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Celgene Reports Second Quarter 2012 Operating And Financial Results

About ABRAXANE

In the U.S., ABRAXANE for Injectable Suspension (paclitaxel protein-bound particles for injectable suspension) is indicated for the treatment of breast cancer after failure of combination chemotherapy for metastatic disease or relapse within six month of adjuvant chemotherapy. Prior therapy should have included an anthracycline unless clinically contraindicated.

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 Web site at www.celgene.com.

Forward-Looking Statements

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.

In addition to financial information prepared in accordance with U.S. GAAP, this press release also contains non-GAAP financial measures that we believe provide investors and management with supplemental information relating to operating performance and trends that facilitate comparisons between periods and with respect to projected information. These non-GAAP measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with U.S. GAAP. We typically exclude certain GAAP items that management does not believe affect our basic operations and that do not meet the GAAP definition of unusual or non-recurring items. Other companies may define these measures in different ways. See the attached Reconciliations of GAAP to non-GAAP Net Income for explanations of the amounts excluded and included to arrive at non-GAAP net income and non-GAAP earnings per share amounts for the three- and six-month periods ended June 30, 2012 and 2011, and for the projected amounts for the year ending December 31, 2012.

 
Celgene Corporation and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited)
(In thousands, except per share data)
                       
 
Three-Month Periods Ended June 30, Six-Month Periods Ended June 30,
  2012     2011     2012     2011  
 
Net product sales $ 1,336,590 $ 1,154,328 $ 2,582,089 $ 2,237,937
Other revenue   30,174     28,827     57,963     70,499  
Total revenue   1,366,764     1,183,155     2,640,052     2,308,436  
 
Cost of goods sold (excluding amortization of
acquired intangible assets) 71,852 126,443 144,372 253,711
Research and development 447,098 371,520 809,142 806,998
Selling, general and administrative 323,027 305,643 648,805 607,904
Amortization of acquired intangible assets 44,148 70,087 85,908 139,137
Acquisition related (gains) charges and restructuring, net   39,285     (9,477 )   28,215     (106,221 )
Total costs and expenses   925,410     864,216     1,716,442     1,701,529  
 
Operating income 441,354 318,939 923,610 606,907
 
Other income (expense), net   (670 )   (528 )   (8,924 )   (1,688 )
 
Income before income taxes 440,684 318,411 914,686 605,219
 
Income tax provision   73,311     39,203     145,776     70,925  
 
Net income 367,373 279,208 768,910 534,294
 
Non-controlling interest   -     190     -     694  
 
Net income attributable to Celgene $ 367,373   $ 279,398   $ 768,910   $ 534,988  
 
 
Net income per share attributable to Celgene:
Basic $ 0.84 $ 0.60 $ 1.76 $ 1.15
Diluted $ 0.82 $ 0.59 $ 1.72 $ 1.14
 
Weighted average shares:
Basic 436,703 462,625 437,526 464,300
Diluted 445,379 469,962 447,092 470,958
 
      June 30,       December 31,    
  2012   2011
Balance sheet items:
Cash, cash equivalents & marketable securities $ 2,561,544 $ 2,648,154
Total assets 10,381,207 10,005,910
Short-term borrowings 390,434 526,684
Long-term debt 1,272,112 1,275,585
Total stockholders' equity 5,958,028 5,512,727
 
Celgene Corporation and Subsidiaries
Reconciliation of GAAP to Non-GAAP Net Income
(In thousands, except per share data)
                       
 
Three-Month Periods Ended June 30,   Six-Month Periods Ended June 30,
  2012     2011     2012     2011  
 
Net income attributable to Celgene - GAAP $ 367,373 $ 279,398 $ 768,910 $ 534,988
 
Before tax adjustments:
Total revenues:
Sales of products exited or to be exited (1 ) - (6,565 ) - (23,468 )
Abraxis non-core other revenues (2 ) - (809 ) - (1,714 )
 
Cost of goods sold (excluding amortization
of acquired intangible assets):
Share-based compensation expense (3 ) 2,983 2,420 5,859 4,427
Abraxis inventory step-up (4 ) - 41,666 - 83,333
Products exited or to be exited (2 ) (572 ) 4,730 (1,981 ) 15,280
 
Research and development:
Share-based compensation expense (3 ) 23,556 22,880 48,584 55,472
Abraxis non-core activities (2 ) - 1,879 - 8,728
IPR&D impairments (5 ) - - 22,151 118,000
Upfront collaboration payments (6 ) 75,000 40,982 75,000 40,982
 
Selling, general and administrative:
Share-based compensation expense (3 ) 27,075 25,613 53,891 48,707
Abraxis non-core activities (2 ) - 5,857 - 15,065
 
Amortization of acquired intangible assets (7 ) 44,148 70,087 85,908 139,137
 
Acquisition related (gains) charges and restructuring, net:
Change in fair value of contingent consideration (8 ) 38,071 (11,635 ) 25,638 (111,170 )
Acquisition and restructuring costs (8 ) 1,214 2,158 2,577 4,949
 
