On January 8, 2018 Celgene Corporation (NASDAQ:CELG) reported a business update as well as its preliminary 2017 unaudited results and financial guidance for 2018 at the 36th Annual J.P. Morgan Healthcare Conference (Press release, Celgene, JAN 8, 2018, View Source [SID1234522979]). Based on U.S. Generally Accepted Accounting Principles (GAAP), GAAP diluted earnings per share (EPS) for the full-year of 2017 is expected to be in the range of $3.64 to $4.19, a 57 percent year-over-year increase based on the mid-point of the range. Full year 2017 GAAP operating margin is expected to be approximately 36 percent, an increase from 28 percent in the prior year, primarily due to increased product sales. For the fourth quarter 2017, GAAP EPS is expected to be in the range of ($0.09) to $0.46, a 65 percent year-over-year decrease based on the mid-point of the range. Fourth quarter 2017 GAAP operating margin is expected to be approximately 34 percent, an increase from 31 percent in the prior year, primarily due to increased product sales.

Schedule your 30 min Free 1stOncology Demo!
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!

Adjusted EPS is expected to be approximately $7.44 for the full year of 2017, a 25 percent year-over-year increase. Full year 2017 adjusted operating margin is expected to be 58.1 percent, an increase of 310 basis points (bps) year-over-year. For the fourth quarter of 2017, adjusted EPS is expected to be approximately $2.00, a 24 percent year-over-year increase. Fourth quarter 2017 adjusted operating margin is expected to be 55.3 percent, a decrease of 70 bps year-over-year.

"2017 was a strong year for Celgene as we delivered excellent top- and bottom-line growth and achieved critical milestones across our hematology, oncology, inflammation and immunology franchises," said Mark J. Alles, Chief Executive Officer of Celgene. "We are executing on a strategy to achieve our 2020 targets, accelerate portfolio diversification and expand our pipeline of innovative therapies."

Preliminary Q4 and FY 2017 Net Product Sales and Total Revenue are expected to be (Unaudited, in millions):

Q4 2017

Y/Y%

FY 2017

Y/Y%

REVLIMID $2,188 21% $8,187 17%
POMALYST/IMNOVID $442 17% $1,614 23%
OTEZLA $371 22% $1,279 26%
ABRAXANE $251 (6)% $992 2%
Total Revenue $3,483 17% $13,003 16%

Certain activities involved in determining the audited results for the fiscal year ended December 31, 2017 are in-process and could result in the final reported audited results being different from the unaudited results noted in this press release. The ranges of our estimated GAAP diluted earnings per share for the quarter and year ended December 31, 2017 include an estimated financial statement impact of between approximately $800 million and approximately $1,300 million related to the Tax Cuts and Jobs Act ("Tax Act"), which was enacted on December 22, 2017. Our estimate of the impact of the Tax Act is based on currently available information and interpretation of its provisions. Our actual results may materially differ from our current estimate due to, among other things, further guidance that may be issued by U.S. tax authorities or regulatory bodies and/or changes in interpretations and assumptions we have preliminarily made. We will continue to analyze the Tax Act to finalize its financial statement impact, including the mandatory deemed repatriation of foreign earnings, re-measurement of deferred taxes and certain other provisions of the Tax Act. We anticipate finalizing our preliminary analysis and the impact on our December 31, 2017 financial statements by the time we announce our financial results currently anticipated on January 25, 2018. Additionally, please see the attached Use of Non-GAAP Financial Measures and Reconciliation of Estimated/Projected GAAP to Adjusted (Non-GAAP) Measures 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, for each of 2017 and 2018.

Celgene Expects Volume-Driven Product Sales and Earnings Growth in 2018

In 2018, total revenue is expected to be approximately $14.4 billion to $14.8 billion, a 12 percent increase year-over-year, based on the mid-point of the range. Based on GAAP, EPS for the full-year 2018 is expected to be in the range of $6.58 to $6.95, excluding the impact of any strategic transactions, impairments, loss contingencies, changes in the fair value of equity investments and non-operating tax adjustments that have not yet occurred. For the full-year 2018, adjusted diluted EPS is expected to be in the range of $8.70 to $8.90, an 18 percent increase year-over-year, based on the mid-point of the range.

