SUMMIT, N.J., Nov. 3 /PRNewswire-FirstCall/ -- Celgene Corporation announced adjusted earnings per diluted share of $0.06 for the quarter ended September 30, 2005. On a reported basis, under U.S. Generally Accepted Accounting Principles (GAAP), Celgene reported net income of $668.0 thousand compared to net income of $19.0 million, or earnings of $0.11 per diluted share in the third quarter of the prior year. Total product sales for the third quarter increased 35.9 % to $113.9 million from $83.8 million for the prior-year quarter. THALOMID(R) net sales in the third quarter of 2005 increased 25.9% to $99.1 million from $78.7 million in the third quarter of 2004. Celgene posted third quarter adjusted net income of $10.4 million, or adjusted earnings of $0.06 per diluted share compared to adjusted net income of $21.2 million or adjusted earnings of $0.12 per diluted share in the third quarter of last year.
For the nine-month period, total product sales reached a record $316.9 million, an increase of 32.6% over the same period in 2004. THALOMID sales for the nine-month period were $281.9 million compared to $222.5 million in 2004, an increase of 26.7% year-over-year. Celgene posted adjusted net income of $60.1 million or adjusted earnings of $0.33 per diluted share, during the nine-month period, compared to adjusted net income of $42.2 million or adjusted earnings of $0.24 per diluted share in the comparable 2004 period. During the nine-month period on a reported basis, Celgene announced GAAP net income of $59.7 million or earnings of $0.33 per diluted share, compared to GAAP net income of $30.5 million or earnings of $0.17 per diluted share in the nine-months of last year.
Adjusted net income and per share amounts for the three and nine-month periods ended September 30, 2005, eliminate the effects of charges for accelerated depreciation expense related to the Company’s corporate headquarters relocation, charges to record our share of equity losses in EntreMed, Inc. and to adjust the income tax provision to a projected cash tax rate of 28.0 percent. Adjusted net income and per share amounts for the nine-month period ended September 30, 2005, also excludes the effects of charges recorded for changes in the estimated value of the Company’s investment in EntreMed, Inc. warrants which were exercised on March 31, 2005.
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 because certain unusual or non-recurring items that do not affect the Company’s basic operations also 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. Our definition of adjusted earnings may differ from others.
To support clinical development and to advance U.S. and European regulatory filings, Celgene increased R&D expenditures in REVLIMID(R) regulatory programs in myelodysplastic syndromes and multiple myeloma. Celgene incurred R&D expenses of $49.3 million in the third quarter of 2005, representing an increase of 22.9% compared to the year ago quarter. These R&D expenditures are expected to increase in the fourth quarter in support of our ongoing global regulatory filings, late stage clinical trials, clinical progress in multiple proprietary development programs and related clinical manufacturing costs.
Selling, general and administrative expenses were $46.9 million in the third quarter of 2005, driven primarily by higher marketing and sales expenses related to product launch activities. Approximately $13 million, or approximately $0.07 per diluted share, in marketing and sales expenses were spent to support pre-launch activities for REVLIMID. These marketing and sales expenditures are expected to increase in the fourth quarter 2005 as Celgene optimizes its commercial launch preparations.
As of September 30, 2005, Celgene reported $746.0 million in cash and marketable securities, an increase of $22.3 million versus the prior quarter.
“We are pleased with the progress of our REVLIMID regulatory application for MDS in the U.S. and Europe achieved during the third quarter,” said John W. Jackson, Chairman and Chief Executive Officer of Celgene Corporation.” Our commercial preparations are being finalized to ensure rapid access to REVLIMID upon approval.”
