CELGENE CORPORATION
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(Exact name of registrant as specified in its charter)
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Delaware
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22-2711928
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification Number)
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86 Morris Avenue, Summit, NJ
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07901
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(Address of principal executive offices)
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(Zip Code)
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(908) 673-9000
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(Registrant’s telephone number, including area code)
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Yes
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X
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No
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Yes
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X
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No
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Large accelerated filer
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X
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Accelerated filer
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Non-accelerated filer (Do not check if a
smaller reporting company)
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Smaller reporting company
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Yes
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No
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X
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Page No.
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Three-Month Periods Ended June 30,
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Six-Month Periods Ended June 30,
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||||||||||||
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2014
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2013
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2014
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2013
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Revenue:
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Net product sales
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$
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1,844.6
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$
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1,564.1
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$
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3,552.1
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$
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2,993.4
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Collaborative agreements and other revenue
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2.7
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3.1
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4.6
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10.2
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Royalty revenue
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25.4
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31.8
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46.0
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60.0
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Total revenue
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1,872.7
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1,599.0
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3,602.7
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3,063.6
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Expenses:
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Cost of goods sold (excluding amortization of acquired intangible assets)
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98.9
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80.9
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185.0
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161.4
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Research and development
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456.9
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458.1
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1,170.6
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910.5
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Selling, general and administrative
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491.8
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418.1
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985.9
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787.1
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Amortization of acquired intangible assets
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65.3
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65.7
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131.0
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131.4
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Acquisition related charges, net
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0.9
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12.5
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9.5
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45.7
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Total costs and expenses
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1,113.8
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1,035.3
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2,482.0
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2,036.1
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Operating income
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758.9
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563.7
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1,120.7
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1,027.5
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Other income and (expense):
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Interest and investment income, net
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7.3
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4.5
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13.7
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9.3
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Interest (expense)
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(41.6
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)
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(19.6
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)
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(70.9
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)
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(37.5
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)
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Other income (expense), net
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(17.8
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)
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9.2
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(24.4
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)
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6.9
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Income before income taxes
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706.8
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557.8
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1,039.1
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1,006.2
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Income tax provision
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109.0
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79.7
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161.6
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143.2
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Net income
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$
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597.8
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$
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478.1
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$
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877.5
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$
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863.0
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Net income per common share (Note1):
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Basic
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$
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0.75
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$
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0.58
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$
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1.09
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$
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1.04
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Diluted
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$
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0.72
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$
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0.56
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$
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1.05
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$
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1.00
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Weighted average shares (Note 1):
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Basic
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799.6
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828.2
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805.5
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832.0
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Diluted
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831.0
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858.5
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838.0
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861.9
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Three-Month Periods Ended June 30,
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Six-Month Periods Ended June 30,
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2014
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2013
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2014
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2013
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Net income
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$
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597.8
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$
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478.1
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$
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877.5
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$
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863.0
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Other comprehensive income (loss):
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Foreign currency translation adjustments
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1.1
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10.0
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4.1
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4.1
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Net unrealized gains (losses) related to cash flow hedges:
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Unrealized holding gains (losses), net of tax expense (benefit) of ($8.9) and $0 for the three-months ended June 30, 2014, and 2013, respectively, and ($12.6) and $0.2 for the six-months ended June 30, 2014, and 2013, respectively.
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(12.8
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)
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11.5
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(27.7
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)
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86.4
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Reclassification adjustment for (gains) losses included in net income, net of tax (expense) benefit of $0.4 and $2.8 for the three-months ended June 30, 2014 and 2013, respectively, and $0.7 and $6.2 for the six-months ended June 30, 2014 and 2013, respectively.
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2.6
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(4.0
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4.2
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(0.2
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Net unrealized gains (losses) on marketable securities available for sale:
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—
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Unrealized holding gains (losses), net of tax expense (benefit) of $16.1 and $19.9 for the three-months ended June 30, 2014 and 2013, respectively, and $45.1 and $19.9 for the six-months ended June 30, 2014 and 2013, respectively.
