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Celgene Reports Third Quarter 2012 Operating And Financial Results

Stocks in this article: CELG

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 months of adjuvant chemotherapy. Prior therapy should have included an anthracycline unless clinically contraindicated. In addition, 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.

About VIDAZA

In the U.S., VIDAZA is indicated for treatment of patients with the following French-American-British (FAB) myelodysplastic syndrome subtypes: refractory anemia (RA) or refractory anemia with ringed sideroblasts (RARS) (if accompanied by neutropenia or thrombocytopenia or requiring transfusions), refractory anemia with excess blasts (RAEB), refractory anemia with excess blasts in transformation (RAEB-T), and chronic myelomonocytic leukemia (CMMoL).

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 adjusted 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 adjusted measures are non-GAAP and 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 adjusted Net Income for explanations of the amounts excluded and included to arrive at adjusted net income and adjusted earnings per share amounts for the three- and nine-month periods ended September 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 September 30, Nine-Month Periods Ended September 30,
2012 2011 2012 2011
 
Net product sales $ 1,388,013 $ 1,219,118 $ 3,970,102 $ 3,457,055
Other revenue   31,238     30,619     89,201     101,118  
Total revenue   1,419,251     1,249,737     4,059,303     3,558,173  
 

Cost of goods sold (excluding amortization of acquired intangible assets)

74,622 94,645 218,994 348,356
Research and development 441,595 356,839 1,250,737 1,163,837
Selling, general and administrative 354,644 303,303 1,003,449 911,207
Amortization of acquired intangible assets 46,157 75,044 132,065 214,181
Acquisition related (gains) charges and restructuring, net   649     (11,209 )   28,864     (117,430 )
Total costs and expenses   917,667     818,622     2,634,109     2,520,151  
 
Operating income 501,584 431,115 1,425,194 1,038,022
 
Other income (expense), net   (25,082 )   (18,474 )   (34,006 )   (20,162 )
 
Income before income taxes 476,502 412,641 1,391,188 1,017,860
 
Income tax provision   52,347     39,657     198,123     110,582  
 
Net income 424,155 372,984 1,193,065 907,278
 
Non-controlling interest   -     -     -     694  
 
Net income attributable to Celgene $ 424,155   $ 372,984   $ 1,193,065   $ 907,972  
 
 
Net income per share attributable to Celgene:
Basic $ 0.99 $ 0.83 $ 2.75 $ 1.97
Diluted $ 0.97 $ 0.81 $ 2.69 $ 1.94
 
Weighted average shares:
Basic 427,209 452,019 434,062 460,161
Diluted 436,272 459,530 443,432 467,052
 
 
September 30, December 31,
2012 2011
Balance sheet items:
Cash, cash equivalents & marketable securities $ 3,832,936 $ 2,648,154
Total assets 11,608,827 10,005,910
Short-term borrowings 324,895 526,684
Long-term debt 2,769,313 1,275,585
Total stockholders' equity 5,728,710 5,512,727
 
 
Celgene Corporation and Subsidiaries
Reconciliation of GAAP to Adjusted Net Income
(In thousands, except per share data)
                   

Three-Month Periods Ended September 30,

Nine-Month Periods Ended September 30,

2012 2011 2012 2011
 
Net income attributable to Celgene - GAAP $ 424,155 $ 372,984 $ 1,193,065 $ 907,972
 
Before tax adjustments:
Total revenues:
Sales of products exited or to be exited (1) - (1,468 ) - (24,936 )
Abraxis non-core other revenues (2) - - - (1,714 )
 

Cost of goods sold (excluding amortization of acquired intangible assets):

Share-based compensation expense (3) 3,314 2,627 9,173 7,054
Abraxis inventory step-up (4) - 6,945 - 90,278
Products exited or to be exited (2) (13 ) 4,008 (1,994 ) 19,288
 
Research and development:
Share-based compensation expense (3) 27,274 24,527 75,858 79,999
Abraxis non-core activities (2) - - - 8,728
IPR&D impairments (5) 31,202 - 53,353 118,000
Upfront collaboration payments (6) 55,000 25,000 130,000 65,982
 
Selling, general and administrative:
Share-based compensation expense (3) 32,119 27,198 86,010 75,905
Abraxis non-core activities (2) - - - 15,065
 
Amortization of acquired intangible assets (7) 46,157 75,044 132,065 214,181
 
Acquisition related (gains) charges and restructuring, net:
Change in fair value of contingent consideration (8) 649 (11,377 ) 26,287 (122,547 )
Acquisition and restructuring costs (8) - 168 2,577 5,117
 
Other income (expense), net
EntreMed, Inc. equity method loss (9) - 53 - 542
Abraxis non-core activities (2) - - - 2,036
Gain on divestment of non-core activities (10) - - - (2,931 )
 
Non-controlling interest -Abraxis (2) - - - (694 )
 
Net income tax adjustments (11)   (58,566 )   (56,455 )   (116,122 )   (177,475 )
 
Net income attributable to Celgene - Adjusted $ 561,291   $ 469,254   $ 1,590,272   $ 1,279,850  
 
Net income per share attributable to Celgene -Adjusted:
Basic $ 1.31 $ 1.04 $ 3.66 $ 2.78
Diluted $ 1.29 $ 1.02 $ 3.59 $ 2.74
 

In addition to financial information prepared in accordance with U.S. GAAP, this press release also contains adjusted 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 adjusted 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 Adjusted Net Income for explanations of the amounts excluded and included to arrive aa Adjusted net income and adjusted earnings per share amounts for the three- and nine-month periods ended September 30, 2012 and 2011, and for the projected amounts for the year ending December 31, 2012.

 
 
Celgene Corporation and Subsidiaries
Reconciliation of GAAP to Adjusted 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 $62,707 for the three-month period ended September 30, 2012 and $54,352 for the three-month period ended September 30, 2011. Exclude share-based compensation expense totaling $171,041 for the nine-month period ended September 30, 2012 and $162,958 for the nine-month period ended September 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 three-and nine-month periods ended September 30, 2012 related to obtaining approval for ISTODAX for the treatment of peripheral T-cell lymphoma, or PTCL, in the European Union. Exclude IPR&D impairment for the nine-month period ended September 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 Adjusted Net Income
(In thousands, except per share data)
 
Range  
Low High
 
Projected net income - GAAP $ 1,622,000 $ 1,674,000
 
Before tax adjustments:
Cost of goods sold (excluding amortization
of acquired intangible assets):
Share-based compensation expense 13,000 11,000
 
Research and development:
Share-based compensation expense 104,000 93,000
IPR&D impairments 53,000 53,000
Upfront collaboration payments 165,000 160,000
 
Selling, general and administrative:
Share-based compensation expense 115,000 104,000
 
Amortization of acquired intangible assets 200,000 194,000
 
Acquisition related (gains) charges and restructuring, net:
Change in fair value of contingent consideration 29,000 29,000
Acquisition and restructuring costs 3,000 3,000
 
Net income tax adjustments   (160,000 )   (155,000 )
 
Projected net income - Adjusted $ 2,144,000   $ 2,166,000  
 
Projected net income per diluted common share - GAAP $ 3.67 $ 3.79
 
Projected net income per diluted common share - Adjusted $ 4.85 $ 4.90
 
Projected weighted average diluted shares 442,000 442,000
 




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