On April 27, 2017 Celgene Corporation (NASDAQ:CELG) reported net product sales of $2,950 million for the first quarter of 2017, an 18 percent increase from the same period in 2016 (Press release, Celgene, APR 27, 2017, View Source [SID1234518705]). Schedule your 30 min Free 1stOncology Demo! Net product sales growth includes a 0.6 percent negative impact from currency exchange effects. Celgene reported first quarter of 2017 total revenue of $2,960 million, an 18 percent increase compared to $2,512 million in the first quarter of 2016.
Discover why more than 1,500 members use 1stOncology™ to excel in:
Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing
Schedule Your 30 min Free Demo!
Based on U.S. GAAP (Generally Accepted Accounting Principles), Celgene reported net income of $941 million and diluted earnings per share (EPS) of $1.16 for the first quarter of 2017. For the first quarter of 2016, GAAP net income was $801 million and diluted EPS was $0.99.
Adjusted net income for the first quarter of 2017 increased 28 percent to $1,364 million compared to $1,064 million in the first quarter of 2016. For the same period, adjusted diluted EPS increased 27 percent to $1.68 from $1.32.
"Our significant first quarter operational, financial and strategic progress strengthen our confidence and outlook for 2017," said Mark J. Alles, Celgene’s Chief Executive Officer. "Our business momentum is increasing as we continue to generate meaningful catalysts and long-term value drivers."
First Quarter 2017 Financial Highlights
Unless otherwise stated, all comparisons are for the first quarter of 2017 compared to the first quarter of 2016. The adjusted operating expense categories presented below exclude share-based employee compensation expense, collaboration-related upfront expense and research and development asset acquisition 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 first quarter increased 20 percent to $1,884 million. Sales growth was driven primarily by increased volume as a result of increases in duration and market share. U.S. sales of $1,234 million and international sales of $650 million increased 24 percent and 13 percent year-over-year, respectively.
POMALYST/IMNOVID sales for the first quarter were $364 million, an increase of 33 percent year-over-year. U.S. sales were $216 million and international sales were $148 million, an increase of 26 percent and 44 percent year-over-year, respectively. POMALYST/IMNOVID sales grew due to increased volume driven by duration gains.
OTEZLA sales for the first quarter were $242 million, a 24 percent increase year-over-year. First quarter U.S. sales of $199 million and international sales of $43 million increased 14 percent and 105 percent, respectively, and were driven by market share gains in the U.S. and continued international launches.
Despite a contraction in the overall market volume of prescriptions filled, OTEZLA share in psoriasis grew versus last quarter. In addition, net sales were impacted by increasing gross-to-net adjustments related to contracts implemented in January with several large payers that significantly broadened access for up to 100 million covered lives.
ABRAXANE sales for the first quarter were $236 million, a 5 percent increase year-over-year. U.S. sales were $142 million and international sales were $94 million, a decrease of 1 percent and an increase of 16 percent, respectively. ABRAXANE market shares in pancreatic cancer, first-line advanced non-squamous lung cancer and metastatic breast cancer in the U.S. are stable. Growth in Europe was driven by market share gains for ABRAXANE in pancreatic cancer.
In the first quarter, all other product sales, which include THALOMID, ISTODAX, VIDAZA and an authorized generic version of VIDAZA drug product in the U.S., were $224 million compared to $226 million in the first quarter of 2016.
Research and Development (R&D)
On a GAAP basis, R&D expenses were $995 million for the first quarter of 2017 versus $733 million for the same period in 2016. The first quarter increase was due to R&D asset acquisition expenses primarily related to the acquisition of Delinia, Inc., that was partially offset by a decrease in collaboration-related upfront expense.
Adjusted R&D expenses were $595 million for the first quarter of 2017 compared to $591 million for the first quarter of 2016.
Selling, General, and Administrative (SG&A)
On a GAAP basis, SG&A expenses were $620 million for the first quarter of 2017 compared to $543 million for the same period in 2016. Adjusted SG&A expenses were $539 million for the first quarter of 2017 compared to $468 million for the first quarter of 2016.
Cash, Cash Equivalents, and Marketable Securities
Operating cash flow was $853 million in the first quarter of 2017, compared to $1.0 billion1 for the first quarter of 2016. In the first quarter, Celgene purchased approximately 2.6 million of its shares at a total cost of approximately $304 million. As of March 31, 2017, the Company had approximately $4.4 billion remaining under the stock repurchase program. Celgene ended the quarter with approximately $8.9 billion in cash, cash equivalents and marketable securities.
1 Adjusted as a result of the adoption of ASU 2016-09, "Compensation-Stock Compensation."
2017 Guidance Updated
Previous 2017 Guidance Updated 2017 Guidance
Net Product Sales
REVLIMID() $8.0B to $8.3B Unchanged
POMALYST()/IMNOVID() Approximately $1.6B Unchanged
OTEZLA( )
$1.5B to $1.7B
Unchanged
ABRAXANE() Approximately $1.0B Unchanged
Total Revenue $13.0B to $13.4B Unchanged
GAAP operating margin Approximately 45.5% Approximately 46.0%
GAAP diluted EPS $5.85 to $6.21 $5.95 to $6.29
Adjusted operating margin Approximately 56.5%
Approximately 57.0%
Adjusted diluted EPS $7.10 to $7.25 $7.15 to $7.30
Weighted average diluted shares Approximately 815M Unchanged
Product and Pipeline Updates
Hematology/Oncology
In February, the U.S. Food and Drug Administration (FDA) and the European Commission (EC) approved the use of REVLIMID as a single agent for maintenance therapy in adult patients with newly diagnosed multiple myeloma (NDMM) following autologous stem-cell transplantation (ASCT). Celgene is actively involved in launch activities for this indication in the U.S. and reimbursement discussions across Europe.
