Celgene Reports Second Quarter 2019 Operating and Financial Results

• Strong total revenue of $4.4 billion, increased 15% Y/Y driven by volume

• Company raises 2019 total revenue guidance; reaffirms 2020 outlook

• Fedratinib, ozanimod and luspatercept regulatory filings accepted year-to-date; liso-cel BLA submission on-track for Q4:19

SUMMIT, N.J.–(BUSINESS WIRE)–Celgene Corporation (NASDAQ: CELG) reported second quarter 2019 total revenue of $4,400 million, a 15 percent increase compared to $3,814 million in the second quarter of 2018.

Based on U.S. GAAP (Generally Accepted Accounting Principles), Celgene reported net income of $1,571 million and diluted earnings per share (EPS) of $2.16 for the second quarter of 2019. For the second quarter of 2018, GAAP net income was $1,045 million and diluted EPS was $1.43.

Adjusted net income for the second quarter of 2019 increased 31 percent to $2,079 million compared to $1,585 million in the second quarter of 2018. For the same period, adjusted diluted EPS increased 32 percent to $2.86 from $2.16.

“Outstanding operating performance in the second quarter supports raising our full-year financial guidance,” said Mark J. Alles, Chairman and Chief Executive Officer of Celgene Corporation. “In parallel, we achieved multiple regulatory and clinical milestones expected to generate even more business momentum into the close of our transaction with Bristol-Myers Squibb.”

Second Quarter 2019 Financial Highlights

Unless otherwise stated, all comparisons are for the second quarter of 2019 compared to the second quarter of 2018. The adjusted operating expense categories presented below exclude share-based employee compensation expense and collaboration-related upfront expense. 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

• REVLIMID^® sales for the second quarter were $2,732 million, an increase of 11 percent year-over-year. U.S. sales were $1,810 million and international sales were $922 million, an increase of 14 percent and 6 percent year-over-year, respectively. REVLIMID^® sales growth was driven primarily by the adoption of triplet therapy for myeloma resulting in increases in treatment duration and market share.
• POMALYST^®/IMNOVID^® sales for the second quarter were $619 million, an increase of 22 percent year-over-year. U.S. sales were $447 million and international sales were $172 million, an increase of 31 percent and 4 percent year-over-year, respectively. POMALYST^®/IMNOVID^® sales growth was driven primarily by the adoption of triplet therapy for myeloma resulting in increases in treatment duration and market share.
• OTEZLA^® sales for the second quarter were $493 million, an increase of 31 percent year-over-year. U.S. sales were $399 million and international sales were $94 million, an increase of 37 percent and 12 percent year-over-year, respectively. OTEZLA^® sales growth in the U.S. was driven by increase in demand and customer buying patterns, while international sales were driven by continued expansion in key markets.

• ABRAXANE^® sales for the second quarter were $316 million, an increase of 30 percent year-over-year. U.S. sales were $207 million and international sales were $109 million, an increase of 36 percent and 20 percent year-over-year, respectively. ABRAXANE^® sales growth was driven primarily by increased demand due to immuno-oncology (IO) combinations in non-small cell lung cancer (NSCLC) and triple-negative breast cancer (TNBC).

• In the secondquarter, all other product sales, which include IDHIFA^®, THALOMID^®, ISTODAX^®, VIDAZA^® and an authorized generic version of VIDAZA^® drug product primarily sold in the U.S., were $239 million compared to $230 million in the second quarter of 2018.

Research and Development (R&D)

On a GAAP basis, R&D expenses were $1,100 million for the second quarter of 2019 compared to $1,251 million for the same period in 2018. Adjusted R&D expenses were $935 million for the second quarter of 2019 compared to $948 million for the second quarter of 2018. The decrease was driven by a reduction in expenses related to certain collaboration arrangements and regulatory submission-related work on multiple programs almost fully offset by increased investments in ongoing late-stage pipeline 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 $793 million for the second quarter of 2019 compared to $790 million for the same period in 2018. Adjusted SG&A expenses were $693 million for the second quarter of 2019 compared to $672 million for the second quarter of 2018. The increase was driven primarily by increased pre-launch marketing related expenses partially offset by a decrease in expense related to technology investments completed in 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 $2.2 billion in the second quarter of 2019, compared to $1.2 billion for the second quarter of 2018. Celgene ended the quarter with approximately $9.3 billion in cash, cash equivalents, marketable debt securities and publicly-traded equity securities.

