U.S. Markets closed

Edited Transcript of CELG earnings conference call or presentation 27-Apr-17 1:00pm GMT

Thomson Reuters StreetEvents

Q1 2017 Celgene Corp Earnings Call

SUMMIT May 11, 2017 (Thomson StreetEvents) -- Edited Transcript of Celgene Corp earnings conference call or presentation Thursday, April 27, 2017 at 1:00:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Jacqualyn A. Fouse

Celgene Corporation - Strategic Advisor and Director

* Mark J. Alles

Celgene Corporation - CEO and Director

* Michael F. Pehl

Celgene Corporation - President of Hematology & Oncology

* Patrick E. Flanigan

Celgene Corporation - Corporate VP of IR

* Peter N. Kellogg

Celgene Corporation - CFO, CAO and EVP

* Robert J. Hugin

Celgene Corporation - Executive Chairman

* Scott Andrew Smith

Celgene Corporation - President and COO

* Terrie Curran

================================================================================

Conference Call Participants

================================================================================

* Alethia Rene Young

Crédit Suisse AG, Research Division - Research Analyst

* Carter Lewis Gould

UBS Investment Bank, Research Division - Large Cap Biotech Analyst

* Cory William Kasimov

JP Morgan Chase & Co, Research Division - Senior Biotechnology Analyst

* Eric Thomas Schmidt

Cowen and Company, LLC, Research Division - MD and Senior Research Analyst

* Geoffrey Christopher Meacham

Barclays PLC, Research Division - MD and Senior Research Analyst

* Geoffrey Craig Porges

Leerink Partners LLC, Research Division - MD, Biotechnology, Director of Therapeutics Research and Senior Biotechnology Analyst

* John Lawrence Newman

Canaccord Genuity Limited, Research Division - Principal and Senior Healthcare Analyst

* Katherine Edna Breedis

Stifel, Nicolaus & Company, Incorporated, Research Division - MD and Senior Analyst

* Mara Goldstein

Cantor Fitzgerald & Co., Research Division - Head of U.S. Healthcare Research and Senior Analyst

* Mayur Amrat Somaiya

BMO Capital Markets Equity Research - Analyst

* Mohit Bansal

Citigroup Inc, Research Division - VP and Analyst

* Nicholas M. Abbott

Wells Fargo Securities, LLC, Research Division - Associate Analyst

* Umer Raffat

Evercore ISI, Research Division - Senior MD and Fundamental Research Analyst

* Yatin Suneja

SunTrust Robinson Humphrey, Inc., Research Division - Director and Senior Research Analyst

* Ying Huang

BofA Merrill Lynch, Research Division - Director in Equity Research

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Good morning, and welcome to the Celgene investor and analyst conference call. I would like to remind you that this call is being recorded. I would now like to turn the call over to Patrick Flanigan, Corporate Vice President of Investor Relations.

--------------------------------------------------------------------------------

Patrick E. Flanigan, Celgene Corporation - Corporate VP of IR [2]

--------------------------------------------------------------------------------

Thanks, Kayleigh, and welcome, everyone, to our first quarter earnings conference call. The press release reporting our financial results, in addition to the presentation for today's webcast, can be accessed by going to the Investor Relations section of the corporate website at www.celgene.com. Joining me in the room today with prepared remarks are Mark Alles, our Chief Executive Officer; Peter Kellogg, our Chief Financial Officer; Michael Pehl, Global Head of our Hematology & Oncology franchise; Scott Smith, President and Chief Operating Officer; and Executive Vice President, Jackie Fouse.

As a reminder, during today's call, we will be making forward-looking statements regarding our financial outlook in addition to regulatory and product development plans. These statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted. A description of these risks can be found in our most recent 10-K on file with the SEC. These statements speak only as of today's date, and we undertake no duty to update or revise them. Reconciliation of the adjusted financial measures to the most comparable GAAP measures are available as part of the earnings release.

I would now like to turn the call over to Mark.

--------------------------------------------------------------------------------

Mark J. Alles, Celgene Corporation - CEO and Director [3]

--------------------------------------------------------------------------------

Thank you, Patrick. Good morning, everyone, and thank you for joining us today. We are pleased and excited to be with you to review our excellent first quarter operating results and to discuss several important strategic achievements. Thanks to the continued outstanding work of my colleagues, our business momentum is very strong. We are beginning to deliver on a diverse and powerful set of near- and longer-term catalysts with the potential to significantly add opportunity and optionality for better-than-expected growth this year and places us on track to achieve or exceed our 2020 outlook.

Today, we reported year-over-year net product sales growth of 18% and adjusted earnings per share growth of 27%, representing our 45th quarter of consecutive year-over-year EPS growth. More importantly, these results reflect the clinically necessary and growing therapeutic value of our medicines for thousands of patients worldwide suffering with very serious diseases. Given the outstanding performance of our hematology franchise, the excellent first quarter demand fundamentals for our oncology and immunology products and the exceptional leverage of our business model, we are raising our full year 2017 adjusted EPS guidance from a range of $7.10 to $7.25 to a range of $7.15 to $7.30. The midpoint of this increased range represents a 22% improvement from 2016. Following my comments, Peter will share more details regarding our first quarter results and improved outlook for 2017.

This progress reflects both the long-standing commitment to operational excellence and the positive outcome of a number of strategic decisions made to establish, strengthen and grow our commercial franchises. Key to our momentum is a multiyear strategy to aggressively deploy capital to acquire new molecules from the best emerging scientific and technological platforms linked to our core areas of expertise.

These investments, combined with exceptional execution, bring us to a significant and meaningful inflection point with our late-stage pipeline programs. For example, during the first quarter, IDHIFA, the new brand name for enasidenib, and coming from our partnership with Agios Pharmaceuticals, received FDA priority review and a PDUFA date of August 30.

Just 20 months after our acquisition of Receptos, we received positive Phase III data from the SUNBEAM trial studying ozanimod in relapsing multiple sclerosis. And we expect the results of the second Phase III trial for ozanimod, RADIANCE, in relapsing MS well before the end of the second quarter. These ozanimod studies represent just the first of the 19 Phase III programs that we expect to read out over the next 2 years.

As our late-stage clinical assets advance, we also expect our late-stage pipeline to expand with the initiation of a number of new pivotal trials this year, including bb2121 in multiple myeloma; JCAR017 in non-Hodgkin's lymphoma; marizomib in glioblastoma multiforme; and based on recent compelling Phase II results from the STEPSTONE study, ozanimod in Crohn's disease. Later in the call, Michael and Scott will discuss details about the first quarter performances of their franchises and the substantial clinical, regulatory and market access accomplishments that have us well positioned for sustained long-term growth.

