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Celgene Reports First Quarter 2019 Operating and Financial Results

BusinessWire

– Strong double-digit top- and bottom-line growth across portfolio
and geographies

– Reaffirming 2019 guidance and 2020 financial targets

– Pipeline execution: fedratinib, ozanimod and luspatercept
regulatory applications submitted year-to-date

– Acquisition by Bristol-Myers Squibb approved by shareholders;
expected to close in the third quarter of 2019

SUMMIT, N.J.–(BUSINESS WIRE)–Celgene Corporation (NASDAQ:CELG) reported net product sales of $4,024
million for the first quarter of 2019, a 14 percent increase from the
same period in 2018. Celgene reported first quarter 2019 total revenue
of $4,025 million, a 14 percent increase compared to $3,538 million in
the first quarter of 2018.

Based on U.S. GAAP (Generally Accepted Accounting Principles), Celgene
reported net income of $1,545 million and diluted earnings per share
(EPS) of $2.14 for the first quarter of 2019. For the first quarter of
2018, GAAP net income was $846 million and diluted EPS was $1.10.

Adjusted net income for the first quarter of 2019 increased 17 percent
to $1,834 million compared to $1,572 million in the first quarter of
2018. For the same period, adjusted diluted EPS increased 24 percent to
$2.55 from $2.05.

“In the first quarter, we delivered strong top- and bottom-line growth
while advancing our innovative pipeline with multiple regulatory
submissions in the U.S. and EU,” said Mark J. Alles, Chairman and Chief
Executive Officer of Celgene Corporation. “Our excellent operating
performance continues to generate positive momentum into the expected
closing of the Bristol-Myers Squibb transaction during the third quarter
of 2019.”

First Quarter 2019 Financial Highlights

Unless otherwise stated, all comparisons are for the first quarter of
2019 compared to the first quarter of 2018. The adjusted operating
expense categories presented below exclude share-based employee
compensation expense, collaboration-related upfront expense, research
and development asset acquisition expense and a benefit associated with
the adjustment to clinical trial and development activity wind-down
costs. Please see the attached Use of Non-GAAP Financial Measures and
Reconciliation of GAAP to Adjusted Net Income for further information
relevant to the interpretation of adjusted financial measures and
reconciliations of these adjusted financial measures to the most
comparable GAAP measures, respectively.

Net Product Sales Performance

Research and Development (R&D)

On a GAAP basis, R&D expenses were $1,216 million for the first quarter
of 2019 compared to $2,203 million for the same period in 2018. Adjusted
R&D expenses were $874 million for the first quarter of 2019 compared to
$694 million for the first quarter of 2018. The current period included
an increase in R&D expense associated with the acquisition of Juno
Therapeutics and regulatory submission-related work on multiple
programs. Additional R&D expenses (only included on a GAAP basis)
decreased in 2019, as outlined in the attached Reconciliation of GAAP to
Adjusted Net Income.

Selling, General and Administrative (SG&A)

On a GAAP basis, SG&A expenses were $773 million for the first quarter
of 2019 compared to $864 million for the same period in 2018. Adjusted
SG&A expenses were $654 million for the first quarter of 2019 compared
to $671 million for the first quarter of 2018. Additional SG&A expense
(only included on a GAAP basis) decreased in 2019, as outlined in the
attached Reconciliation of GAAP to Adjusted Net Income.

Cash, Cash Equivalents, Marketable Debt Securities and
Publicly-Traded Equity Securities

Operating cash flow was $1.5 billion in the first quarter of 2019,
compared to $(325) million for the first quarter of 2018. Celgene ended
the quarter with approximately $7.7 billion in cash, cash equivalents,
marketable debt securities and publicly-traded equity securities.

2019 Product Sales and Earnings Guidance
Reaffirmed

2019 Guidance Year-over-Year Change
Total Revenue $17.0B to $17.2B ~12%*
REVLIMID® Net Product Sales ~ $10.8B ~12%
POMALYST®/IMNOVID® Net Product Sales ~ $2.4B ~18%
OTEZLA® Net Product Sales ~ $1.9B ~18%
ABRAXANE® Net Product Sales ~ $1.1B ~4%
GAAP Operating Margin** Approximately 49% N/M**
Adjusted Operating Margin Approximately 57.5% ~+200 bps
Adjusted Tax Rate ~17.0% ~+50 bps
GAAP Diluted EPS $8.90 – $9.63 N/M**
Adjusted Diluted EPS $10.60 – $10.80 ~21%*
Weighted average diluted shares ~715M ~(20M)

*Year-over-year percentage change based on the mid-point of the
range.
**Not meaningful as the 2019 measures exclude the
impact of any strategic transactions, impairments, loss contingencies,
changes in the fair value of equity investments, costs associated with
the Bristol-Myers Squibb Company (Bristol-Myers Squibb) and Celgene
transaction and non-operating tax adjustments that have not yet occurred.

