Analyst Conference Summary

Celgene
CELG

conference date: May 8, 2008 @ 6:00 AM Pacific Time
for quarter ending: March 31, 2008 (1st quarter)

I own this stock
Forward-looking statements

Overview: Merger costs hurt GAAP earnings, but otherwise plenty of good news.

Basic data (GAAP):

Revenue was $462.6 million, up 12% sequentially from $414.6 million and up 58% from $293.4 million year-earlier.

Net income was negative $1.64 billion, down sequentially from positive $75.3 million and down from positive $57 million year-earlier.

EPS (earnings per share) were negative $3.98, down sequentially from positive $0.18 and down from positive $0.14 year-earlier.

Guidance:

Total 2008 revenues $2.1 billion. International Thalidomide revenues expected at $100 million. 90% gross margins rest of year. $580 to $600 million SG&A expense, increased due to acquisition. Vidaza $200 million for 10 months. Non-GAAP EPS $1.45 per share.

Conference Highlights:

The acquisition of Pharmion was completed on March 7. So 3 weeks of Pharmion revenue and expenses were included in results. In-process research and development acquisition charge against GAAP net income was $1.74 billion. Believes Pharmion will be dilutive in 2008 ($0.05 to $0.10 per share full 2008), accretive in 2009, and materially accretive in 2010 and beyond.

Non-GAAP numbers: revenues $461.0 million; operating income $188.4 million; net income $159.3 million; EPS $0.36. This excludes the acquisition charge and $17.5 million for share-based compensation.

Revlimid sales were $286.8 million, up 96% y/y (and up 16% sequentially).
Thalomid sales were $113.9 million, up 7% from $106 million year-earlier.
Alkeran sales $15.1 million.
Focalin and Ritalin sales $25.9 million up 31% from $19.8 million year-earlier.
Vidaza sales were $13.8 million (from March 8). Full quarter Vidaza sales were nearly $50 million.

Product sales were $431.4 million, royalty and other revenue $31.2 million.

90% gross product margin, down from 92% year-earlier.

VIDAZA revenues are expected to be about $200 million between Pharmion acquisition date and end of 2008. Significant commercial potential seen.

Thalidomide Pharmion granted full marketing authorization for newly diagnosed multiple myeloma by European Medicines Agency.

Revlimid now available in over 60% of Europe, including Germany, France, Spain and Italy. New prescriptions in U.S. increased 10% sequentially. Global regulatory progress continues.

R&D expenses more than doubled, including a $45 million upfront collaboration payment to Acceleron and expansion of international program and pipeline.

Cash and equivalents ended at $2.0 billion, down $700 million due to acquisition of Pharmion. Expects $2.6 billion cash and equivalents by end of 2008.

Cost of goods sold was $44.7 million. R&D $156.9 million. Selling, general and administrative (SG&A) $140.5 million. Amortization $9.8 million. In process R&D acquisition expense $1.74 billion. Interest income was $28.3 million. $35.0 income tax provision. GAAP operating loss $1.63 billion.

Clinical trials on a variety of products and indications continue and some good results have come in, including good Vidaza survival data for high-risk MDS.

Q&A:

Myeloma v. MDS revlimid presciptions in U.S.? Growth is mainly in myeloma at this time. We had good market share growth in both previously treated and new patient segments. Compendia listing last September means no newly-diagnosed patient had been refused reimbursement.

We think Revlimid will compare and do very well in the newly diagnosed myeloma setting.

Revlimid in Europe? In some nations has started as a 4th line therapy, in others it is 2nd line, but mostly it is not first line, yet. Thalomid will do well in budget-constrained markets for 1st line. We still have a very big penetration upside. There will be continued pressure on price and reimbursement, which is why we are looking for more trial data to support it.

SG&A expense, organic v. Pharmion addition? About $25 to $30 will be acquisition related one-time expense in 2008. $20 to $25 million (per quarter?) added SG&A from Pharmion on a continuing basis.

Italy revenue did not come in Q1, will see in Q2. Spain revenue was for most of Q1. Japanese market appears to be similar to the U.S. and Europe, but about a year to approval.

Duration of Revlimid use is expanding as expected. There do not seem to be any accumulated toxicities with the drug. Maintenance trials are underway.

OpenIcon Analyst Conference Summaries Main Page

Celgene Investor Relations page

My Celgene main page

Search

More Analyst Conference Pages:

 
 ADBE
 AKAM
 ALTR
 AMAT
 AMD
 AMGN
 ANSV
 ATML
 BIIB
 CELG
 CHINA
 CSCO
 DELL
 DNA
 DNDN
 GILD
 GOOG
 HILL
 HPQ
 IBM
 INTC
 JNPR
 LLTC
 MCHP
 MOT
 MRVL
 MSFT
 MXIM
 NAPS
 NOVL
 NVDA
 ORCL
 ONXX
 RACK
 RHT
 STMP
 SUNW
 TXN
 XLNX
 YHOO

Disclaimer: Our analyst summaries may include both our condensations of statements made by company representatives and our own analysis. They are not covered by any warranty. We cannot guarantee anything said by company representatives is true. We try not to make errors, but it is possible. Before making or terminating an investment you should always verify any factual basis of your decision.

Copyright 2008 William P. Meyers