2005 THIRD QUARTER COMPANY HIGHLIGHTS: Clinical and Regulatory Achievements: - The Oncologic Drugs Advisory Committee (ODAC) of the U.S. Food and Drug Administration (FDA) recommended full approval of REVLIMID for the treatment of 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. The committee based its recommendation on clinical data from an open label Phase II trial, evaluating REVLIMID(R) in the largest trial with MDS patients with deletion 5q chromosomal abnormality to date. The original action date under the Prescription Drug User Fee Act (PDUFA) for the REVLIMID NDA was extended from October 7, 2005 to January 7, 2006 to allow more time for completion of review of the REVLIMID risk-management program. - The European Medicines Agency (EMEA) accepted the Company’s Marketing Authorization Application (MAA) for REVLIMID for review. The application is based on clinical data from an open-label Phase II trial, evaluating REVLIMID in the largest clinical trial to date of MDS patients with deletion 5q chromosomal abnormality. Celgene is seeking authorization to market REVLIMID as a treatment for 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. Corporate and Commercial Developments: - The Celgene management team was further strengthened by the addition of Mr. Aart Brouwer as President of Celgene International, Sarl based in Neuchatel, Switzerland. Aart brings over 30 years of global pharmaceutical and biotechnology experience building successful major product franchises throughout Europe. Prior to Celgene, Aart spent 14 years building Amgen’s international business in Europe. His accomplishments included building subsidiaries in all of Europe, with Sales, Marketing and high quality Clinical Development organizations. - Celgene contributed $2 million in financial support to an independent, non-profit 501(c)(3) charity whose mission is to support the needs of the underinsured. The foundation provides financial support to eligible patients suffering from certain diseases. These patients have insurance coverage, but may not be able to afford the out-of-pocket costs associated with that coverage, which are necessary to obtain prescription drug therapies critical to their overall treatment. The foundation, which is not affiliated with Celgene, assesses patients’ eligibility to receive co-payment assistance based upon its own independent objective eligibility criteria. Celgene has no involvement or influence over any patient eligibility decisions, and is one of many donors to the foundation. Webcast
Celgene will webcast its third quarter 2005 operating and financial results on November 3, 2005 starting at 8:00 a.m. EST, and its 2005 Analyst/Investor Day program starting at 8:30 a.m. EST. The webcast will be available at http://www.celgene.com. A replay of the event will be available from noon EST November 4, 2005 until midnight EST November 17, 2005. To access the audio replay, dial 1-888-286-8010 and enter Reservation Number 22719360.
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 http://www.celgene.com.
This release contains forward-looking statements which are subject to 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 expressed or 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 other factors described in the Company’s filings with the Securities and Exchange Commission such as our 10-K, 10-Q and 8-K reports.
Celgene Corporation Consolidated Statement of Operations Three Months Ended (Unaudited) (In thousands, except per share data) September 30, 2005 September 30, 2004 GAAP Adjustments “Adjusted” GAAP Adjustments “Adjusted” Net product sales $113,900 $- $113,900 $83,803 $- $83,803 Collaborative agreements and other revenue 4,879 - 4,879 10,392 - 10,392 Royalty revenue 10,727 - 10,727 7,273 - 7,273 Total revenue 129,506 - 129,506 101,468 - 101,468 Cost of goods sold 23,199 176 (2) 23,375 15,166 - 15,166 Research and development 49,348 - 49,348 40,154 - 40,154 Selling, general and administrative 46,941 (111)(1) 46,830 27,750 27,750 Total costs and expenses 119,488 65 119,553 83,070 - 83,070 Operating income 10,018 (65) 9,953 18,398 - 18,398 Equity in losses of associated company 980 (980)(2) - - - - Interest and other income (expense), net 4,605 4,605 2,584 2,246(3) 4,830 Income before taxes 13,643 915 14,558 20,982 2,246 23,228 Income tax provision (benefit) 12,975 (8,899)(4) 4,076 1,974 47(4) 2,021 Net income $668 $9,814 10,482 $19,008 $2,199 21,207 Per common share - basic and diluted Net income - basic $- $0.06 $0.06 $0.12 $0.01 $0.13 Net income - diluted $- $0.05 $0.06 $0.11 $0.01 $0.12 Weighted average shares outstanding -basic 168,298 168,298 168,298 164,091 164,091 164,091 Weighted average shares outstanding -diluted 179,862 