The outstanding results and achievements we are sharing with you today are possible only because of the nearly 7,000 Celgene employees around the world, who are committed to our culture and to making a meaningful difference in the lives of patients. We're incredibly fortunate to have extraordinary people and outstanding leaders at Celgene. I'd like to take the occasion of our call today to recognize 2 members of our management team who have recently been promoted to new executive positions: Scott Smith, our new President and Chief Operating Officer, and Terrie Curran, our new President of the Celgene I&I franchise. Terrie is joining us in the room today and will participate in the Q&A.

On a personal note, Bob Hugin and I would also like to congratulate and thank one of the most impactful leaders and friends we've ever had at Celgene. Jackie Fouse's contributions to our company are well-known to many of you, but her passion for what we do will stay with us for many years to come. Before she closes our call this morning, and on behalf of the entire Celgene community, I would like to thank Jackie for her dedication to our mission and all that she has done to support, communicate and advance the potential and promise of Celgene. Jackie, we wish you all the best in your retirement. We know that your contributions to whatever you decide to do next will be just as meaningful as everything you've done for us. Thank you very much.

So thanks, again, for being with us today. And now I'd like to turn the call over to another outstanding Celgene leader, Peter Kellogg.

--------------------------------------------------------------------------------

Peter N. Kellogg, Celgene Corporation - CFO, CAO and EVP [4]

--------------------------------------------------------------------------------

Thank you, Mark, and good morning, everyone. We're off to another strong start to the year. The momentum that's been building over the last few years is now continuing into 2017. The team's solid commercial performance continues, and operating leverage is a little better than expected, leading us to raise our full year adjusted EPS guidance to $7.15 to $7.30 per share. Importantly, we are building upon this momentum by investing in our pipeline of next-generation growth drivers for beyond 2020. As Mark covered, we are excited to now be in a 2-year window in which we expect several inflection points on key mid- to late-stage pipeline programs.

Now turning to the Q1 performance. Net product sales grew 18% year-over-year to almost $3 billion. Strong growth is achieved across the portfolio with key contributions by REVLIMID, POMALYST and OTEZLA. Similar to prior periods, our growth was predominantly volume-driven, with 15 of the 18 total percentage points of growth coming from volume. The modest contribution from price was partially offset by foreign exchange. Now we expect foreign exchange to have a greater impact in the second half of the year.

As a reminder, the sequential performance from Q4 to Q1 is always impacted by several items: REVLIMID and POMALYST are impacted by higher gross-to-net adjustments related to early Medicare donut hole and other ACA payments; ABRAXANE is impacted by customer contract optimization that results in a buy in, in Q4, followed by a sell-through in Q1; and OTEZLA is impacted by managed care dynamics that drive lower total marketplace prescriptions for psoriasis therapies in Q1. In addition, a new dynamic for OTEZLA this quarter was a higher gross-to-net adjustment related to new contracts with several large payers that were implemented in January. These new contracts approximately doubled the number of patient lives who can now access OTEZLA without being required to step through a biologic therapy, which has already improved OTEZLA's market share in these accounts. Scott will review this market dynamic and our progress in more detail later.

In total, and not surprisingly, the market dynamics that I just described across the portfolio resulted in a 1% sequential decline in net product sales from Q4. Adjusted earnings per share grew 27% to $1.68 per share, with operating income driving $0.38 of the $0.36 per share bottom line growth. In total, financial levers had a negative $0.02 per share impact.

Turning to the P&L line items. The adjusted operating margin improved 410 basis points to 51.7%. Most of the margin improvement occurred in the R&D expense line. R&D was impacted by the timing and pace of clinical trial activity, in addition to milestone payments to our partners. In Q1, we recorded a $7 million milestone payment compared to payments totaling $65 million in Q1 of 2016. Importantly, if we were to exclude the milestone payments in both years, R&D expense grew 12% year-over-year, reflecting increased investments in advancing our pipeline programs, which is fully in line with our strategy. SG&A grew 15% year-over-year with relatively flat growth from Q4. We ended the quarter with $8.9 billion in cash and marketable securities, and we have considerable financial flexibility to make strategic investments that further build the pipeline and create long-term shareholder value.

Finally, based on the strong start and a continued momentum in the year, we are increasing the expected operating margin by 50 basis points to approximately 57%, resulting in the $0.05 per share increase to both the high and low end of the adjusted EPS range. We expect R&D expense as a percentage of revenue to increase throughout the year, while SG&A leverage drives the operating margin improvements. Other guidance items remain unchanged.

Thank you, and now I'd like to turn the call over to my colleague, Michael.

--------------------------------------------------------------------------------

Michael F. Pehl, Celgene Corporation - President of Hematology & Oncology [5]

--------------------------------------------------------------------------------

Thank you, Peter, and good morning, everyone. Hematology & Oncology franchise had a very good first quarter of 2017. We delivered a strong sales performance with 18% year-over-year growth and 1% sequential growth. We're very pleased with these results, and in addition, delivered against some critical regulatory and clinical milestones.

REVLIMID had an excellent first quarter and overcame the expected buy-in pattern and U.S. coverage gap challenges that we typically see in Q1. Our newly diagnosed myeloma launch continues to drive global increases in demand and duration. POMALYST/IMNOVID is significantly growing versus the same quarter in 2016 due to increasing use of triplets and duration gain. Finally, ABRAXANE continues to be stable overall, with U.S. buying patterns impacting the Q1 performance.

REVLIMID net sales grew 20% year-over-year and an impressive 4% quarter-over-quarter. Growth was strong in the U.S. and outside of the U.S. In the U.S., we had an excellent 24% growth year-over-year and 4% sequential growth. U.S. growth in Q1 was driven by an increase in both new and repeat prescription. International REVLIMID growth was also very strong, with 13% year-over-year and 5% sales growth. Year-over-year and sequential international volume growth were 22% and 13%, respectively.

NDMM market share continues to grow outside of the U.S. with a positive uptake both in the EU and in Japan. We have obtained NDMM NSCT reimbursement in 20 countries around the globe and are finalizing reimbursement in France.

We received regulatory approval in the U.S. and EU for REVLIMID as maintenance therapy post autologous stem cell transplantation, and we're already able to obtain reimbursement in 6 European markets. As we mentioned before, we believe that indication will be a significant opportunity for REVLIMID globally.

In the U.S. market, there's still a large portion of patients who do not receive REVLIMID maintenance, but who only receive a fixed duration of REVLIMID treatment. The recent approvals will allow us to educate physicians on the unique value proposition of REVLIMID post autologous stem cell transplantation and continue to highlight the need for treatment to disease progression. In Europe, there's an even greater opportunity with very few patients receiving maintenance therapy to date.

We are also advancing our plans to submit an sNDA for RVD in first-line transplant and non-transplant patients. We have positive interactions with health authorities and are pleased with the progress being made. We expect a submission in the U.S. by year-end.

Finally, we are awaiting the Phase III results of our indolent lymphoma programs. The (inaudible) RELEVANCE and AUGMENT trials are both expected to read out by the end of 2017.

