Cephalon Q1 2010 Earnings Call Transcript

Cephalon Q1 2010 Earnings Call Transcript
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Cephalon (CEPH)

Q1 2010 Earnings Call

May 04, 2010 5:00 pm ET


Gerald Pappert - Executive Vice President, Secretary and General Counsel

Robert Merritt - VP of IR

Robert Repella - Senior Vice President of U.S Pharmaceutical Operations

Lesley Russell - Chief Medical Officer and Executive Vice President

Frank Baldino - Founder, Chairman, Chief Executive Officer and President

Wilco Groehhuysen - Chief Financial Officer

Kevin Buchi - Chief Operating Officer


Corey Davis - Jefferies & Company, Inc.

Louise Chen - Collins Stewart LLC

Raghuram Selvaraju - Rodman & Renshaw

Manoj Garg - Soleil Securities Group, Inc.

Frank Pinkerton - SunTrust Robinson Humphrey Capital Markets

Bret Holley - Oppenheimer & Co. Inc.

Marc Goodman - UBS Investment Bank

Gregory Gilbert - BofA Merrill Lynch

Eric Schmidt - Cowen and Company, LLC

Gary Nachman - Leerink Swann LLC



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Good day, everyone, and welcome to the Cephalon First Quarter 2010 Earnings Conference Call. At this time for opening remarks and introductions, I would like to turn the call over to Mr. Chip Merritt, Vice President of Investor Relations.

Robert Merritt

Thank you. Today, we will review Cephalon's financial performance for the first quarter 2010. Before we begin, let me remind you that certain statements on this call maybe forward-looking and are subject to risks and uncertainties associated with the company's business. These statements may concern among other things guidance as to future revenues and earnings, operations, transactions, prospects, intellectual property, litigation, development of pharmaceutical products, clinical trials and potential approval or product candidates.

The company also may discuss certain non-GAAP financial measures within the meaning of Regulation G during today's call. The information required by Regulation G is available in either the earnings press release or the Investor section of our website at www.cephalon.com. Additional information and risk factors affecting the company's business and financial prospects and factors that would cause Cephalon's actual performance to vary from our current expectations is available in the company's current Form 10-K on file with the SEC.

During this call, we will update full year 2010 guidance and introduce second quarter guidance. Please note that guidance will remain in effect unless the company provides subsequent modifications or updates. Our earnings press release is available on the Internet at www.cephalon.com. Investors with further questions should contact me at (610)738-6376. This conference call is being webcast via the Cephalon homepage and will be available for one week after the call.

Speaking on today's call will be Dr. Frank Baldino, Chief Executive Officer; and Wilco Groenhuysen, Chief Financial Officer. Also joining us today are Kevin Buchi, Chief Operating Officer; Dr. Lesley Russell, Chief Medical Officer; Jerry Pappert, General Counsel; and Bob Repella, Senior Vice President and Head of U.S. Pharmaceutical Business. Following remarks by Frank and Wilco, we will be pleased to answer your questions.

Now, Frank Baldino.

Frank Baldino

Thanks, Chip. Good afternoon, everyone. I am pleased to say that Cephalon again delivered strong financial results. First quarter 2010 sales of $576.7 million and adjusted net income of $144 million, both set new records for the company. We are off to a great start in 2010 and expect to deliver another year of record sales and earnings. This quarter, we recorded cash from operations of $234 million. This put the cash and cash equivalents in our balance sheet to $1.9 billion at the end of the quarter. Even after paying for Ception Therapeutics and Mepha AG, both of which closed shortly after the quarter ended, we have approximately $1 billion in cash on hand. Ception Therapeutics and Mepha AG are two very important deals for us. Ception brings to Cephalon the late stage biological candidate, CINQUIL, for the treatment of a severe type of asthma. Mepha doubles our ex U.S. business with a product base including 120 branded and non-branded generic products and sales in over 50 countries. We are dedicated to building a diversified business and a strong pipeline of new medicines for the future.

TREANDA is bringing new hope to oncology patients. First approved in April 2008 for the treatment of chronic lymphocytic leukemia, TREANDA received its second indication for rituximab-refractory indolent non-Hodgkin's lymphoma in October of that same year. After just two years on the market, TREANDA has helped over 18,000 patients. Growing acceptance by hematologist resulted in sales of $81.3 million for the quarter. TREANDA continues to penetrate the market and is fast becoming an important treatment option for oncologists and patients. We are committed to advancing treatment for cancer patients by seeking FDA approval for TREANDA as treatment for front-line indolent NHL.

To this end we're working with the StiL Group to determine if their study can be filed with the FDA. We should know more by mid-year end and we'll keep you updated on these efforts. And as we have previously communicated, our own study with TREANDA and front-line indolent non-Hodgkin's lymphoma is currently enrolling patients. We remain confident that TREANDA's proven efficacy, safety and ease-of-use will allow us to reach additional patients as physician's gain experience and confidence in its use.

NUVIGIL continues to gain market share as physicians and patients becomes familiar with the benefits this product has to offer. This year, we launched our shift towards disorder campaign. We are beginning to see positive results as use increases among Americans who work shifts. Recall that there are 15 million shift workers in the United States and approximately 1/3 of them suffer from excessive sleepiness associated with shift work disorder. We have an opportunity to serve many of these potential patients with NUVIGIL.

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