Celgene (CELG)

Q4 2011 Earnings Call

January 26, 2012 9:00 am ET


Mark Alles -

Robert J. Hugin - Chairman, Chief Executive officer, President, Secretary and Chairman of Executive Committee

Jacqualyn Fouse -

Patrick E. Flanigan III -


Jim Birchenough - BMO Capital Markets U.S.

Brian Abrahams - Wells Fargo Securities, LLC, Research Division

Sapna Srivastava - Goldman Sachs Group Inc., Research Division

Ying Huang - Barclays Capital, Research Division

Michael J. Yee - RBC Capital Markets, LLC, Research Division

Charles C. Duncan - JMP Securities LLC, Research Division

Rachel L. McMinn - BofA Merrill Lynch, Research Division

Mark J. Schoenebaum - ISI Group Inc., Research Division

Matthew Roden - UBS Investment Bank, Research Division

Eric Schmidt - Cowen and Company, LLC, Research Division

Christopher J. Raymond - Robert W. Baird & Co. Incorporated, Research Division

Yaron Werber - Citigroup Inc, Research Division

Geoffrey C. Porges - Sanford C. Bernstein & Co., LLC., Research Division

Geoffrey C. Meacham - JP Morgan Chase & Co, Research Division

Thomas Wei - Jefferies & Company, Inc., Research Division

M. Ian Somaiya - Piper Jaffray Companies, Research Division

Gene Mack - Mizuho Securities USA Inc., Research Division

Michael G. King - Rodman & Renshaw, LLC, Research Division



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Hello, and welcome to the Celgene Fourth Quarter and Full Year 2011 Earnings Call. [Operator Instructions] As a reminder, today's conference call is being recorded. Now I'll turn the call over to your host, Patrick Flanigan, VP of Investor Relations. Please go ahead.

Patrick E. Flanigan III

Thanks, Alli, and welcome, everyone, to Celgene Corporation's Fourth Quarter and Year End 2011 Earnings Conference Call. The press releases reporting our financial results and announcing the acquisition of Avila Therapeutics in addition to the presentation for today's webcast can be accessed by going to the Investor Relations section of the corporate website at www.celgene.com.

Joining me in the room today are Bob Hugin, our Chairman and Chief Executive Officer; Jackie Fouse, our Chief Financial Officer and Mark Alles who is our Chief Commercial Officer. As a reminder, during today's call, we will be making forward-looking statements regarding our financial outlook, our regulatory and product development plan, any acquisition. These statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted. A description of these risks can be found in our most recent filings with the SEC. These statements speak only as of today's date, and we undertake no duty to update or revise them. Finally, reconciliation of the non-GAAP financial measure to the most comparable GAAP measures are available as part of the earnings release. I would now like to turn the call over to Bob Hugin.

Robert J. Hugin

Thank you, Patrick, and thank you, everyone, for joining us this morning. 2011 was an exceptionally successful year for Celgene. We achieved or exceeded major corporate objectives across all areas of the company. The result delivered in 2011 are all the more impressive as they work accomplished while simultaneously advancing key strategic initiatives that position us for sustained near- and long-term growth. Jackie and Mark will review the results and achievements of 2011 and how they position us for 2012 in a few minutes.

The financial results were outstanding. 2011 revenue, earnings and cash flow all exceeded our expectations. Our commercial teams across the globe are maximizing the potential of our products. Our regulatory, clinical and research teams significantly progress key development and research programs positioning us for multiple high-potential milestones in 2012. In a moment, I'll outline some of these key inflection points. But first, I'd like to review with you the acquisition that we announced this morning. We were very pleased to announce our acquisition of Avila Therapeutics, a privately held biotechnology company located in the Boston area, a company with world-class talent and innovative and productive drug discovery team with a promising drug candidate targeted in hematology, our core area of expertise. This acquisition is fully aligned with our strategic initiative of expanding and enhancing our hematology franchise and further strengthens our global leadership position. Avila's lead drug candidate AVL-292 and Avilomics drug discovery platform position Celgene to play an increasingly important role in the treatment of B-cell diseases, areas of high unmet medical need. This transaction deepens our hematology and drug discovery pipelines and creates research and development synergies with existing Celgene programs. It's an exciting combination. We expect the transaction to be completed in this first quarter and plan to absorb the additional research and development expenditures within our existing budget with no impact on our 2012 guidance. AVL-292 is a highly selective BTK inhibitor currently in Phase I development where its showing early signs of clinical activity as a single agent in patients with refractory chronic lymphocytic leukemia and non-Hodgkin's lymphoma. We anticipate that Phase II trials will start in the second half of this year. Importantly, we'll develop AVL-292 in combination with REVLIMID and other agents to further advance the treatment of B-cell hematological malignancies with the intention of delivering a best-in-class therapy. We're also encouraged by efficacy signals in animal models for rheumatoid arthritis and multiple sclerosis. Avila has a very productive drug discovery team, which through their Avilomics platform has already generated 3 drug candidates in less than 5 years. Avila's unique approach to protein silencing offers great promise to accelerate our research initiatives in both cancer and immune-inflammatory diseases.

Let me now return to 2012. 2012 has the potential to be the most transformational year for Celgene since the launch of REVLIMID in 2006. We're now beginning to capitalize on the sustained research and development investments of the past decade. We have upcoming excitement milestones across our portfolio of products and programs this year. It's our job in 2012 to continue to maximize the full global potential of REVLIMID. There are multiple important commercial, clinical and regulatory milestones during the year, including label expansion in newly diagnosed and post-transplant maintenance indications in myeloma. Our programs outside of myeloma and lymphomas and leukemia are also progressing rapidly. 2012 will be a defining year for pomalidomide. Pomalidomide is our next generation immunomodulatory agent for heavily pretreated multiple myeloma patients. We've received past track designation from the FDA for the treatment of relapsed/refractory myeloma, and it's our intention to submit our NDA to the FDA this quarter and our marketing application in Europe in the second quarter. These are high-priority corporate objectives. Pomalidomide has the potential to have a meaningful impact on myeloma therapy globally. One year post-integration of Abraxis, we're pleased by the progress of our global solid tumor franchise and the market prospects for ABRAXANE in metastatic breast cancer. In 2012, we look forward to FDA action on our application in first line non-small cell lung cancer. Full enrollment of our Phase III pancreatic cancer trial and data from our fully-enrolled Phase III melanoma study.

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