POMALYST/IMNOVID net sales grew 33% year-over-year. In the U.S., POMALYST net sales grew 26% year-over-year, and we saw 1% decline quarter-over-quarter. The underlying demand is very strong, and total prescriptions grew in Q1 versus Q4. Demand growth was offset by the gross-to-net impact of the coverage gap and some inventory fluctuation.

Both in the U.S. and internationally, POMALYST/IMNOVID is maintaining a market-leading position in third line plus despite new entrants. We have strong increases in treatment duration for POMALYST/IMNOVID globally, and we expect to see dynamic growth during the rest of the year. An important near-term growth driver in the U.S. will be the expected FDA approval of POMALYST in combination with daratumumab for relapsed/refractory myeloma by June of this year.

Finally, as mentioned on our Q4 call, we are successfully enrolling key development programs for POMALYST/IMNOVID to further support the use of multiple combinations. We are pleased to announce that our Phase III OPTIMISMM trial, in combination with bortezomib in second or later treatment lines completed enrollment during the first quarter, and we expect data in 2018.

ABRAXANE continues to have quite stable demand. ABRAXANE net sales grew 5% year-over-year and declined by 11% quarter-over-quarter, impacted by U.S. customer buying patterns that we typically see in Q1. ABRAXANE U.S. sales were flat year-over-year, U.S. ABRAXANE maintained its leadership position in pancreatic cancer, and demand is stable in breast and lung cancer. Outside of the U.S., ABRAXANE grew 16% year-over-year and was stable quarter-over-quarter. We continue to see growth in pancreatic cancer outside of the U.S. and have multiple growth drivers ahead for ABRAXANE.

We expect results of the apact adjuvant pancreatic cancer trial to be available by the end of 2017. And the pivotal ABRAXANE/Tecentriq combination trial in non-small cell lung cancer and triple-negative breast cancer will read out in 2018.

The second quarter is always an exciting time with important congresses. This year, we will have a strong presence at ASCO. We expect to see the final overall survival data from the CALGB trial with REVLIMID maintenance in newly diagnosed multiple myeloma. We will also have updated data from the Phase III MAGNIFY trial with [outspread] in relapsed/refractory indolent lymphoma. In addition, there will be data from the ABOUND non-small cell lung cancer program with ABRAXANE in elderly patients and in patients with poor performance status.

In addition, our collaborations are producing exciting data for ASCO. From our collaboration with bluebird, we will have updated data for the Phase I trial of bb2121 in late line relapsed refractory multiple myeloma. Our collaboration with Juno will see updated data from the Phase I TRANSCEND trial with JCAR017 in relapsed/refractory Diffuse Large B-cell Lymphoma. Finally, updated data will be presented from the Phase I/II trial with IDHIFA for enasidenib through our Agios collaboration. Those data in relapsed/refractory AML patients with an IDH2 mutation are the bases of our ongoing FDA submission. As a reminder, the PDUFA date for IDHIFA is August 30, and our U.S. team is fully prepared for a highly successful launch.

Through our Acceleron collaboration, we will have luspatercept data at the MDS foundation meeting in Valencia, Spain, including Phase II data in early low-risk MDS patients, who have not received an ESA. We're very pleased with the efficacy of luspatercept in this patient population and are moving forward with the planning for our respective Phase III study in frontline low-risk MDS. Our ongoing Phase III luspatercept studies in later-line, low-risk MDS and non-transfusion-dependent beta-thalassemia are expected to be fully recruited during the second quarter, which represents an acceleration of 6 months versus original plan, with an expected read out of top line results by mid-2018.

In summary, we had a great start to the year for the Hematology & Oncology franchise, and we're on track to deliver our 2017 guidance. We have already achieved key regulatory and clinical milestones with the approval of REVLIMID as maintenance therapy post autologous stem cell transplantation. We are awaiting the approval of IDHIFA in IDH2 mutant relapsed/refractory AML by the end of August. We're on track to submit RVd and NDMM to the FDA by year-end and have fully recruited our Phase III OPTIMISMM study of pomalidomide (inaudible) bortezomib in second and later-line multiple myeloma.

Finally, our mid- and late-stage pipeline is making great progress. We are further advancing our pivotal plans for luspatercept in frontline low-risk MDS and are planning to initiate a Phase II study in myelofibrosis later this year. We are preparing to initiate pivotal programs for multiple additional assets by the end of this year, including marizomib in first-line glioblastoma; bb2121 in relapsed/refractory myeloma; JCAR017 in relapsed/refractory Diffuse Large B-cell Lymphoma; CC-122 in relapsed/refractory lymphoma; IDHIFA in first-line AML; and durvalumab in myeloma, MDS and AML.

Thank you, and I will now turn the call over to Scott.

--------------------------------------------------------------------------------

Scott Andrew Smith, Celgene Corporation - President and COO [6]

--------------------------------------------------------------------------------

Thank you, Michael, and good morning. Q1 2017 was a strong quarter for Celgene I&I. There were challenging dynamics in the U.S. psoriatic markets but OTEZLA continues to produce significant year-on-year growth. We initiated a number of activities that will expand the addressable population for OTEZLA worldwide, laying the groundwork for a highly successful year ahead. We significantly advanced development of the Celgene I&I pipeline, taking important steps forward in proof-of-concept and pivotal programs for GED-0301 and ozanimod.

Global OTEZLA net sales for Q1 2017 were $242 million, representing a 24% year-on-year increase. This revenue growth is being driven by continued gains in market share and geographic expansion. With full reimbursement now in place in major markets in Europe and Japan, uptake is accelerating internationally.

In the U.S., the challenging dynamics we faced in Q1 were mainly driven by short-term headwinds. Beyond the normal Q1 market declines we anticipated, this year's contraction was deeper and more protracted. Additionally, we saw significantly higher GTN adjustments in Q1 due to contracting to remove biologic step-edits in several major U.S. health plans and a modest decline in inventory levels. We expect the increased GTN to be more than offset by future growth in these large plans.

Looking specifically to the key performance indicators. We see consistent growth in OTEZLA share in the large psoriasis market. We are closing the share gap on Stelara for second position in the category. In addition, OTEZLA continues to expand the market, and that leaves all other therapies [and new] to brand share for both psoriasis and PsA. Currently 90% of patients are coming to OTEZLA from something other than a biologic.

Looking at the graphic on the right. We can see that early gains are already evident after only 1 quarter from this contracting strategy. The strategy will allow an additional 70 million to 100 million commercial lives to have biologic step-free access to OTEZLA. We believe that this increasing access will allow us to truly compete for market share and leadership in these large and important markets.

Building on our momentum, we are aggressively expanding the foundation for future revenue growth. We are continuing to execute on a robust life cycle plan for OTEZLA. At the AAD meeting in March, data from our Phase IV UNVEIL study were presented. These data demonstrated the compelling efficacy and safety profile in the moderate psoriasis population. We also initiated a Phase III development in scalp psoriasis and are preparing to file our once-daily formulation in the U.S. later this year. The momentum we see in Q2 across a number of fronts gives us confidence that we will deliver on our full year 2017 guidance of $1.5 billion to $1.7 billion.