Portfolio Updates

Business Updates

First Quarter 2019 Earnings Information

Due to the pending transaction with Bristol-Myers Squibb, Celgene is not
hosting a conference call in conjunction with its first-quarter 2019
earnings release and does not expect to do so for future quarters.
Please direct any questions regarding this press release to Celgene
Investor Relations or Celgene Communications.

About Celgene

Celgene Corporation, headquartered in Summit, New Jersey, is an
integrated global biopharmaceutical company engaged primarily in the
discovery, development and commercialization of innovative therapies for
the treatment of cancer and inflammatory diseases through
next-generation solutions in protein homeostasis, immuno-oncology,
epigenetics, immunology and neuro-inflammation. For more information,
please visit www.celgene.com.
Follow Celgene on Social Media: @Celgene,
Pinterest,
LinkedIn,
Facebook
and YouTube.

TECENTRIQ® is a registered trademark of Genentech, a member
of the Roche Group.

About REVLIMID®

In the U.S., REVLIMID® (lenalidomide) in combination with
dexamethasone is indicated for the treatment of patients with multiple
myeloma. REVLIMID® as a single agent is also indicated as a
maintenance therapy in patients with multiple myeloma following
autologous hematopoietic stem cell transplant. REVLIMID® is
indicated for 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. REVLIMID® is approved in the U.S.
for the treatment of patients with mantle cell lymphoma (MCL) whose
disease has relapsed or progressed after two prior therapies, one of
which included bortezomib. Limitations of Use: REVLIMID® is
not indicated and is not recommended for the treatment of chronic
lymphocytic leukemia (CLL) outside of controlled clinical trials.

About ABRAXANE®

In the U.S., ABRAXANE® for Injectable Suspension (paclitaxel
protein-bound particles for injectable suspension) (albumin-bound) is
indicated for the treatment of metastatic 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. 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.
ABRAXANE® is also indicated for the first-line treatment of
metastatic adenocarcinoma of the pancreas in combination with
gemcitabine.

About POMALYST®

In the U.S., POMALYST® (pomalidomide) is indicated for
patients with multiple myeloma who have received at least two prior
therapies including lenalidomide and a proteasome inhibitor and have
demonstrated disease progression on or within 60 days of completion of
the last therapy.

About OTEZLA®

In the U.S., OTEZLA® (apremilast) is indicated for the
treatment of adult patients with active psoriatic arthritis. OTEZLA®
is indicated in the U.S. for the treatment of patients with moderate to
severe plaque psoriasis who are candidates for phototherapy or systemic
therapy.

Forward-Looking Statement

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, including factors related to the proposed
transaction between Bristol-Myers Squibb and Celgene, such as, but not
limited to, the risks that: management’s time and attention is
diverted on transaction related issues; disruption from the transaction
makes it more difficult to maintain business, contractual and
operational relationships; legal proceedings are instituted against
Bristol-Myers Squibb, Celgene or the combined company; and Bristol-Myers
Squibb, Celgene or the combined company is unable to retain key
personnel.

Hyperlinks are provided as a convenience and for informational
purposes only. Celgene bears no responsibility for the security or
content of external websites.

Use of Non-GAAP Financial Measures

In addition to financial information prepared in accordance with U.S.
GAAP, this document also contains certain non-GAAP financial measures
based on management’s view of performance including:

Management uses such measures internally for planning and forecasting
purposes and to measure the performance of the Company. We believe these
adjusted financial measures provide useful and meaningful information to
us and investors because they enhance investors’ understanding of the
continuing operating performance of our business and facilitate the
comparison of performance between past and future periods. These
adjusted financial measures are non-GAAP measures and should be
considered in addition to, but not as a substitute for, the information
prepared in accordance with U.S. GAAP. When preparing these supplemental
non-GAAP financial measures we typically exclude certain GAAP items that
management does not consider to be normal, recurring cash operating
expenses but that may not meet the definition of unusual or
non-recurring items. Other companies may define these measures in
different ways. The following categories of items are excluded from
adjusted financial results:

