Celgene Corporation Reports Record Third Quarter Revenue And Operating Profits
Product Sales Drive Record Third Quarter Revenue and Profits: * Record Net Product Sales of $223.1 Million - REVLIMID Achieved $101.3 Million in Net Product Sales - THALOMID Net Product Sales Totaled $108.4 Million * Record Adjusted Net Income of $59.4 Million with Adjusted Diluted Earnings Per Share of $0.15 Financial Highlights of Third Quarter Performance Year-Over-Year: * Total Revenue Increased 89.1% to a Record $244.8 Million * Adjusted Operating Income Increased 682.1% to $79.4 Million * Adjusted R&D Expenditures Increased to $64.1 Million to Support Continued Expansion of Both REVLIMID and Promising Pipeline Clinical Programs * Adjusted SG&A Expenses Increased to $67.3 Million to Support Commercial Activities for Multiple Product Launches, Including Preparations for International Launches
SUMMIT, N.J., Oct. 26 /PRNewswire-FirstCall/ -- Celgene Corporation announced adjusted net income of $59.4 million, or adjusted earnings per diluted share of $0.15 for the quarter ended September 30, 2006. Based on U.S. Generally Accepted Accounting Principles (GAAP), Celgene reported net income of $20.4 million, or diluted earnings per share of $0.05 for the quarter ended September 30, 2006, including share-based employee compensation expense, compared to net income in the prior year period of $0.7 million. Total revenue was a record $244.8 million for the quarter ended September 30, 2006, an increase of 89.1% over the same period in 2005 driven by REVLIMID net sales of $101.3 million, and THALOMID net sales of $108.4 million, an increase of 9.3% year-over-year. ALKERAN(R) net sales for the Third Quarter were $12.2 million in 2006 compared to $13.9 million in 2005. Revenue from Focalin(TM) and the Ritalin(R) family of drugs totaled $17.9 million for the Third Quarter of 2006 compared to $10.7 million over the same period last year.
For the nine-month period, total net product sales reached a record $559.7 million, an increase of 76.6% over the same period in 2005. REVLIMID(R) sales for the nine-month period reached $196.8 million. THALOMID(R) sales for the nine-month period of 2006 were $322.8 million compared to $282.0 million in 2005, an increase of 14.5% year-over-year. Celgene posted adjusted net income of $135.7 million or adjusted earnings per diluted share of $0.35, during the nine-month period of 2006, compared to adjusted net income of $60.6 million or adjusted earnings per diluted share of $0.17 in the comparable 2005 period. During the nine-month period on a reported basis of 2006, Celgene announced GAAP net income of $46.1 million or earnings per diluted share of $0.12, compared to GAAP net income of $59.7 million or earnings of $0.16 per diluted share in the first nine-months of last year, which did not include charges for stock option expense.
Adjusted net income and adjusted per share amounts for the three and nine- month periods ended September 30, 2006, eliminate the effects of charges for share-based employee compensation expense associated with the application of the Statement of Financial Accounting Standards (SFAS) No. 123 (revised 2004), "Share-Based Payment", (SFAS 123(R)). The after tax net impact of share-based employee compensation expense reduced GAAP net income by $15.4 million, or $0.04 per diluted share for the three-month period ended September 30, 2006 and by $40.6 million, or $0.10 per diluted share for the nine-month period ended September 30, 2006. Adjusted net income and per share amounts, for the three-month and nine-month periods ended September 30, 2006 and 2005, excludes amortization of acquisition intangibles resulting from the acquisition of Penn T Limited and charges to record our share of equity losses in EntreMed, Inc. Also, adjusted net income and per share amounts, for the three-month period ended September 30, 2006 and nine-month periods ended September 30, 2006 and 2005 excludes gains (losses) recorded for changes in the estimated value of our investment in EntreMed, Inc. warrants. The nine-month periods ended September 30, 2006 and 2005, and the three-month period ended September 30, 2005, also excludes accelerated depreciation expense related to the Company's corporate headquarters relocation. Adjusted net income and per share amounts, for the nine-month period ended September 30, 2006 and 2005 includes adjustments to the income tax provision to reflect a projected cash tax rate of 32.0% and 28.0%, respectively.
Adjusted or Non-GAAP financial measures provide investors and management with supplemental measures of operating performance and trends that facilitate comparisons between periods before, during 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 non-recurring items. Adjusted earnings are not, and should not be, viewed as a substitute for GAAP net income. We define adjusted diluted earnings per share amounts as adjusted net income divided by the GAAP weighted average number of diluted shares outstanding. Our definition of adjusted earnings and adjusted diluted earnings per share may differ from similarly named measures used by others.