Turning now to ozanimod. We are very encouraged by the results we have seen to date in both the MS and IBD indications. In the Phase III SUNBEAM MS trial, ozanimod achieved the primary and all measured secondary endpoints with no new safety findings. The second pivotal MS trial, RADIANCE, is on track to read out next month.

The Phase II STEPSTONE study in Crohn's disease demonstrated positive signs of clinical benefit, supporting initiation of a Phase III development program by year-end. We expect these important data to be presented in a major medical meeting later this year. We are very excited about the blockbuster potential of ozanimod across multiple indications.

Q1 was a quarter full of important advancements for the franchise. We executed multiple initiatives to expand the foundation for OTEZLA growth across both markets and indications. We aggressively advanced the development of 2 potential future blockbuster products, ozanimod and GED-0301. Several important data readouts will follow throughout the year.

Going forward, with Terrie Curran as President of the franchise, I look forward to sharing in many future successes for Celgene I&I. There will be multiple milestones and accomplishments coming throughout 2017 and beyond.

Thank you very much for your attention, and I'd now like to turn the call over to Jackie.

--------------------------------------------------------------------------------

Jacqualyn A. Fouse, Celgene Corporation - Strategic Advisor and Director [7]

--------------------------------------------------------------------------------

Thank you, Scott. Good morning, everyone. As you have heard from the Celgene team, Q1 of 2017 was a stellar quarter for many reasons. From my perspective, our performance can best be summarized by 3 high-level aspects: First, our outstanding execution paved the way for ongoing strong long-term growth. Across all of our teams, from early research, to clinical development, to medical affairs, to commercial, and for all of the other operations (inaudible) supporting functions, our record bodes well for our future ability to make the most, both from the assets that exist within our current portfolio as well as those that will come out of the pipeline.

Second, Celgene's portfolio diversification is well underway and is happening across our research and development pipeline and our marketed product portfolio. Tangible developments in this regard should provide confidence in the company's ability to grow at an industry-leading rate for the coming decade and beyond.

And third, the Celgene strategy is delivering across all of its components. Our focus on science, data and unmet medical need has supported us, bringing new blockbuster products to market and generating a steady stream of new data to support the value propositions of our drugs that have been on the market for some time. Our distributed R&D model for early stage programs is bearing fruit, witness IDHIFA from our Agios collaboration, and it is creating significant optionality within our pipeline. The mid- to late-stage acquisitions we have done have delivered on their objectives thus far, including Pharmion, Abraxis, GED-0301 and Receptos. And to round out the strategy, with respect to operational excellence, we have, are and will continue to leverage our focused, global operating model to deliver earnings growth that exceeds revenue growth, even while we invest for the long-term health of our business.

A lot was accomplished in Q1. There's still much more to come for the remainder of this year and well beyond. As we hit these milestones, each event will provide even more visibility and confidence to what the future holds for Celgene.

In closing, I would like to thank my Celgene colleagues around the world and across all functions for a great Q1 2017 and a fantastic past 7 years. I would also like to thank our sell-side and buy-side friends for your support over the years, both your support of Celgene and our teams and your support of me. Many of you have been a part of my professional journey since my pre-Celgene days, and I greatly appreciate the confidence you have always placed in me. Today is my last Celgene earnings call, but I'm still around for 2 more months, and I look forward to seeing everyone at ASCO in June.

Thank you, and I will now turn the call to questions.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) Our first question comes from the line of Carter Gould with UBS.

--------------------------------------------------------------------------------

Carter Lewis Gould, UBS Investment Bank, Research Division - Large Cap Biotech Analyst [2]

--------------------------------------------------------------------------------

On OTEZLA, definitely sounds like you're positioning -- the performance is seasonal and sort of temporary and very much in line with what we've heard from Amgen last night in the broader segment. Can you just walk through what gives you confidence growth will bounce back? Or could we see continued pressure in the near term?

--------------------------------------------------------------------------------

Terrie Curran, [3]

--------------------------------------------------------------------------------

Thank you, Carter. Yes, I think you're spot on. I think there was really 3 key drivers to the performance in the first quarter. Firstly, we saw contraction in the market as we saw increased GTN as a result of the contracting. But importantly, that really gives us access to double the number of insured lives going forward. And lastly, we saw a minimal drawdown in inventory. Importantly, if we look at the underlying dynamics of the business, they're exceptionally strong. If you look at the market share, OTEZLA continues to grow market share. We continue to gain more than 40% of new patients. And these new contracts will give us access to an additional pool of patients moving forward. Importantly, if we look at the exit run rates out of quarter 1 and into quarter 2, we do see the net sales rebounding and on track to deliver our 2017 guidance.

--------------------------------------------------------------------------------

Operator [4]

--------------------------------------------------------------------------------

And our next question comes from the line of Ying Huang with Bank of America.

--------------------------------------------------------------------------------

Ying Huang, BofA Merrill Lynch, Research Division - Director in Equity Research [5]

--------------------------------------------------------------------------------

And congrats on your achievement for Jackie. I have a question on bb2121. It sounds like you plan for pivotal trial already. Does that mean you have seen durable response? And then quickly on ozanimod in MS, do you have to clear both the hurdles for clean safety, and also, you have to see a disability progression benefit in order to make this a differentiated product in your marketplace?

--------------------------------------------------------------------------------

Michael F. Pehl, Celgene Corporation - President of Hematology & Oncology [6]

--------------------------------------------------------------------------------

Yes, thanks for the question. It's Michael. I'll start with bb2121. So what we're going to present to you at ASCO, I think, is reflecting updated data, not just with more patients at the clinically relevant dose, but in also a longer treatment duration, which is going to allow us to look exactly as what we were just mentioning, the durability of the responses. We think that throughout the course of the year, we're going to have sufficient patient in the clinically relevant dose to look in aggregate on safety, efficacy and treatment duration so that we can, as you said, make a pivotal decision by the end of the year. But I think ASCO will allow us to have a first look on a sufficient number of patients with a clinically meaningful treatment duration.

--------------------------------------------------------------------------------

Scott Andrew Smith, Celgene Corporation - President and COO [7]

--------------------------------------------------------------------------------

Specific to ozanimod, we do expect to see differentiated safety data. We saw that in the first initial SUNBEAM trial. We would expect that to hold up, and that's a critical part of what we see as commercialization success with this molecule going forward. Relative to the disability endpoint, no oral therapies have ever shown a p-value on the disability endpoint relative to an active comparator. Only one compound has ever shown it at all. And so what we would expect here is not necessarily a p-value here, but clinically meaningful changes in that disability index. All the competitors have the disability data in their inserts, whether or not it was significant or not. And again, it's only been significant for one compound and not for any oral compound. So our base case was built off clinically meaningful disability endpoints not necessarily statistically significant. Now I will add a little context that we got a agreement from the FDA that we could pool and prespecify the pool data as the endpoint here that other compounds haven't done. So we'll be interested to see what that looks like.