Acquisition/Integration and Divestiture Related Costs: We exclude
the impact of certain amounts recorded in connection with business
combinations and divestitures from our adjusted financial results that
are either non-cash or not normal, recurring operating expenses due to
their nature, variability of amounts, and lack of predictability as to
occurrence and/or timing. These amounts may include non-cash items such
as the amortization of acquired intangible assets, amortization of
purchase accounting adjustments to inventories, intangible asset
impairment charges and expense or income related to changes in the
estimated fair value measurement of contingent consideration and success
payments. We also exclude transaction and certain other cash costs
associated with business acquisitions and divestitures that are not
normal, recurring operating expenses, including severance costs which
are not part of a formal restructuring program as well as integration
preparation costs associated with our merger with Bristol-Myers Squibb.

Share-Based Compensation Expense: We exclude share-based
compensation from our adjusted financial results because share-based
compensation expense, which is non-cash, fluctuates from period to
period based on factors that are not within our control, such as our
stock price on the dates share-based grants are issued.

Collaboration-Related Upfront Expenses: We exclude
collaboration-related upfront expenses from our adjusted financial
results because we do not consider them to be normal, recurring
operating expenses due to their nature, variability of amounts, and lack
of predictability as to occurrence and/or timing. Upfront payments to
collaboration partners are made at the commencement of a relationship
anticipated to continue for a multi-year period and provide us with
intellectual property rights, option rights and other rights with
respect to particular programs. The variability of amounts and lack of
predictability of collaboration-related upfront expenses makes the
identification of trends in our ongoing research and development
activities more difficult. We believe the presentation of adjusted
research and development, which does not include collaboration-related
upfront expenses, provides useful and meaningful information about our
ongoing research and development activities by enhancing investors’
understanding of our normal, recurring operating research and
development expenses and facilitates comparisons between periods and
with respect to projected performance. All expenses incurred subsequent
to the initiation of the collaboration arrangement, such as research and
development cost-sharing expenses/reimbursements and milestone payments
up to the point of regulatory approval are considered to be normal,
recurring operating expenses and are included in our adjusted financial
results.

Research and Development Asset Acquisition Expense: We exclude
costs associated with acquiring rights to pre-commercial compounds
because we do not consider such costs to be normal, recurring operating
expenses due to their nature, variability of amounts, and lack of
predictability as to occurrence and/or timing. Research and development
asset acquisition expenses includes expenses to acquire rights to
pre-commercial compounds from a collaboration partner when there will be
no further participation from the collaboration partner or other
parties. The variability of amounts and lack of predictability of
research and development asset acquisition expenses makes the
identification of trends in our ongoing research and development
activities more difficult. We believe the presentation of adjusted
research and development, which does not include research and
development asset acquisition expenses, provides useful and meaningful
information about our ongoing research and development activities by
enhancing investors’ understanding of our normal, recurring operating
research and development expenses and facilitates comparisons between
periods and with respect to projected performance.

Restructuring Costs: We exclude costs associated with
restructuring initiatives from our adjusted financial results. These
costs include amounts associated with facilities to be closed, employee
separation costs and costs to move operations from one location to
another. We do not frequently undertake restructuring initiatives and
therefore do not consider such costs to be normal, recurring operating
expenses.

Certain Other Items: We exclude certain other significant items
that may occur occasionally and are not normal, recurring cash operating
expenses from our adjusted financial results. Such items are evaluated
on an individual basis based on both the quantitative and the
qualitative aspect of their nature and generally represent items that,
either as a result of their nature or magnitude, we would not anticipate
occurring as part of our normal business on a regular basis. While not
all-inclusive, examples of certain other significant items excluded from
adjusted financial results would be: significant litigation-related loss
contingency accruals and expenses to settle other disputed matters and,
effective for fiscal year 2018, changes in the fair value of our equity
securities upon the adoption of ASU 2016-01 (Financial
Instruments-Overall: Recognition and Measurement of Financial Assets and
Financial Liabilities).

Estimated Tax Impact From Above Adjustments: We exclude the net
income tax impact of the non-tax adjustments described above from our
adjusted financial results.

Contacts

Celgene
Investors:
908-673-9628
ir@celgene.com
or
Media:
908-673-2275
media@celgene.com

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