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31.9
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34.9
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87.2
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33.0
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Reclassification adjustment for (gains) losses included in net income, net of tax (expense) benefit of $0.6 and $1.0 for the three-months ended June 30, 2014 and 2013, respectively, and $1.1 and $1.0 for the six-months ended June 30, 2014 and 2013.
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1.0
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1.4
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1.9
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2.2
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Total other comprehensive income (loss)
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23.8
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53.8
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69.7
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125.5
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Comprehensive income
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$
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621.6
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$
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531.9
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$
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947.2
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$
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988.5
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June 30,
2014 |
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December 31,
2013 |
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Assets
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Current assets:
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Cash and cash equivalents
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$
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3,219.5
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$
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3,234.4
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Marketable securities available for sale
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2,993.5
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2,452.6
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Accounts receivable, net of allowances of $37.1 and $40.0 at June 30, 2014 and December 31, 2013, respectively
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1,124.4
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1,061.4
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Inventory
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360.0
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340.4
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Deferred income taxes
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27.0
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25.3
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Other current assets
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382.6
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436.4
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Total current assets
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8,107.0
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7,550.5
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Property, plant and equipment, net
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605.1
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593.4
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Intangible assets, net
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4,325.8
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2,839.7
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Goodwill
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2,191.2
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2,041.2
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Other assets
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372.8
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353.4
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Total assets
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$
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15,601.9
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$
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13,378.2
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Liabilities and Stockholders’ Equity
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Current liabilities:
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Short-term borrowings
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$
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192.3
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$
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544.8
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Accounts payable
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184.5
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156.2
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Accrued expenses
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848.8
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1,001.1
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|
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Income taxes payable
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15.6
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|
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16.0
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|
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Current portion of deferred revenue
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33.5
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|
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27.7
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|
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Other current liabilities
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216.9
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199.7
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Total current liabilities
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1,491.6
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1,945.5
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Deferred revenue, net of current portion
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27.7
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23.7
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|
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Income taxes payable
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259.2
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|
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235.0
|
|
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Deferred income taxes
|
659.5
|
|
|
804.9
|
|
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Other non-current liabilities
|
1,569.3
|
|
|