--------------------------------------------------------------------------------

Operator [8]

--------------------------------------------------------------------------------

And our next question comes from the line of Eric Schmidt with Cowen and Company.

--------------------------------------------------------------------------------

Eric Thomas Schmidt, Cowen and Company, LLC, Research Division - MD and Senior Research Analyst [9]

--------------------------------------------------------------------------------

And congrats to Jackie on her wonderful tenure at Celgene, and to Scott and Terrie on their promotions. Maybe a question for Scott or Terrie. Looks like the U.S. sales of ozanimod were down 26% quarter-on-quarter. And given that weakness, I was hoping you could just provide a little bit more granularity as to what percent of the decline was gross to net, what was stocking and what was the seasonality that you mentioned?

--------------------------------------------------------------------------------

Terrie Curran, [10]

--------------------------------------------------------------------------------

I think if you look at those few factors, what we can say is that the total impact of inventory drawdown in quarter 1 was about $35 million to $40 million. But inventory levels exiting the quarter were at the low end of the normal range. If we look at GTN, the GTN actually doubled going from Q1 in '16 to Q1 in '17. And then if we look at the contraction of the market, the overall market in terms of scripts were down by about 4%. Having said that, OTEZLA did much better, and the contraction in overall scripts shriveling down by 1.5%. So if you actually look at the underlying dynamics of the business, we really see, as we have in previous years, that quarter 2 will have a rebound.

--------------------------------------------------------------------------------

Operator [11]

--------------------------------------------------------------------------------

And our next question comes from the line of Umer Raffat with Evercore.

--------------------------------------------------------------------------------

Umer Raffat, Evercore ISI, Research Division - Senior MD and Fundamental Research Analyst [12]

--------------------------------------------------------------------------------

I actually wanted to focus on ozanimod, pooled Phase III, the statistical hierarchy. And I guess the question was do -- will the primary announcement be on the 0.5 milligram or the 1 milligram? And also on ozanimod, just while we're at it, clearly, MS and GI indications are a high priority for you. And from our perspective, we're just trying to think out loud what would that mean when you do come to the market as it relates to the price points that are very different between MS and GI. Would really appreciate any color.

--------------------------------------------------------------------------------

Scott Andrew Smith, Celgene Corporation - President and COO [13]

--------------------------------------------------------------------------------

So relative to the first question, we would pool the 0.5 and look at it versus placebo, and pool the 1 milligram and look at it versus placebo. That's the way it would go. It would not be a blended-dose pooled analysis. It will be a pooled analysis from the 2 studies. That's the pooling effect is that you're taking the SUNBEAM study and the RADIANCE study and pooling it. You're not blending the 2 doses within the study. Second question was relative to price differences in the marketplace. It's interesting, when we did this transaction 19 months ago or so, the price differences were much more profound, the price points from the 2 markets, IBD and MS. And they've sort of, over the past number of months drifted closer together. Certainly, the MS has got a higher price point than the IBD marketplace. What we would always do in this case is make sure that we get the fullness of the Phase III data and understand the value of the asset, both in MS and then when we get the UC data, understand the fullness of that data. And we will be in a position then to really start to move forward on our pricing strategy for both indications for this particular molecule. But the differences in the market are certainly less acute than they were just a couple of years ago, so the problems a little bit lesser. But we'll get the fullness of the data. Certainly, we've done a number of different pricing scenarios and looked at lots of different ways to price in this marketplace. And we feel very good about the economic opportunity for both indications.

--------------------------------------------------------------------------------

Operator [14]

--------------------------------------------------------------------------------

And our next question comes from the line of Cory Kasimov with JPMorgan.

--------------------------------------------------------------------------------

Cory William Kasimov, JP Morgan Chase & Co, Research Division - Senior Biotechnology Analyst [15]

--------------------------------------------------------------------------------

Let me add my congratulations to Jackie. I wish you the best of luck in whatever you decide to do next. I have a pipeline question for you regarding your Juno partnership. You mentioned that a pivotal trial in NHL is set to begin by the end of the year for JCAR017. Do you have an expectation of how this might be designed? Is it potentially possible to roll the current DLBCL study into a registrational trial by expanding centers and patients?

--------------------------------------------------------------------------------

Michael F. Pehl, Celgene Corporation - President of Hematology & Oncology [16]

--------------------------------------------------------------------------------

This is Michael. So the planning is -- and we're responsible for planning the registrational study in Europe. So the planning is to have a distinct study in late-line relapse/refractory diffuse large B-cell lymphoma patients. And we will probably have the opportunity to do those as a [single arm] study, and then we will have to do a confirmatory trial afterwards. That's where we are.

--------------------------------------------------------------------------------

Operator [17]

--------------------------------------------------------------------------------

And our next question comes from the line of Geoff Meacham with Barclays.

--------------------------------------------------------------------------------

Geoffrey Christopher Meacham, Barclays PLC, Research Division - MD and Senior Research Analyst [18]

--------------------------------------------------------------------------------

Jackie, congrats on the retirement. I'm going to miss you. A couple -- for bigger picture questions for Mark and then one for Scott on OTEZLA. So Scott, is the positioning ahead of biologics at risk, given the changes that you mentioned on step-edits? And then for Mark, all the biz dev activity the past few years should really help diversify the concentration on REV. But I wanted to ask you, what would you call out as the highest asset or highest-impact asset on diversification? And what can you tell us maybe about the pace of biz dev activity from here?

--------------------------------------------------------------------------------

Terrie Curran, [19]

--------------------------------------------------------------------------------

So just to answer the question on OTEZLA. The contracts that we have implemented actually give us an opportunity to position OTEZLA pre-biologics. So what they actually do is remove the steps, to remove the requirement in these 3 large contracts to first try a biologics. So it's actually the opposite to what you articulated. The strategic reason that we did this was that it's really important for OTEZLA patients to have access without having to have that step through a biologic. So it's going to have a very positive effect for our market share, particularly towards the second half of the year.

--------------------------------------------------------------------------------

Mark J. Alles, Celgene Corporation - CEO and Director [20]

--------------------------------------------------------------------------------

Geoff, it's Mark. Thanks for the question. By the way, that was, I think, 2 questions but we'll let you go because you were so nice to Jackie. Hey, listen, on the diversification question, you'll remember that we've talked a lot about the pipeline and how excited we are with the optionality and opportunity coming from, give or take, 14 different unique molecules that between now and 2021, 2022 are in late-stage development or in proof-of-concept stage development that gives us the kind of opportunity to diversify from the concentration of REVLIMID over time, so leading up to the loss of exclusivity. But as again, we've spoken to some 10 of those molecules, we estimate in a bottoms-up forecast about $1 billion in revenue as an opportunity and another 4 we think are multibillion-dollar opportunities. Many of those assets, you've heard my colleagues talk about during their prepared remarks and on the call already. So that optionality keeps growing. And then on the pace of business development, we're very excited. I talked about it in my prepared remarks. The strength of our balance sheet, how we see the marketplace, the technological advances that are happening really are, I think, virtuous and supportive of our BD strategy to stay hungry, stay in the market and be the partner of choice across the hematologic, oncologic and the increasingly broader, I would call it, immunology platform. We've talked a lot about I&I sort of inflammatory diseases perhaps versus. But we see the science actually converging now. It's more about immunology specifically than just inflammations. So thanks for the question.