2019 Total Revenue Guidance Raised; Reaffirming 2020 Outlook*

• Full-Year 2019 Total Revenue increase driven by POMALYST^® and ABRAXANE^® performance
• Full-Year 2019 Adjusted Operating Margin and Adjusted Diluted EPS includes potential collaboration-related expenses of approximately $160 million that may be incurred in the second half of 2019
• Diluted shares outstanding reflects no planned share repurchases in 2019

	January 2019 Guidance	July 2019 Guidance
Total Revenue	$17.0B – $17.2B	$17.2B – $17.4B
REVLIMID® Net Product Sales	~ $10.8B	Unchanged
POMALYST®/IMNOVID® Net Product Sales	~ $2.4B	~ $2.5B
OTEZLA® Net Product Sales	~ $1.9B	Unchanged
ABRAXANE® Net Product Sales	~ $1.1B	~ $1.2B
GAAP Operating Margin	~ 49.0%	~48.0%
Adjusted Operating Margin	~57.5%	~58.0%
Adjusted Tax Rate	~17.0%	~16.75%
GAAP Diluted EPS	$8.90 – $9.63	$8.71 – $9.44
Adjusted Diluted EPS	$10.60 – $10.80	$10.65 – $10.85
Weighted average diluted shares	~715M	~730M

* Company reaffirms 2020 outlook: Total revenue of $19.0-$20.0 billion and adjusted diluted EPS of >$12.50 on a standalone basis. Due to pending Bristol-Myers Squibb transaction, Celgene does not anticipate providing any additional updates on our 2020 outlook going forward.

Portfolio Updates

• In July, Celgene announced that the U.S. Food and Drug Administration (FDA) approved OTEZLA^® for the treatment of adult patients with oral ulcers associated with Behçet’s Disease. The approval was based on efficacy and safety results from the phase III RELIEF^™ trial evaluating OTEZLA^® in adult patients with Behçet’sDisease with active oral ulcers who were previously treated with at least one nonbiologic medication and were candidates for systemic therapy.
• In June, Celgene announced that the U.S. FDA accepted the New Drug Application (NDA) for ozanimod for the treatment of patients with relapsing forms of multiple sclerosis (RMS) and set a Prescription Drug User Fee Act (PDUFA) date of March 25, 2020. In addition, the European Medicines Agency (EMA) accepted for review the Marketing Authorization Application (MAA) for ozanimod in relapsing-remitting multiple sclerosis (RRMS). A regulatory decision from the EMA is expected in the first half of 2020. Both applications are based primarily on data from the phase III SUNBEAM^™ and RADIANCE^™ Part B trials evaluating ozanimod in RMS.
• In June, Celgene and Acceleron Pharma announced that the U.S. FDA accepted Celgene’s Biologics License Application (BLA) for luspatercept for the treatment of adult patients with very low to intermediate-risk myelodysplastic syndromes (MDS)-associated anemia who have ring sideroblasts and require red blood cell (RBC) transfusions, and for the treatment of adult patients with beta-thalassemia-associated anemia who require RBC transfusions. The FDA granted Priority Review for the evaluation of the beta-thalassemia indication with a PDUFA date of December 4, 2019. The FDA also set a PDUFA date of April 4, 2020 for the MDS indication. In addition, the MAA has been accepted for review by the EMA. The applications are based on data from the pivotal phase III MEDALIST^™ and BELIEVE^™ trials evaluating luspatercept for the treatment of anemia associated with MDS and beta-thalassemia, respectively.
• In June, Celgene submitted a supplemental NDA (sNDA) to the U.S. FDA for an OTEZLA^® label update for the treatment of adult patients with moderate to severe plaque psoriasis to include clinical results from the phase III STYLE^™ study evaluating patients with plaque psoriasis of the scalp.
• At the 2019 American Society of Clinical Oncology (ASCO) Annual Meeting, select data presentations on investigational products included:
  • First clinical data from the phase I/II trial evaluating CELMoD^® agent iberdomide (CC-220) in patients with relapsed and/or refractory multiple myeloma (RRMM); The results included encouraging preliminary safety and efficacy data from the ongoing multicenter, open-label, dose-escalation study. A pivotal trial with iberdomide is being planned;
  • Updated data, including minimal residual disease (MRD), from the ongoing phase I/II TRANSCEND CLL-004 trial evaluating liso-cel in a heavily pretreated patient population with high-risk chronic lymphocytic leukemia (CLL). In this trial, all patients had been previously treated with ibrutinib, and more than half had received prior venetoclax. The phase II pivotal trial with liso-cel in patients with relapsed and/or refractory CLL is ongoing; and,
  • Updated analysis of data from the phase II JAKARTA2 trial reporting clinically meaningful response rates with fedratinib in patients with myelofibrosis previously treated with ruxolitinib, which utilized a more stringent definition of patients relapsed, refractory, or intolerant to ruxolitinib. The U.S. FDA granted Priority Review designation for the NDA for fedratinib in patients with myelofibrosis with a PDUFA date of September 3, 2019.

