Celgene Earnings Call Nuggets: Inventory Impact, U.S. REVLIMID

On Thursday, Celgene Corporation (NASDAQ:CELG) reported its first quarter earnings and discussed the following topics in its earnings conference call. Take a look.

Inventory Impact

Geoffrey Meacham – JPMorgan: Just got a couple of them. When you guys talk about global inventory for REVLIMID, could you help us out with how O-U.S. inventories are different from the U.S.? Then the second question, assuming European approval, how do you guys see the pace of reimbursement discussions thereafter given that you’ll be into a seasonally slow period?

Jacqualyn A. Fouse – EVP and CFO: I’ll take the first one and pass it to Mark for the second one. So, with respect to the inventory impact, I highlighted the total to $30 million, $35 million, globally for all products of which we think REVLIMID was about $20 million or so globally with around $15 million of that being in the U.S. and the balance mostly in Japan related to the March fiscal year-end.

Celgene Earnings Cheat Sheet>>

Mark J. Alles – EVP and CCO: Yes. I think the Geoff the other component of that is that we do have obviously multiple markets around the world now where we’re in various stages of maturing some early, some a little bit later, and I think those other markets in combination make up the balance of what Jacqui just presented. Geoff, can I just ask you to clarify – to restate the second part of your question? I want to be sure I understood it well.

Geoffrey Meacham – JPMorgan: Yes, so if you assume European approval, I would say third quarter, you’re right into sort of the vacation season and this is for first-line REVLIMID in myeloma obviously. I’m assuming that it’s going to take maybe six months, nine months to get full reimbursement throughout the big five, but would you now see, for example, the impact of that label skewed to say maybe mid-13 as opposed to early 13?

Robert J. Hugin – Chairman, President and CEO: Really thank you for the detail. I wanted to be sure it was clear. First the expected positive outcome of the CHMP review we think will be a big lift in the current markets. So the incremental we see this year will be confidence in the brand moving to first-line. That would be the market statement. Market by market though the difference between when we launched REVLIMID in the relapsed or refractory setting across Europe is we had to really build our plans market by market from a zero base. Today we have, of course, a fully integrated global team focused on market access. So we built and have in the queue the value proposition (dossiers) that would be ready to engage much earlier post approval. Having said that, it will be a month by month, quarter by quarter process as you know to get reimbursement. So our focus would be on the early opportunity markets in a priority order and yet still seek reimbursement in parallel across these markets. So is it going to be a Q1 to Q2 to Q3 effect in Europe? Certainly. But we’re looking to frontload to the best of our ability broad reimbursement for newly diagnosed myeloma in the major European markets.

U.S. REVLIMID

Mark J. Alles – EVP and CCO: So, first question is just on U.S. REVLIMID. Wanted to get a sense of just as we put the pieces together, given the price increase late last year, I realize it was a slow January, but can you help us think about how much unit growth you saw quarter-over-quarter even if we take out the inventory in terms of end market unit growth; would love to get a better sense of kind of how that looked for the full quarter.

Mark J. Alles – EVP and CCO: So, these variables, of course, happen in the quarter on a bit of a gated month-by-month, but we’re looking at what we think now in an absolute comparison unit growth in the mid single-digits, but again, as we got into the second part of the quarter, we saw acceleration. So, I think it’s an absolute terms about mid single-digits, but we’re encouraged, as we said, about what we saw through March and into the early part of April.

Mark J. Alles – EVP and CCO: And just more follow-up on Europe. Just wanted to get an update on sort of post the 180-day questions, kind of how your – is the confidence in the broad label still there, and any sort of changes on how you’re thinking about that or some of the age issues for elderly patients in the non-transplant setting?

Robert J. Hugin – Chairman, President and CEO: It’s Bob. We’re obviously in the late stages of the review and we’re now in the last couple of months; hopefully by the end of the quarter have the CHMP recommendation. So, again, we’re engaged in a very active dialog, and so I think until the results are clear, we’ll see. But we’re well positioned and we’re focused on the right issues and we’ve got strong data, and we’ll be discussing that over the coming weeks.

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