Year-over-Year

Change

Total Revenue $14.4B to $14.8B 12%*
REVLIMID Net Product Sales Approximately $9.4B 15%
POMALYST/ IMNOVID Net Product Sales Approximately $1.9B 18%
OTEZLA Net Product Sales Approximately $1.5B 17%
ABRAXANE Net Product Sales Approximately $1.0B 1%
GAAP diluted EPS $6.58 to $6.95 N/M**
Adjusted diluted EPS $8.70 to $8.90 18%*
GAAP operating margin Approximately 46.5% N/M**
Adjusted operating margin Approximately 60.0% ~ +200 bps
Weighted average diluted shares 775M -34M
Adjusted Tax Rate ~18% ~ +200 bps
*Year-over-year percentage change based on the mid-point of the range.

**Not meaningful as the 2018 measures exclude the impact of any strategic transactions, impairments, loss contingencies, changes in the fair value of equity investments and non-operating tax adjustments that have not yet occurred.

Reaffirming Expected 2020 Long-term Financial Targets

2020 total revenue range of $19.0 billion to $20.0 billion
Adjusted Diluted EPS to exceed $12.50
2018 Expected Operational Milestones

Hematology & Oncology

Regulatory Submissions

Submission of a supplemental New Drug Application (sNDA) to the U.S. Food and Drug Administration (FDA) for REVLIMID in combination with bortezomib and dexamethasone (RVd) in patients with newly diagnosed multiple myeloma (NDMM)
Submission of a New Drug Application (NDA) to the FDA for fedratinib in myelofibrosis
Trial Initiations

Initiate the pivotal program with CC-122 in non-Hodgkin lymphoma (NHL)
Initiate the pivotal program with BGB-A317 (tislelizumab) in non-small cell lung cancer (NSCLC)
Initiate a phase III trial with bb2121 in third-line plus multiple myeloma in collaboration with bluebird bio
Initiate a phase III trial with JCAR017 in transplant-eligible second-line diffuse large B-cell lymphoma (DLBCL) in collaboration with Juno Therapeutics
Initiate the phase III COMMANDS trial with luspatercept in first-line, lower-risk myelodysplastic syndromes (MDS)
Clinical Data

Data from the phase III AUGMENT trial with REVLIMID in combination with rituximab in patients with relapsed and/or refractory follicular lymphoma (FL)
Data from the phase III ROBUST trial with REVLIMID in patients with first-line ABC-subtype DLBCL
Data from the phase III apact trial with ABRAXANE as adjuvant therapy in patients with surgically resected pancreatic cancer
Data from the phase III QUAZAR AML-001 trial with CC-486 as maintenance therapy in post-induction acute myeloid leukemia (AML)
Data from the phase III OPTIMISMM trial with POMALYST in combination with bortezomib and dexamethasone (PVd) in second-line multiple myeloma
Data from the phase III MEDALIST trial with luspatercept in patients with ring sideroblast-positive (RS+) MDS in collaboration with Acceleron Pharma
Data from the phase III BELIEVE trial with luspatercept in patients with beta-thalassemia in collaboration with Acceleron Pharma
Data from phase I/II trial with CC-220 in relapsed and/or refractory multiple myeloma (RRMM)
Trial Enrollment

Complete enrollment in the pivotal KarMMa trial with bb2121 in RRMM in collaboration with bluebird bio
Complete enrollment in the pivotal TRANSCEND WORLD trial with JCAR017 in third-line DLBCL in collaboration with Juno Therapeutics
Inflammation and Immunology

Regulatory Submissions/Decisions

FDA decision on the submission of an NDA for ozanimod in patients with relapsing multiple sclerosis (RMS)
FDA decision on the submission of an sNDA for OTEZLA once-daily formulation
Submission of an sNDA for OTEZLA in Behçet’s disease
Submission of a Marketing Authorization Application (MAA) for ozanimod in RMS
Trial Initiations

Initiate a phase III trial with OTEZLA in ulcerative colitis
Initiate a phase III trial with OTEZLA in mild-to-moderate psoriasis
Initiate a phase III trial with ozanimod in secondary progressive multiple sclerosis (SPMS)
Clinical Data

Data from a phase III trial with OTEZLA in scalp psoriasis
Data from a phase II trial with OTEZLA in ulcerative colitis to be presented at a medical meeting in the first quarter of 2018

Trial Enrollment

Complete enrollment in the phase III TRUE NORTH trial with ozanimod in ulcerative colitis
Research and Early Development

File at least 5 Investigational New Drug (IND) or Clinical Trial Applications (CTA) for novel assets