In support of the Company's commitment to bring more disease-altering therapies to patients in need, Celgene continued to advance development of promising compounds in early-stage, preclinical and discovery programs. The Company increased R&D investments in multiple Phase II and Phase III programs evaluating REVLIMID across a broad range of hematological cancers with unmet medical needs including: multiple myeloma, myelodysplastic syndromes, chronic lymphocyte leukemia, non-Hodgkin's lymphoma and myelofibrosis. During the third quarter of 2006, the Company incurred adjusted R&D expenses of $64.1 million, representing an increase of 29.8% compared to the year ago quarter. These R&D expenditures support ongoing clinical progress in multiple proprietary development programs for REVLIMID(R) and THALOMID(R) internationally; for other promising immunomodulatory compounds such as CC- 4047, CC-11006 and CC-10015; for our lead anti-inflammatory compounds CC-10004 and CC-11050; and our kinase and ligase inhibitor programs and placental- derived stem cell program. On a reported GAAP basis R&D expenses were $66.8 million in the third quarter of 2006.
Adjusted selling, general and administrative expenses were $67.3 million, representing an increase of 5.6% over the second quarter of 2006 and an increase of 44.2% compared to the year ago quarter. Expenses during the third quarter of 2006 were driven primarily by significantly higher marketing and sales expenses related to REVLIMID and THALOMID product launch activities in the United States, and continued expansion of Celgene International in 23 countries, including Europe, Japan, Australia and Canada. On a reported GAAP basis selling, general and administrative expenses were $89.6 million in the third quarter of 2006.
Celgene reported $872.5 million in cash and marketable securities as of September 30, 2006, an increase of $148.2 million from December 31, 2005.
"During the third quarter we continued to make significant progress towards our objective to maximize REVLIMID's full commercial and clinical potential worldwide," said Celgene Chief Executive Officer Sol J. Barer. "We continue to build on our strong science capabilities and to invest in our future by advancing promising compounds through our research and development pipeline."
Webcast
Celgene will host a conference call to discuss the results and achievements of its third quarter 2006 operating and financial performance on October 26, 2006 at 9:00 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 EDT October 27, 2006 until midnight EDT November 4, 2006. To access the replay, dial 1-888-203-1112 and enter reservation number 2547910. The Company's fourth quarter and year-end financial and operational results will be reported on Thursday, February 1, 2007.
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 website 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 10K, 10Q and 8K reports.
Celgene Corporation and Subsidiaries Consolidated Statement of Operations Three Months Ended (Unaudited) (In thousands, except per share data) September 30, 2006 GAAP Adjustments "Adjusted" Net product sales $223,105 $- $223,105 Collaborative agreements and other revenue 4,186 - 4,186 Royalty revenue 17,548 - 17,548 Total revenue 244,839 - 244,839 Cost of goods sold 34,205 (76)(1)(3) 34,129 Research and development 66,756 (2,689)(1) 64,067 Selling, general and administrative 89,597 (22,309)(1)(2) 67,288 Total costs and expenses 190,558 (25,074) 165,484 Operating income 54,281 25,074 79,355 Equity in losses of associated company 736 (736)(3) - Interest and other income, net 8,031 27 (4) 8,058 Income before taxes 61,576 25,837 87,413 Income tax provision (benefit) 41,139 (13,167)(5) 27,972 Net income $20,437 $39,004 59,441 Per common share: Net income - basic $0.06 $0.11 $0.17 Net income - diluted $0.05 $0.10 (6) $0.15 Weighted average shares -basic 351,200 351,200 351,200 Weighted average shares -diluted 404,858 404,858 404,858 September 30, 2005 GAAP Adjustments "Adjusted" Net product sales $113,900 $- $113,900 Collaborative agreements and other revenue 4,879 - 4,879 Royalty revenue 10,727 - 10,727 Total revenue 129,506 - 129,506 Cost of goods sold 23,199 176 (3) 23,375 Research and development 49,348 - 49,348 Selling, general and administrative 46,941 (304)(2) 46,637 Total costs and expenses 119,488 (128) 119,360 Operating income 10,018 128 10,146 Equity in losses of associated company 980 (980)(3) - Interest and other income, net 4,605 - 4,605 Income before taxes 13,643 1,108 14,751 Income tax provision (benefit) 12,975 (8,845)(5) 4,130 Net income $668 $9,953 $10,621 Per common share: Net income - basic $- $0.03 $0.03 Net income - diluted $- $0.03 (6) $0.03 Weighted average shares -basic 336,596 336,596 336,596 Weighted average shares -diluted 359,724 359,724 359,724 Celgene Corporation and Subsidiaries Notes to Reconciliation of GAAP Earnings to "Adjusted" Earnings Three Months Ended September 30, 2006 and 2005 (Unaudited) (In thousands, except per share data) (1) To exclude SFAS 123(R) share-based compensation expense totaling $23,194 related to stock options. (2) To exclude the amortizaton of acquisition intangibles resulting from the acquisition of Penn T Limited in the amount of $2,217 in 2006 and $193 in 2005 and to exclude accelerated depreciation expense related to the relocation of the Company's corporate headquarters in the amount of $111 in 2005. (3) To exclude the Company's share of equity losses in EntreMed, Inc. and to adjust for our share of THALOMID royalties payable to EntreMed, Inc. (4) To exclude the charge recorded for changes in the estimated value of the Company's investment in EntreMed, Inc. warrants. (5) The adjusted income tax provision reflects a projected annual cash tax rate of 32.0% for 2006 and 28.0% for 2005. (6) Adjusted diluted per share amounts represent adjusted net income divided by the GAAP weighted average number of diluted shares outstanding. Celgene Corporation and Subsidiaries Consolidated Statement of Operations Nine Months Ended (Unaudited) (In thousands, except per share data) September 30, 2006 GAAP Adjustments "Adjusted" Net product sales $559,749 $- $559,749 Collaborative agreements and other revenue 12,032 - 12,032 Royalty revenue 52,138 - 52,138 Total revenue 623,919 - 623,919 Cost of goods sold 91,148 (995)(1)(3) 90,153 Research and development 178,298 (10,038)(1) 168,260 Selling, general and administrative 239,318 (53,976)(1)(2) 185,342 Total costs and expenses 508,764 (65,009) 443,755 Operating income 115,155 65,009 180,164 Equity in losses of associated company 5,202 (5,202)(3) - Interest and other income, net 19,032 298 (4) 19,330 Income before taxes 128,985 70,509 199,494 Income tax provision (benefit) 82,916 (19,077)(5) 63,839 Net income $46,069 $89,586 135,655 Per common share: Net income - basic $0.13 $0.26 $0.39 Net income - diluted $0.12 $0.23 (6) $0.35 Weighted average shares -basic 347,687 347,687 347,687 Weighted average shares -diluted 403,092 403,092 403,092 September 30, 2005 GAAP Adjustments "Adjusted" Net product sales $316,928 $- $316,928 Collaborative agreements and other revenue 35,829 - 35,829 Royalty revenue 34,846 - 34,846 Total revenue 387,603 - 387,603 Cost of goods sold 53,999 176 (3) 54,175 Research and development 138,413 - 138,413 Selling, general and administrative 126,114 (2,953)(2) 123,161 Total costs and expenses 318,526 (2,777) 315,749 Operating income 69,077 2,777 71,854 Equity in losses of associated company 5,975 (5,975)(3) - Interest and other income, net 5,396 6,875 (4) 12,271 Income before taxes 68,498 15,627 84,125 Income tax provision (benefit) 8,770 14,785 (5) 23,555 Net income $59,728 $842 $60,570 Per common share: Net income - basic $0.18 $- $0.18 Net income - diluted $0.16 $0.01 (6) $0.17 Weighted average shares -basic 334,054 334,054 334,054 Weighted average shares -diluted 390,004 390,004 390,004 Celgene Corporation and Subsidiaries Notes to Reconciliation of GAAP Earnings to "Adjusted" Earnings Nine Months Ended September 30, 2006 and 2005 (Unaudited) (In thousands, except per share data) (1) To exclude SFAS 123(R) share-based compensation expense totaling $58,694 related to stock options. (2) To exclude the amortizaton of acquisition intangibles resulting from the acquisition of Penn T Limited in the amount of $6,450 in 2006 and $598 in 2005 and to exclude accelerated depreciation expense related to the relocation of the Company's corporate headquarters in the amount of $202 in 2006 and $2,355 in 2005. (3) To exclude the Company's share of equity losses in EntreMed, Inc. and to adjust for our share of THALOMID royalties payable to EntreMed, Inc. (4) To exclude the charge recorded for changes in the estimated value of the Company's investment in EntreMed, Inc. warrants. (5) The adjusted income tax provision reflects a projected annual cash tax rate of 32.0% for 2006 and 28.0% for 2005. (6) Adjusted diluted per share amounts represent adjusted net income divided by the GAAP weighted average number of diluted shares outstanding. Celgene Corporation and Subsidiaries Consolidated Balance Sheet Data (Unaudited) (In thousands, except per share data) September 30, December 31, 2006 2005 Cash, cash equivalents & marketable securities $872,474 $724,260 Total assets 1,526,819 1,246,637 Convertible notes 399,962 399,984 Stockholders' equity 838,278 635,775
Celgene CorporationCONTACT: Robert J. Hugin, President and Chief Operating Officer, +1-908-673-9102, or Brian P. Gill, Senior Director of PR-IR, +1-908-673-9530, bothof Celgene Corporation
Web site: http://www.celgene.com/