• In May, Celgene announced that the U.S. FDA approved REVLIMID^® in combination with a rituximab product (R²) for the treatment of adult patients with previously treated follicular lymphoma or marginal zone lymphoma. The approval was based on data from the phase III AUGMENT^™ trial.
• In May, Celgene announced that the European Commission (EC) approved REVLIMID^® in combination with bortezomib and dexamethasone (RVd) in adult patients with previously untreated multiple myeloma who are not eligible for transplant. The approval for the REVLIMID^® triplet (RVd) was supported by data from the phase III SWOG S0777 trial. In addition, Celgene announced that the EC approved pomalidomide (POMALYST^®/IMNOVID^®) in combination with bortezomib and dexamethasone (PVd) in adult patients with multiple myeloma who have received at least one prior treatment regimen including lenalidomide. The approval of the pomalidomide (POMALYST^®/IMNOVID^®) triplet (PVd) was supported by data from the phase III OPTIMISMM trial. Results from the OPTIMISMM trial were recently published in The Lancet Oncology.
• In May, Celgene announced that the U.S. FDA granted Breakthrough Therapy Designation (BTD) for POMALYST^® for the treatment of patients with human immunodeficiency virus (HIV)-positive Kaposi’s sarcoma who have previously received systemic chemotherapy, as well as patients with HIV‐negative Kaposi’s sarcoma. The BTD was granted by the FDA based on data from a clinical trial performed under a Cooperative Research and Development Agreement (CRADA). Celgene plans to submit an sNDA for POMALYST^® in this disease area by the end of 2019.
• In May, Celgene and bluebird bio announced that the New England Journal of Medicine (NEJM) published interim results from CRB-401, the ongoing phase I trial evaluating investigational product ide-cel (bb2121) in patients with RRMM. The manuscript, “Anti-BCMA CAR T Cell Therapy bb2121 in Relapsed/Refractory Multiple Myeloma”, published in NEJM includes key safety and efficacy results from the dose escalation and first expansion cohort, including a minimum of six months follow up on all subjects. The BLA submission for ide-cel is expected in the first half of 2020.

Transaction Update

On July 29, 2019, Bristol-Myers Squibb Company (NYSE: BMY) announced that the EC has granted unconditional approval of Bristol-Myers Squibb’s pending acquisition of Celgene. In June, Bristol-Myers Squibb announced the planned divestiture of OTEZLA^® (apremilast) in light of concerns raised by the U.S. Federal Trade Commission (“FTC”). The divestiture would be conditioned upon the closing of the pending transaction between Bristol-Myers Squibb and Celgene. Subject to the satisfaction of customary closing conditions and receipt of regulatory approvals, Bristol-Myers Squibb and Celgene intend to close the pending transaction at the earliest possible date, which the parties currently expect to be at the end of 2019 or the beginning of 2020.

Second Quarter 2019 Earnings Information

Due to the pending transaction with Bristol-Myers Squibb, Celgene is not hosting a conference call in conjunction with its second-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.

About REVLIMID^®

In the U.S., REVLIMID^® (lenalidomide) in combination with dexamethasone is indicated for the treatment of adult patients with multiple myeloma. REVLIMID^® as a single agent is also indicated as a maintenance therapy in adult 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 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. REVLIMID^® is approved in the U.S. in combination with a rituximab product for the treatment of adult patients with previously treated follicular lymphoma or marginal zone lymphoma. 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, in combination with dexamethasone, 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. OTEZLA^® is indicated in the U.S. for the treatment of adult patients with oral ulcers associated with Behçet’s Disease.

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, including the planned divestiture of OTEZLA^®; disruption from the proposed 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:

• Adjusted research and development expense
• Adjusted selling, general and administrative expense
• Adjusted operating margin
• Adjusted net income
• Adjusted earnings per share

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.

Contacts

Celgene

Investors:

908-673-9628

[email protected]

or

Media:

908-673-2275

[email protected]

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