adjustments (10) (52 ) (127 ) (185 ) (238 )
Non-operating tax adjustments (11)   (5 )   (95 )   (16 )   (170 )
Net income - Adjusted $ 1,585   $ 1,514   $ 3,157   $ 2,869  
 
Net income per common share - Adjusted
Basic $ 2.21 $ 1.94 $ 4.31 $ 3.68
Diluted $ 2.16 $ 1.87 $ 4.21 $ 3.54
 
Explanation of adjustments:
(1)   Exclude share-based compensation expense totaling $284 and $170 for
the three-month periods ended June 30, 2018 and 2017, respectively.
Exclude share-based compensation expense totaling $685 and $323 for
the six-month periods ended June 30, 2018 and 2017, respectively.
(2) Exclude upfront payment expense for research and development
collaboration arrangements.
(3) Exclude research and development asset acquisition expenses.
(4) Exclude adjustment of clinical trial and development activity
wind-down charge associated with the discontinuance of GED-0301
clinical trials in Crohn's disease.
(5) Exclude loss contingency accrual expenses related to a civil
litigation matter.
(6)

Exclude amortization of intangible assets acquired in the
acquisitions of Pharmion Corp., Gloucester Pharmaceuticals, Inc.
(Gloucester), Abraxis BioScience, Inc. (Abraxis), Celgene
Avilomics Research, Inc. (Avila), Quanticel Pharmaceuticals, Inc.
(Quanticel) and Juno Therapeutics, Inc. (Juno).

(7)

Exclude changes in the fair value of contingent consideration
related to the acquisitions of Gloucester, Abraxis, Avila, Nogra
Pharma Limited (Nogra), Quanticel and Juno, as well as changes in
the fair value of success payments related to the acquisition of
Juno.

(8) Exclude acquisition costs related to Juno.
(9)

Exclude changes in the fair value of equity investments due to the
adoption of ASU 2016-01 (Financial Instruments-Overall:
Recognition and Measurement of Financial Assets and Financial
Liabilities).

(10) Exclude the estimated tax impact of the above adjustments.
(11)

Exclude other non-operating tax expense items. The adjustments for
the three- and six-month periods ended June 30, 2018 and 2017 are
to exclude the excess tax related to the adoption of ASU 2016-09
(Compensation-Stock Compensation).

 

    Three-Month Period Ended     Six-Month Period Ended
June 30, 2017 June 30, 2017
As Reported   As Revised As Reported   As Revised
Net income - GAAP $ 1,061 $ 1,101 $ 2,002 $ 2,033
Net income - Adjusted 1,474 1,514 2,838 2,869
Diluted net income per common share - Adjusted $ 1.82 $ 1.87 $ 3.50 $ 3.54
 
 
Celgene Corporation and Subsidiaries
Reconciliation of Full-Year 2018 Projected GAAP to Adjusted Net
Income
(In millions, except per share data)
     
Range
Low High
 
Projected net income - GAAP (1) $ 4,374 $ 4,594
 
Before tax adjustments:
Cost of goods sold (excluding amortization of acquired intangible
assets):
Share-based compensation expense 31 28
 
Research and development:
Share-based compensation expense 554 502
Collaboration-related upfront expense 391 391
Research and development asset acquisition expense 1,125 1,125
Adjustment to clinical trial and development activity wind-down
charge
(60 ) (60 )
 
Selling, general and administrative:
Share-based compensation expense 542 491
 
Amortization of acquired intangible assets 493 469
 
Acquisition related charges (income) and restructuring, net:
Change in fair value of contingent consideration and success payments 24 14
Acquisition related charges 110 88
 
Other income (expense), net:
Change in fair value of equity investments (1,007 ) (1,007 )
 
Income tax provision:
Estimated tax impact from above adjustments (166 ) (188 )
Non-operating tax adjustments   (16 )   (16 )
Projected net income - Adjusted $ 6,395   $ 6,431  
 
Projected net income per diluted common share - GAAP $ 5.95 $ 6.25
 
Projected net income per diluted common share - Adjusted $ 8.70 $ 8.75
 
Projected weighted average diluted shares   735.0     735.0  
 
(1)   Our projected 2018 earnings do not include the effect of any
business combinations, collaboration agreements, asset acquisitions,
asset impairments, litigation-related loss contingency accruals,
changes in the fair value of our CVRs issued as part of the
acquisition of Abraxis, changes in the fair value of equity
investments as per ASU 2016-01 (Financial Instruments-Overall:
Recognition and Measurement of Financial Assets and Financial
Liabilities) or non-operating tax adjustments that may occur after
the day prior to the date of this press release.
 