A New Drug Application (NDA) was filed with the FDA for IDHIFA (enasidenib) in relapsed and/or refractory acute myeloid leukemia (AML) with isocitrate dehydrogenase 2 (IDH2) mutation. The NDA was granted Priority Review and has been given a Prescription Drug User Fee Act (PDUFA) action date of August 30, 2017. IDHIFA is part of Celgene’s global strategic collaboration with Agios Pharmaceuticals focused on cancer metabolism.
The phase III OPTIMISMM trial evaluating POMALYST/IMNOVID in combination with bortezomib and low-dose dexamethasone versus bortezomib and low-dose dexamethasone in patients with second-line relapsed and/or refractory multiple myeloma (RRMM) completed enrollment. Data from the OPTIMISMM trial are expected in 2018.
In April, Celgene’s partner OncoMed Pharmaceuticals, Inc. provided top-line data from the phase II YOSEMITE trial evaluating demcizumab in combination with ABRAXANE and gemcitabine in patients with first-line metastatic pancreatic cancer. The trial did not meet its primary and secondary endpoints of progression-free survival and overall survival, respectively. Celgene retains an opt-in right on demcizumab.
At the American Association for Cancer Research (AACR) (Free AACR Whitepaper) Annual Meeting in April, data presentations from several collaboration partners highlighted the scientific advancement of Celgene’s broad innovation strategy in immuno-oncology:
Jounce Therapeutics presented preclinical data supporting the ongoing phase I/II ICONIC trial evaluating JTX-2011, an agonist monoclonal antibody targeting Inducible T cell CO-Stimulator (ICOS), as a single agent and in combination with nivolumab in patients with advanced solid tumors. The ICONIC trial is currently enrolling with preliminary efficacy data expected in the second half of 2017.
OncoMed Pharmaceuticals presented the first public data of its anti-T cell immunoglobulin and ITIM domain protein (TIGIT) antibody, OMP-313M32. The preclinical data demonstrated immune activation and anti-tumor activity of OMP-313M32 alone and in combination with checkpoint inhibitors. OncoMed Pharmaceuticals plans to initiate a phase I trial in the second quarter of 2017.
At the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting in June, data presentations are expected to include:
Updated data from the phase III MAGNIFY trial with REVLIMID in combination with rituximab (R2) in patients with relapsed and/or refractory indolent non-Hodgkin lymphoma (NHL). The data analysis will focus on patients with double-refractory or early relapsed follicular lymphoma (FL).
Updated data from the phase I/II trial evaluating IDHIFA in patients with relapsed and/or refractory AML with an IDH2 mutation. Data from this trial supports the NDA currently under review by the FDA.
Celgene’s collaboration partner bluebird bio is expected to present updated data from the phase I trial evaluating bb2121, a B-cell maturation antigen (BCMA) chimeric antigen receptor (CAR)-T cell therapy, in patients with RRMM. Celgene and bluebird bio plan to initiate a pivotal trial with bb2121 in RRMM by year-end.
Celgene’s collaboration partner Juno Therapeutics is expected to present updated data from the phase I TRANSCEND trial evaluating investigational CAR-T cell product candidate, JCAR017, in patients with relapsed or refractory aggressive NHL. Celgene and Juno Therapeutics plan to initiate a pivotal trial with JCAR017 in NHL by year-end.
At the 14th International Symposium on Myelodysplastic Syndromes (MDS) in May, Celgene’s collaboration partner Acceleron Pharma, Inc., is expected to present data from the phase II trial evaluating luspatercept in first-line, lower-risk MDS patients. Celgene plans to initiate a phase III trial with luspatercept in first-line, lower-risk MDS in early 2018.
Inflammation & Immunology
In February, Celgene disclosed positive top-line results from the phase III SUNBEAM trial evaluating ozanimod in patients with relapsing multiple sclerosis (RMS). The trial met its primary endpoint in reducing annualized relapse rate (ARR), compared to weekly interferon (IFN) β-1a (Avonex). Data from the confirmatory phase III RADIANCE trial are expected in the second quarter. Celgene anticipates filing ozanimod for regulatory approval by year-end based on these data.
The phase II STEPSTONE trial evaluating ozanimod in patients with moderate-to-severe Crohn’s disease is complete. The data will be presented at a medical congress in the second half of 2017. Based on these positive data, Celgene plans to initiate a phase III trial with ozanimod in Crohn’s disease by year-end.
On March 1, 2017, OTEZLA was launched in Japan following full marketing authorization by Japan’s Ministry of Health, Labor and Welfare (MHLW) for the treatment of patients with plaque psoriasis with an inadequate response to topical therapies, as well as psoriatic arthritis.
At the American Academy of Dermatology (AAD) annual meeting, data were presented from the phase IV UNVEIL trial evaluating OTEZLA in patients with moderate plaque psoriasis with a body surface area (BSA) of 5 to 10 percent who were naïve to systemic and biologic therapy. At week 16, OTEZLA demonstrated significant improvements versus placebo for the primary endpoint defined by the mean percentage change from baseline in the product of Physician’s Global Assessment and Body Surface Area (PGA×BSA). The safety profile for OTEZLA in the UNVEIL trial was consistent with that of previous trials. Celgene is executing on a strategy to maximize the value of OTEZLA across additional patient segments in psoriasis to include initiating a phase III trial in scalp psoriasis in the second quarter of 2017.
Data from the ongoing phase IIa trial evaluating CC-220 in patients with systemic lupus erythematosus (SLE) are expected to be presented at the European League Against Rheumatism (EULAR) Annual Congress in June. Celgene plans to initiate a phase IIb trial with CC-220 in the second half of 2017.