--------------------------------------------------------------------------------

Operator [21]

--------------------------------------------------------------------------------

Our next question comes from the line of Geoffrey Porges with Leerink Partners.

--------------------------------------------------------------------------------

Geoffrey Craig Porges, Leerink Partners LLC, Research Division - MD, Biotechnology, Director of Therapeutics Research and Senior Biotechnology Analyst [22]

--------------------------------------------------------------------------------

And Jackie, congratulations, and thanks for all the access that you've given us over the years and the sort of candor that you've shared. We'll definitely miss you. So now that you're more or less ready to talk unscripted, could you tell us whether all those upfront payments really should have been pro-forma-ed out of all those earnings numbers? And in case you won't answer that, could you talk a little bit about return on invested capital and how that is trending for Celgene? You didn't comment -- Peter didn't mention it on the call. It's something that we are accustomed to seeing in the past, and just wondering whether there's going to be some recovery in that metric.

--------------------------------------------------------------------------------

Jacqualyn A. Fouse, Celgene Corporation - Strategic Advisor and Director [23]

--------------------------------------------------------------------------------

On the return on invested capital question, I'm going to punt it to Peter.

--------------------------------------------------------------------------------

Peter N. Kellogg, Celgene Corporation - CFO, CAO and EVP [24]

--------------------------------------------------------------------------------

Yes. No, so absolutely. It's great question. The return on invested capital, as you say, will start to grow. Clearly, when you go to do a major acquisition of a pipeline asset, like we did with Receptos, what you're doing is you're laying out a lot of value to an asset, and then you're not getting any revenue or return in the short term. But now this is coming through, as you could see with the excitement with ozanimod as well as other assets that have come from that company in our pipeline that we haven't really talked about yet, but we will be probably in the future. I think that'll be a very strong contributor to our return on invested capital. Obviously, for the rest of our portfolio, the company's continuing to do extremely well, driving great returns, increasing margins. It's funny, as you said that. I was thinking about how when we gave our 2020 guidance, we highlighted that our operating margin would be in the high 50s. And I remember, a few people kind of gasped and said, "Can you really actually get there?" And I look at our results now. Already, you can see that the trends are very, very strong. So I think we're on a great track. The return on invested capital metric, if you were just to take out the -- that one big acquisition, would be -- continue to drive forward. And obviously, once that asset starts to kick in with revenue and returns, you're going to see it really jump forward. So we feel really great about it. We're thinking that our alliance portfolio is very strong. What's interesting there is in January, we highlighted a number of assets. They're in the late stage. They have a lot of potential. And quite frankly, that list keeps getting added to as we go forward. And so we feel very good about the investments we've made, even the upfront shift, and also the whole collaboration portfolio approach and the building pipeline, which really is going to build our next decade of growth. So it seems like it's coming together really nicely.

--------------------------------------------------------------------------------

Operator [25]

--------------------------------------------------------------------------------

And our next question comes from the line of Alethia Young with Crédit Suisse.

--------------------------------------------------------------------------------

Alethia Rene Young, Crédit Suisse AG, Research Division - Research Analyst [26]

--------------------------------------------------------------------------------

Jackie, congrats, and thanks for everything professionally and personally. You always kept it real with us, and you definitely will be missed. So congrats to Peter (sic) [Scott] and Terrie on the promotion. I just wanted to talk a little bit about duration trends that you're seeing with REVLIMID in Europe perhaps maybe now, sort of as we move to the post-transplant era. And just maybe if you could talk a bit about the market share dynamic, both in the U.S. and Europe?

--------------------------------------------------------------------------------

Michael F. Pehl, Celgene Corporation - President of Hematology & Oncology [27]

--------------------------------------------------------------------------------

Yes, thanks, Alethia. This is Michael. So I think the very good numbers that you saw for our first quarter as compared to the fourth quarter, by the way, both for the U.S. and in -- and for Europe, were really driven primarily by volume. We had a record number of prescriptions in the U.S., and that's a composite of 2 things: It's the increasing treatment duration, and it's market share increases, driven by our NDMM launches. And we have the same phenomenon in Europe. We have a very strong 13% sequential volume growth in Europe in the first quarter, and this is really a reflection of the starting stem cell transplantation of -- launch. We have reimbursement in 6 countries. But then also the ongoing non-stem cell transplantation launch, where we have reimbursement in 17 European countries. Market share in U.S. and in Europe and in Japan continues to grow, and treatment duration continues to grow. And the treatment duration is really driven by a couple of things. I just wanted to say this once again. Of course, the fact that REVLIMID is used in early treatment lines and on first lines, that's helping a lot. There's a lot of appreciation because all the data pointing to this direction of using REVLIMID [until] progression. And then, you have this phenomenon of triplets, which are used in the relapsed/refractory setting in U.S. even starting to be used in the first-line setting, and that is driving treatment duration. So we have all these factors that help us. And we have, I think, a lot of hope that this very positive trend is going to continue very significantly in the future.

--------------------------------------------------------------------------------

Operator [28]

--------------------------------------------------------------------------------

And our next question comes from the line of John Newman with Canaccord Genuity.

--------------------------------------------------------------------------------

John Lawrence Newman, Canaccord Genuity Limited, Research Division - Principal and Senior Healthcare Analyst [29]

--------------------------------------------------------------------------------

Just had one quick additional question on OTEZLA. The contracts that you put in place regarding removal of the step-through biologic edits, I'm just wondering, were those patients already covered? Are you simply looking to modify the contracts that were already there? Or will these patients bring in a lot of new patients that previously weren't already covered under the contracts?

--------------------------------------------------------------------------------

Terrie Curran, [30]

--------------------------------------------------------------------------------

Thanks, John, for the question. So those are new contracts that we negotiated. They're multiple-year contracts that were implemented in the first quarter, and they will establish a new pool of patients for OTEZLA pre-biologics. So they'll actually double the number of patients -- number of lives that are covered by these plans.

--------------------------------------------------------------------------------

Operator [31]

--------------------------------------------------------------------------------

Our next question comes from the line of Ian Somaiya with BMO Capital.

--------------------------------------------------------------------------------

Mayur Amrat Somaiya, BMO Capital Markets Equity Research - Analyst [32]

--------------------------------------------------------------------------------

And Jackie, you are truly going to be missed. The one question I had was on mongersen, on the upcoming endoscopy data. I don't know if there's anyone willing to just set expectations since we dealt with this issue about a year ago. And then just trying to think about ozanimod versus mongersen. You have data in-house. Just curious how you think data will lead to patient segmentation of those 2 drugs.