 
Celgene Corporation and Subsidiaries
Net Product Sales
(In millions)
         
Three-Month Periods
Ended June 30, % Change
2018 2017 Reported Operational(1) Currency(2)
 
REVLIMID®
U.S. $ 1,586 $ 1,358 16.8% 16.8% 0.0%
International   867   676 28.3% 29.9% (1.6)%
Worldwide 2,453 2,034 20.6% 21.1% (0.5)%
 
POMALYST®/IMNOVID®
U.S. 341 241 41.5% 41.5% 0.0%
International   166   150 10.7% 11.8% (1.1)%
Worldwide 507 391 29.7% 30.1% (0.4)%
 
OTEZLA®
U.S. 291 306 (4.9)% (4.9)% 0.0%
International   84   52 61.5% 62.5% (1.0)%
Worldwide 375 358 4.7% 4.9% (0.2)%
 
ABRAXANE®
U.S. 152 161 (5.6)% (5.6)% 0.0%
International   91   93 (2.2)% (1.0)% (1.2)%
Worldwide 243 254 (4.3)% (3.9)% (0.4)%
 
IDHIFA® (3)
U.S. 16 - N/A N/A N/A
International   1   - N/A N/A N/A
Worldwide 17 - N/A N/A N/A
 
VIDAZA®
U.S. 3 2 50.0% 50.0% 0.0%
International   159   154 3.2% 5.0% (1.8)%
Worldwide 162 156 3.8% 5.6% (1.8)%
 
azacitidine for injection
U.S. 5 9 (44.4)% (44.4)% 0.0%
International   -   - N/A N/A N/A
Worldwide 5 9 (44.4)% (44.4)% 0.0%
 
THALOMID®
U.S. 17 21 (19.0)% (19.0)% 0.0%
International   11   13 (15.4)% (13.6)% (1.8)%
Worldwide 28 34 (17.6)% (16.9)% (0.7)%
 
ISTODAX®
U.S. 14 17 (17.6)% (17.6)% 0.0%
International   3   2 50.0% 48.7% 1.3%
Worldwide 17 19 (10.5)% (10.6)% 0.1%
 
All Other
U.S. - - N/A N/A N/A
International   1   4 N/A N/A N/A
Worldwide 1 4 N/A N/A N/A
 
Total Net Product Sales
U.S. 2,425 2,115 14.7% 14.7% 0.0%
International   1,383   1,144 20.9% 22.7% (1.8)%
Worldwide $ 3,808 $ 3,259 16.8% 17.4% (0.6)%
 
(1)   Operational includes impact from both volume and price.
(2) Currency includes the impact from both foreign exchange rates and
hedging activities.
(3)

IDHIFA® was approved in August 2017 in the U.S. for the
treatment of adult patients with R/R AML with an isocitrate
dehydrogenase-2 (IDH2) mutation as detected by an FDA approved
test.

 
 
Celgene Corporation and Subsidiaries
Net Product Sales
(In millions)
         
Six-Month Periods
Ended June 30, % Change
2018 2017 Reported Operational(1) Currency(2)
 
REVLIMID®
U.S. $ 3,073 $ 2,592 18.6% 18.6% 0.0%
International   1,614   1,326 21.7% 22.1% (0.4)%
Worldwide 4,687 3,918 19.6% 19.7% (0.1)%
 
POMALYST®/IMNOVID®
U.S. 641 457 40.3% 40.3% 0.0%
International   319   298 7.0% 7.7% (0.7)%
Worldwide 960 755 27.2% 27.5% (0.3)%
 
OTEZLA®
U.S. 567 505 12.3% 12.3% 0.0%
International   161   95 69.5% 69.8% (0.3)%
Worldwide 728 600 21.3% 21.3% 0.0%
 
ABRAXANE®
U.S. 311 303 2.6% 2.6% 0.0%
International   194   187 3.7% 4.2% (0.5)%
Worldwide 505 490 3.1% 3.3% (0.2)%
 
IDHIFA® (3)
U.S. 30 - N/A N/A N/A
International   1   - N/A N/A N/A
Worldwide 31 - N/A N/A N/A
 
VIDAZA®
U.S. 5 4 25.0% 25.0% 0.0%
International   314   310 1.3% 2.0% (0.7)%
Worldwide 319 314 1.6% 2.3% (0.7)%
 
azacitidine for injection
U.S. 11 18 (38.9)% (38.9)% 0.0%
International   1   - N/A N/A N/A
Worldwide 12 18 (33.3)% (33.3)% 0.0%
 
THALOMID®
U.S. 36 43 (16.3)% (16.3)% 0.0%
International   23   27 (14.8)% (14.1)% (0.7)%
Worldwide 59 70 (15.7)% (15.4)% (0.3)%
 
ISTODAX®
U.S. 30 34 (11.8)% (11.8)% 0.0%
International   6   5 20.0% 17.7% 2.3%
Worldwide 36 39 (7.7)% (8.0)% 0.3%
 
All Other
U.S. - - N/A N/A N/A
International   2   7 N/A N/A N/A
Worldwide 2 7 N/A N/A N/A
 
Total Net Product Sales
U.S. 4,704 3,956 18.9% 18.9% 0.0%
International   2,635   2,255 16.9% 17.6% (0.7)%
Worldwide $ 7,339 $ 6,211 18.2% 18.4% (0.2)%
 
(1)   Operational includes impact from both volume and price.
(2) Currency includes the impact from both foreign exchange rates and
hedging activities.
(3)

IDHIFA® was approved in August 2017 in the U.S. for the
treatment of adult patients with R/R AML with an isocitrate
dehydrogenase-2 (IDH2) mutation as detected by an FDA approved
test.

 

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