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Celgene Corp. Reports Operating Results (10-Q)

November 02, 2010 | About:

10qk

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Celgene Corp. (CELG) filed Quarterly Report for the period ended 2010-09-30.

Celgene Corp. has a market cap of $28.07 billion; its shares were traded at around $61.9 with a P/E ratio of 27.5 and P/S ratio of 10.4. CELG is in the portfolios of Paul Tudor Jones of The Tudor Group, Louis Moore Bacon of Moore Capital Management, LP, Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors, Mario Gabelli of GAMCO Investors, RS Investment Management, Kenneth Fisher of Fisher Asset Management, LLC, George Soros of Soros Fund Management LLC.

Highlight of Business Operations:

Acquisition of Abraxis BioScience, Inc.: On October 15, 2010, or the acquisition date, we acquired all of the outstanding common stock of Abraxis BioScience, Inc., or Abraxis, resulting in Abraxis becoming our wholly owned subsidiary. The transaction, referred to as the Merger, will be accounted for under the acquisition method of accounting for business combinations, ASC 805, Business Combinations, or ASC 805. Under the acquisition method of accounting for business combinations, the assets and liabilities of Abraxis will be recorded at their respective fair values on the acquisition date and consolidated with ours. For the year ended December 31, 2009, Abraxis reported total revenues of $359.1 million and total assets of $1.068 billion.

Each share of Abraxis common stock outstanding, other than treasury shares of Abraxis, was cancelled and the holder received (i) $58.00 in cash, (ii) 0.2617 of a share of Celgene Common Stock and (iii) one contingent value right, or CVR, issued by us. A holder of a CVR is entitled to receive a pro rata portion of cash payments that we are obligated to pay to all holders of CVRs, which is determined by achievement of certain net sales and U.S. regulatory approval milestones. A total of approximately $2.480 billion in cash was paid and 10,660,196 shares of Celgene common stock and 43,273,855 CVRs were issued as consideration for the Merger.

Debt Issuance: On October 7, 2010, we issued a total of $1.25 billion principal amount of senior notes consisting of $500 million aggregate principal amount of 2.45% Senior Notes due 2015 (referred to as the 2015 notes), $500 million aggregate principal amount of 3.95% Senior Notes due 2020 (referred to as the 2020 notes) and $250 million aggregate principal amount of 5.7% Senior Notes due 2040 (referred to as the 2040 notes) and, together with the 2015 notes and the 2020 notes, referred to as the notes). Interest on the notes is payable semi-annually in arrears on April 15 and October 15 each year beginning April 15, 2011. The notes may be redeemed at our option, in whole or in part, at any time at a redemption price equaling accrued and unpaid interest plus the greater of 100% of the principal amount of the notes to be redeemed or the sum of the present values of the remaining scheduled payments of interest and principal. If we incur a change of control, we will be required to offer to repurchase the notes at a purchase price equal to 101% of their principal amount plus accrued and unpaid interest. We are subject to covenants which limit our ability to pledge properties as security under borrowing arrangements and limit our ability to perform sale and leaseback transactions involving our property.

Total net product sales for the three-month period ended September 30, 2010 increased by $217.7 million, or 32.6%, to $885.7 million compared to the three-month period ended September 30, 2009. The change was comprised of net volume increases of $210.5 million, price decreases of $2.7 million primarily resulting from increases in Medicaid rebates and the favorable impact from foreign exchange of $9.9 million.

Collaborative Agreements and Other Revenue: Revenues from collaborative agreements and other sources decreased by $0.1 million to $2.2 million for the three-month period ended September 30, 2010 compared to the three-month period ended September 30, 2009. Revenues for both three-month periods included the sales of services through our Cellular Therapeutics subsidiary and income from miscellaneous licensing agreements.

Royalty Revenue: Royalty revenue decreased by $2.6 million to $22.2 million for the three-month period ended September 30, 2010 compared to the three-month period ended September 30, 2009. The decrease resulted from a reduction in residual payments earned by us based upon GSKs ALKERAN® revenues subsequent to the conclusion of the ALKERAN® license with GSK and a slight reduction in royalties earned from Novartis based upon their RITALIN® sales.

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