On July 30, 2019 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 (Press release, Celgene, JUL 30, 2019, View Source [SID1234537885]).
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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
* 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) (Free ASCO Whitepaper) 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.