--------------------------------------------------------------------------------

Scott Andrew Smith, Celgene Corporation - President and COO [33]

--------------------------------------------------------------------------------

Thank you very much. There is a sort of an encore presentation of some of the GED, CD-001 data upcoming, which takes a look at the relationship between clinical remission and endoscopic improvements. And so I can't give specifics to that data, but that will be presented at DDW coming up. So we're excited about that. We're very, very -- we've got data for GED, obviously, and for ozanimod. We're very excited about both assets. The GED registration program has really accelerated over the last little while. We remain on track with time lines there, and we think there's tremendous potential. Before you finalize positioning, you would want to see and make sure that you have the data from both GED and from ozanimod in Crohn's. I think there is some real positives on the mongersen or GED side in terms of the nonsystemic absorption characteristics of the product, which could make it really, I think, a very good product, both to be used early first line, but also to be used in combination or in combinatorial approaches with other agents in the marketplace. Because again, it's got a very unique mechanism and non-systemically absorbs. So we're very, very excited about both these assets. When we get the final data, that's really when you start to harden our positioning. But it's an area of extremely high unmet medical need. It's a market that has been not particularly well penetrated. And the idea that we can bring 2 or even more assets into the IBD space is, I think, very, very positive for Celgene and for patients worldwide.

--------------------------------------------------------------------------------

Operator [34]

--------------------------------------------------------------------------------

And our next question comes on the line of Katherine Breedis with Stifel.

--------------------------------------------------------------------------------

Katherine Edna Breedis, Stifel, Nicolaus & Company, Incorporated, Research Division - MD and Senior Analyst [35]

--------------------------------------------------------------------------------

And I have to reiterate as well that we will really miss you, Jackie, and look forward to celebrating you at ASCO. My question is about CC-220. We're looking forward to seeing the Phase IIa data at EULAR, particularly after what we learned about the molecule mechanistically at your protein homeostasis R&D day last September. Can you provide some thoughts on how you think about what the structure of the Phase IIb will look like, your targeted enrollment, and when we could potentially see these data readout in the future.

--------------------------------------------------------------------------------

Scott Andrew Smith, Celgene Corporation - President and COO [36]

--------------------------------------------------------------------------------

Yes. We're just working through the -- in discussion with the agencies what this Phase IIb data is going to look like. We don't want to get into specifics right now, because it may be subject to change. I think we have seen some utilization and some proof-of-concept of IMIDs in SLE in the past in small studies and [IETs] and other things, the Phase IIa data was very encouraging, that regardless of which biomarkers you looked at in this space, they all seem to be moving in the right direction. There seem to be pretty profound effects in this relatively sick (inaudible) population. So we think we have a good shot at an active therapeutic in this space. It is a very complex development space, as you may know. There's a lot of discussion around endpoint and what are the appropriate regulatory endpoints. We are -- so we constructed the Phase IIa, and we will construct the Phase IIb, in a way to give us the broadest read of overall activity before we would select, and together with the regulatory agencies, the appropriate endpoint and construct that pivotal Phase III program. But we're very excited about that and looking forward to getting that data in a couple of months.

--------------------------------------------------------------------------------

Operator [37]

--------------------------------------------------------------------------------

Our next question comes from the line of Mohit Bansal with Citigroup.

--------------------------------------------------------------------------------

Mohit Bansal, Citigroup Inc, Research Division - VP and Analyst [38]

--------------------------------------------------------------------------------

And Jackie, thank you so much for all the access you've provided over the years. So my question is regarding GILENYA. And then given that your launch would coincide with -- your launch of ozanimod will coincide with GILENYA going generic, could you help us understand how you're thinking about the MS market in '19, 2020 time frame? And how comfortable do you feel about the idea that no monitoring would be enough to counter a substantial price difference especially in the current payer environment?

--------------------------------------------------------------------------------

Scott Andrew Smith, Celgene Corporation - President and COO [39]

--------------------------------------------------------------------------------

Thank you very, very much for the question. When we looked at the molecule, I think we look at ozanimod and we look at the totality of the safety data. And it's not just cardiac monitoring or lack of AV block and some of the other cardiac toxicities. But we see differentiated data in a number of different places, including liver toxicity, the return to normalcy of lymphocytes post dosing, looks different for the compound. Infection rates and other things look different than GILENYA. So we believe we will have an asset, which is significantly differentiated from GILENYA from a clinical perspective. We see it in preclinical models. We see it in the Phase II. We certainly are seeing it initially in Phase III, and we're hoping for the next study and taking a look at that. But the hypothesis that we made this acquisition and investment on was this idea that it would be differentiated from a safety perspective from GILENYA, not just on first-pass cardiac monitoring but in lots of other aspects of the molecule. And we hope -- and we saw that on Phase II, and we hope that holds up in Phase III. And that will be the fundamental value proposition of ozanimod in this space, even post loss of exclusivity of another compound, but highly differentiated or differentiated data leading to hopefully what will be a best-in-class compound.

--------------------------------------------------------------------------------

Operator [40]

--------------------------------------------------------------------------------

And our next question comes from the line of Jim Birchenough with Wells Fargo Securities.

--------------------------------------------------------------------------------

Nicholas M. Abbott, Wells Fargo Securities, LLC, Research Division - Associate Analyst [41]

--------------------------------------------------------------------------------

It's Nick on for Jim, and I'm sure Jim would echo -- and myself, everything nice that's been said about you, Jackie. In terms of the bb2121 trial, obviously, you could just do a standard trial in relapsed/refractory myeloma. I know yesterday, Ken Anderson's led the publication early online in Clinical Cancer Research discussing minimal residual disease, and obviously, this is a hot topic. So is there an opportunity to do something creative with bb2121 that resets the bar for what to expect in a relapsed/refractory multiple myeloma study?

--------------------------------------------------------------------------------

Michael F. Pehl, Celgene Corporation - President of Hematology & Oncology [42]

--------------------------------------------------------------------------------

Yes, thanks for the questions. And you can expect a lot of creative things from us over the time. I think the starting point is really, it's taken a kind of a late-line population, where very little treatment options exist. And please recall the data that we've been showing at the triple meeting in Munich, although early dose for quadruple refractory patients where we obtained complete responses and stringent complete responses. So the starting point is obviously kind of a late-line population where you can obtain regulatory approval quickly. That said, I think there's all opportunities then to bring bb2121 up in the treatment. And to your point, an MLB positive population, for example, in the first-line setting is definitely a population to reflect on, a population with high-risk [stratogenetic] features in a first-line setting. That's a population definitely to reflect on. I'm personally convinced that over time, autologous transplant and high-dose chemotherapy are not going to stay the mainstay for younger patients, and I think we start to see results that are questioning their role, even in the light of new compounds in multiple myeloma. So I would also think about then opportunity to take out this treatment modality and replace it by something absolutely better. I think this is all things we are contemplating on, but the starting point for us is having a dose, having a great efficacy, having a great duration of response. And hopefully, we're going to get -- obtain all these results and then go into well-defined, late-line population, get the drug approved and then come up with a great clinical development plan.