179,862 179,862 177,064 193,576 193,576(5) Celgene Corporation Notes to Reconciliation of GAAP Earnings to “Adjusted” Earnings Three Months Ended September 30, 2005 and 2004 (Unaudited) (In thousands, except per share data) (1) To exclude accelerated depreciation expense related to the relocation of the Company’s corporate headquarters. (2) 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. (3) To exclude the charge recorded for changes in the estimated value of the Company’s investment in EntreMed, Inc. warrants prior to our March 31, 2005 exercise. (4) To adjust the income tax provision to a projected cash tax rate of 28.0% and 8.7% in 2005 and 2004, respectively. The projected cash tax rate differs from the GAAP provision due primarily to (i) The recognition of deferred tax assets in the first quarter of 2005 that decrease the tax provision but not cash taxes (ii) the use of net operating losses that arose from employee stock option deductions that reduce cash taxes, but not the tax provision, (iii) the exercise of employee stock options in the current year that reduce cash taxes, but not the tax provision, and (iv) the payment in the current year of prior year taxes, that increase cash taxes, but not the tax provision (5) For the three-month period ended September 30, 2004, the Company’s convertible debt was anti-dilutive on a GAAP basis but dilutive on an adjusted basis. Accordingly, the weighted-average shares used to compute the adjusted diluted earnings includes the additional common shares assuming conversion of the convertible debt. Celgene Corporation Consolidated Statement of Operations Nine Months Ended (Unaudited) (In thousands, except per share data) September 30, 2005 September 30, 2004 GAAP Adjustments “Adjusted” GAAP Adjustments “Adjusted” Net product sales $316,928 $- $316,928 $238,933 $- $238,933 Collaborative agreements and other revenue 35,829 - 35,829 15,420 - 15,420 Royalty revenue 34,846 - 34,846 17,741 - 17,741 Total revenue 387,603 - 387,603 272,094 - 272,094 Cost of goods sold 53,999 176 (2) 54,175 43,655 - 43,655 Research and development 138,413 - 138,413 116,520 - 116,520 Selling, general and administrative 126,114 (2,355)(1) 123,759 79,408 - 79,408 Total costs and expenses 318,526 (2,179) 316,347 239,583 - 239,583 Operating income 69,077 2,179 71,256 32,511 - 32,511 Equity in losses of associated company 5,975 (5,975)(2) - - - - Interest and other income (expense), net 5,396 6,875 (3) 12,271 1,937 11,801(3) 13,738 Income before taxes 68,498 15,029 83,527 34,448 11,801 46,249 Income tax provision (benefit) 8,770 14,617 (4) 23,387 3,931 93(4) 4,024 Net income $59,728 $412 60,140 $30,517 $11,708 42,225 Per common share - basic and diluted Net income - basic $0.36 $0.00 $0.36 $0.19 $0.07 $0.26 Net income - diluted $0.33 $- $0.33 $0.17 $0.07 $0.24 Weighted average shares outstanding -basic 167,027 167,027 167,027 163,574 163,574 163,574 Weighted average shares outstanding -diluted 195,002 195,002 195,002 176,273 176,273 176,273 Celgene Corporation Notes to Reconciliation of GAAP Earnings to “Adjusted” Earnings Nine Months Ended September 30, 2005 and 2004 (Unaudited) (In thousands, except per share data) (1) To exclude accelerated depreciation expense related to the relocation of the Company’s corporate headquarters. (2) 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. (3) To exclude the charge recorded for changes in the estimated value of the Company’s investment in EntreMed, Inc. warrants prior to our March 31, 2005 exercise. (4) To adjust the income tax provision to a projected cash tax rate of 28.0% and 8.7% in 2005 and 2004, respectively. The projected cash tax rate differs from the GAAP provision due primarily to (i) The recognition of deferred tax assets in the first quarter of 2005 that decrease the tax provision but not cash taxes (ii) the use of net operating losses that arose from employee stock option deductions that reduce cash taxes, but not the tax provision, (iii) the exercise of employee stock options in the current year that reduce cash taxes, but not the tax provision, and (iv) the payment in the current year of prior year taxes, that increase cash taxes, but not the tax provision Celgene Corporation Consolidated Balance Sheet Data (Unaudited) (In thousands, except per share data) September 30, December 31, 2005 2004 Cash, cash equivalents & marketable securities $745,990 $748,537 Total assets 1,213,455 1,107,293 Convertible notes 399,992 400,000 Stockholders’ equity 583,232 477,444
Celgene Corporation
CONTACT: Robert J. Hugin, Senior VP and CFO of Celgene Corporation,+1-908-673-9102, or Brian P. Gill, Director of PR/IR, +1-908-673-9530, bothof Celgene Corporation
Web site: http://www.celgene.com/