Other income (expense), net
EntreMed, Inc. equity method loss (9 ) - 234 - 489
Abraxis non-core activities (2 ) - 93 - 2,036
Gain on divestment of non-core activities (10 ) - (2,931 ) - (2,931 )
 
Non-controlling interest -Abraxis (2 ) - (190 ) - (694 )
 
Net income tax adjustments (11 )   (34,296 )   (58,660 )   (57,556 )   (121,020 )
 
Net income attributable to Celgene - non-GAAP $ 544,552   $ 417,207   $ 1,028,981   $ 810,596  
 
 
Net income per share attributable to Celgene -non-GAAP:
Basic $ 1.25 $ 0.90 $ 2.35 $ 1.75
Diluted $ 1.22 $ 0.89 $ 2.30 $ 1.72
 
In addition to financial information prepared in accordance with U.S. GAAP, this press release also contains non-GAAP financial measures that we believe provide investors and management with supplemental information relating to operating performance and trends that facilitate comparisons between periods and with respect to projected information. These non-GAAP measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with U.S. GAAP. We typically exclude certain GAAP items that management does not believe affect our basic operations and that do not meet the GAAP definition of unusual or non-recurring items. Other companies may define these measures in different ways. See the attached Reconciliations of GAAP to non-GAAP Net Income for explanations of the amounts excluded and included to arrive at non-GAAP net income and non-GAAP earnings per share amounts for the three- and six-month periods ended June 30, 2012 and 2011, and for the projected amounts for the year ending December 31, 2012.
 
Celgene Corporation and Subsidiaries
Reconciliation of GAAP to Non-GAAP Net Income
 
Explanation of adjustments:
(1) Exclude sales related to non-core former Pharmion Corp., or Pharmion, products to be exited and Abraxis BioScience Inc., or Abraxis, products that
have been exited.
(2) Exclude the estimated impact of activities arising from the acquisition of Abraxis that are not related to core nab technology and
were divested in 2011, including other miscellaneous revenues, cost of goods sold (excluding amortization of acquired intangible assets), operating
expenses and other costs related to such activities. Exclude the net (benefit) cost of activities arising from the acquisition of Pharmion that
are planned to be exited.
(3) Exclude share-based compensation expense totaling $53,614 for the three-month period ended June 30, 2012 and $50,913 for the three-month
period ended June 30, 2011. Exclude share-based compensation expense totaling $108,334 for the six-month period ended June 30, 2012 and
$108,606 for the six-month period ended June 30, 2011.
(4) Exclude acquisition-related inventory step-up adjustments to fair value which were expensed for Abraxis in 2011.
(5) Exclude in-process research and development, or IPR&D, impairment for the six-month period ended June 30, 2012 related to the timing of obtaining
approval for ISTODAX for the treatment of peripheral T-cell lymphoma, or PTCL, in the European Union. Exclude IPR&D impairment for the
six-month period ended June 30, 2011 related to a reduction in the probability of obtaining progression free survival labeling for the treatment of
non-small cell lung cancer for ABRAXANE in the United States.
(6) Exclude upfront payments for research and development collaboration arrangements.
(7) Exclude amortization of intangible assets acquired from the acquisitions of Pharmion, Gloucester Pharmaceuticals, Inc., or Gloucester, Abraxis
and Celgene Avilomics Research, Inc. (formerly known as Avila Therapeutics), or Avila.
(8) Exclude acquisition related charges and restructuring related to Gloucester, Abraxis and Avila.
(9) Exclude the Company's share of EntreMed, Inc. equity losses in 2011.
(10) Exclude the 2011 gain recognized on divestment of non-core activities obtained in the acquisition of Abraxis.
(11) Net income tax adjustments reflect the estimated tax effect of the above adjustments and the impact of certain other non-operating tax adjustments,
including one-time effects of changes in tax law, acquisition related matters, an adjustment to the amount of unrecognized tax benefits and deferred
taxes on unremitted foreign earnings.
 
Celgene Corporation and Subsidiaries    
Reconciliation of Full-Year 2012 Projected GAAP to Non-GAAP Net Income
(In thousands, except per share data)
           
 
Range
Low High
 
Projected net income - GAAP $ 1,641,000 $ 1,692,000
 
Before tax adjustments:
Cost of goods sold (excluding amortization
of acquired intangible assets):
Share-based compensation expense 11,000 10,000
 
Research and development:
Share-based compensation expense 121,000 109,000
IPR&D impairment 57,000 52,000
Upfront collaboration payments 75,000 75,000
 
Selling, general and administrative:
Share-based compensation expense 118,000 107,000
 
Amortization of acquired intangible assets 178,000 178,000
 
Acquisition related (gains) charges and restructuring, net:
Change in fair value of contingent consideration 41,000 36,000
Acquisition and restructuring costs 4,000 3,000
 
Net income tax adjustments (110,000) (104,000)
   
Projected net income - non-GAAP $ 2,136,000 $ 2,158,000
 
Projected net income per diluted common share - GAAP $ 3.69 $ 3.80
 
Projected net income per diluted common share - non-GAAP $ 4.80 $ 4.85
 
Projected weighted average diluted shares 445,000 445,000




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