--------------------------------------------------------------------------------

Operator [43]

--------------------------------------------------------------------------------

Our next question comes from the line of Mara Goldstein with Cantor.

--------------------------------------------------------------------------------

Mara Goldstein, Cantor Fitzgerald & Co., Research Division - Head of U.S. Healthcare Research and Senior Analyst [44]

--------------------------------------------------------------------------------

I have a question and it regards the forward growth expectation. And it's perhaps a both theoretical and a practical question in that the company's consistently provided long-term growth rates, which we appreciate. And I believe pipeline candidates are risk-adjusted in those long-term growth rates. And as we're moving close -- through 2017 and seeing filings and completion of later-stage clinical programs, I'm wondering at what point do such programs become a definitive part of these growth expectations. And when might you disclose them to the broader investment community?

--------------------------------------------------------------------------------

Peter N. Kellogg, Celgene Corporation - CFO, CAO and EVP [45]

--------------------------------------------------------------------------------

Yes, be glad to. So obviously, when we put together our internal plans for -- on a long-term basis, what we actually do is we think through which programs do we actually have proof-of-concept data for. And then we include those in our base case, not probability adjusted and they're actually, quite frankly, very small relative to our 2020 guidance. It's one of the reasons why we wanted to see some of the Phase III results before we go beyond 2020 just because we want to know how do you add these in for the ozanimods and the GEDs and other assets like that. So what we tend to do is we do a base case based on the composition of our commercial assets or very late-stage assets where we have very strong proof-of-concepts already, and only for the indications for those drugs where we have proof of concept. Then what happens is each time we get a Phase III result, we roll that in, and we would talk very clearly with you in terms of how that might impact guidance for 2020 or beyond. Now obviously, for 2020, as I mentioned, the late-stage pipeline has actually a fairly small impact, because it's really launching in '18 or '19 for most of the assets that are just starting to ramp up. Compared to the magnitude of the rest of our commercial portfolio, that adds some nice growth, but it's not a big deal. Going beyond 2020 with guidance, which would be something we'll think about at some quite in the future, no question. If we have some of those Phase III results and we kind out know what the outcomes are and how to add those in with much more clear understanding of late-stage data and what the label might look like, then we're really ready to start rolling those in. We don't really have a broad probability adjusted approach to it. Because for us, we consider it's more important to have kind of like the binary signal of is this a product and is it a go? And then we have a fairly clear read of how it's going to go forward. So I hope that helps, and I'd be glad to chat offline.

--------------------------------------------------------------------------------

Mark J. Alles, Celgene Corporation - CEO and Director [46]

--------------------------------------------------------------------------------

It's Mark. Just to add one quick comment. All that said, we remain very confident that we're on track to meet or exceed 2020. The timing question that you asked is really an important one, but we're just not ready to think that through more completely today, given the optionality and opportunity that's in the pipeline.

--------------------------------------------------------------------------------

Operator [47]

--------------------------------------------------------------------------------

And our last question comes from the line of Yatin Suneja with SunTrust.

--------------------------------------------------------------------------------

Yatin Suneja, SunTrust Robinson Humphrey, Inc., Research Division - Director and Senior Research Analyst [48]

--------------------------------------------------------------------------------

And I also would like to extend my congratulations to Jackie, Scott and Terrie. So the question is on the pipeline. Could you maybe talk about your confidence in IDHIFA upcoming approval, given that the NDA was filed on a single-arm trial? And how do you envision that market opportunity?

--------------------------------------------------------------------------------

Michael F. Pehl, Celgene Corporation - President of Hematology & Oncology [49]

--------------------------------------------------------------------------------

Yes, this is Michael. So our confidence starts with the fact that we have a PDUFA date and certainly, very intensive and very constructive ongoing interactions with regulatory authority. The fact that we believe that we can actually get an approval with the single-arm, Phase I/II data comes, a, from the strength of the data; and then, b, from the medical need that's there; and c, from the clear definition of the patient population. And let me just also once again say that we are really excited about this approval because it's the first one that comes from our distributed research model that comes along with a companion diagnostic that will help us a lot in positioning the drug and getting reimbursement. And then, of course, it fit beautifully in the AML pipeline that is building, not just IDHIFA for us (inaudible) [2019]. So I think from all angles, that looks great. The initial opportunity for IDHIFA is a bit more limited because we're starting with relapsed/refractory AML. Our first-line AML journey has started. We have 2 trials ongoing. We think the real commercial opportunity that could make this drug a $1 billion drug is coming from the first-line data and then also, hopefully, development plans that we're about to develop. So everything is set, our launch plans are in place, and we are very, very excited about IDHIFA.

--------------------------------------------------------------------------------

Peter N. Kellogg, Celgene Corporation - CFO, CAO and EVP [50]

--------------------------------------------------------------------------------

So that completes our call. This is Peter. I just like to thank everybody for joining us today. As you can see, we're off to a great start for 2017. We've already increased our guidance range for non-GAAP EPS. The products are doing extremely well. I think a couple of charts we showed today really highlight the excitement we have, actually, for OTEZLA. While it was true, the first quarter had some market contraction for the moment, we already see it coming through in March and April with very good volumes. And so we're on track there as well. And in fact, to the point of the number of covered lives and the market gain opportunities, quite frankly, to bring those top accounts up to a market share that's commensurate with the rest of the market is just phenomenal. So we're excited about 2017. And in particularly, we're excited about getting all the late-stage trial outcomes that will start coming through as we go through the year. So we're really in a period of a lot of trigger points and opportunities for us. And quite frankly, we at Celgene are very excited.

And let me just finish by saying also thank you to Jackie one more time. But also, it's just been great working with her. And also we want to really thank her for all the great results. And I'd like to hand it over Bob, if I could.

--------------------------------------------------------------------------------

Robert J. Hugin, Celgene Corporation - Executive Chairman [51]

--------------------------------------------------------------------------------

Yes. No, it's been a great pleasure just to serve with Jackie. And Celgene's going to miss her but benefit for the long term. And I'm not as much of a crier, but I'm feeling the same emotion. So Jackie, thank you for all you've done for us and for the industry. And we wish you the best and look forward to you coming to work every day until June 30, and stay good friends after that. Thank you very much.

--------------------------------------------------------------------------------

Peter N. Kellogg, Celgene Corporation - CFO, CAO and EVP [52]

--------------------------------------------------------------------------------

Thanks, everyone. Bye.

--------------------------------------------------------------------------------

Operator [53]

--------------------------------------------------------------------------------

Ladies and gentlemen, thank you for participating in today's conference. This does conclude...