582.7
|
|
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Long-term debt, net of discount
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6,743.3
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|
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4,196.5
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Total liabilities
|
10,750.6
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|
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7,788.3
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|
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Commitments and Contingencies (Note 15)
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Stockholders’ Equity:
|
|
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Preferred stock, $.01 par value per share, 5.0 million shares authorized; none outstanding at June 30, 2014 and December 31, 2013, respectively
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—
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—
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Common stock, $.01 par value per share, 1,150.0 million shares authorized; issued 915.1 million and 906.5 million shares at June 30, 2014 and December 31, 2013, respectively (Note 1)
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9.2
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|
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9.1
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Common stock in treasury, at cost; 115.9 million and 101.5 million shares at June 30, 2014 and December 31, 2013, respectively (Note 1)
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(9,837.1
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)
|
|
(7,662.1
|
)
|
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Additional paid-in capital (Note 1)
|
9,165.5
|
|
|
8,676.4
|
|
||
Retained earnings
|
5,350.0
|
|
|
4,472.5
|
|
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Accumulated other comprehensive income
|
163.7
|
|
|
94.0
|
|
||
Total stockholders’ equity
|
4,851.3
|
|
|
5,589.9
|
|
||
Total liabilities and stockholders’ equity
|
$
|
15,601.9
|
|
|
$
|
13,378.2
|
|
|
Six-Month Periods Ended June 30,
|
||||||
|
2014
|
|
2013
|
||||
Cash flows from operating activities:
|
|
|
|
|
|
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Net income
|
$
|
877.5
|
|
|
$
|
863.0
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
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Depreciation
|
52.1
|
|
|
47.4
|
|
||
Amortization
|
136.4
|
|
|
135.8
|
|
||
Deferred income taxes
|
(181.1
|
)
|
|
(94.9
|
)
|
||
Impairment charges
|
2.0
|
|
|
18.8
|
|
||
Change in value of contingent consideration
|
9.5
|
|
|
45.7
|
|
||
Share-based compensation expense
|
207.8
|
|
|
135.4
|
|
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Share-based employee benefit plan expense
|
17.6
|
|
|
14.0
|
|
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Reclassification adjustment for cash flow hedges included in net income
|
4.9
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|
|
6.0
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|
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Unrealized change in value of derivative instruments
|
(16.5
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)
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|
(21.0
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)
|
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Other, net
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(1.2
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)
|
|
6.9
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|
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Change in current assets and liabilities, excluding the effect of acquisitions:
|
|
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|
|
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Accounts receivable
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(61.8
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)
|
|
(74.8
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)
|
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Inventory
|
(19.1
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)
|
|
(45.2
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)
|
||
Other operating assets
|
36.7
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|
|
(53.7
|
)
|
||
Accounts payable and other operating liabilities
|
(20.1
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)
|
|
97.5
|
|
||
Income tax payable
|
24.8
|
|
|
10.7
|
|
||
Payment of contingent consideration
|
(5.0
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)
|
|
—
|
|
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Deferred revenue
|
8.3
|
|
|
12.5
|
|
||
Net cash provided by operating activities
|
1,072.8
|
|
|
1,104.1
|
|
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Cash flows from investing activities:
|
|
|
|
|
|
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Proceeds from sales of marketable securities available for sale
|
1,144.0
|
|
|
1,329.1
|
|
||
Purchases of marketable securities available for sale
|
(1,556.3
|
)
|
|
(1,773.4
|
)
|
||
Payments for acquisition of business
|
(710.0
|
)
|
|
—
|
|
||
Purchases of intellectual property and other assets
|
(2.0
|
)
|
|
(9.4
|
)
|
||
Capital expenditures
|
(61.4
|
)
|
|
(61.3
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)
|
||
Purchases of investment securities
|
(22.5
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)
|
|
(10.4
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)
|
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Other investing activities
|
2.3
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|
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(1.5
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)
|
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Net cash used in investing activities
|
(1,205.9
|
)
|
|
(526.9
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
|
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Payment for treasury shares
|
(2,182.2
|
)
|
|
(1,877.9
|
)
|
||
Proceeds from short-term borrowing
|
2,235.4
|
|
|
3,211.0
|
|
||
Principal repayments on short-term borrowing
|
(2,588.0
|
)
|
|
(2,633.8
|
)
|
||
Proceeds from issuance of long-term debt
|
2,470.6
|
|
|
—
|
|
||
Proceeds from sale of common equity put options
|
5.2
|
|
|
—
|
|
||
Payment of contingent consideration
|
(15.0
|
)
|
|
—
|
|
||
Net proceeds from share-based compensation arrangements
|
94.0
|
|
|
320.5
|
|
||
Excess tax benefit from share-based compensation arrangements
|
90.0
|
|
|
81.2
|
|
||
Net cash provided by (used in) financing activities
|
110.0
|
|
|
(899.0
|
)
|
||
Effect of currency rate changes on cash and cash equivalents
|
8.2
|
|
|
(26.3
|
)
|
||
Net decrease in cash and cash equivalents
|
(14.9
|
)
|
|
(348.1
|
)
|
||
Cash and cash equivalents at beginning of period
|
3,234.4
|
|
|
2,090.4
|
|
||
Cash and cash equivalents at end of period
|
$
|
3,219.5
|
|
|
$
|
1,742.3
|
|
|
Six-Month Periods Ended June 30,
|
||||||
|
2014
|
|
2013
|
||||
Supplemental schedule of non-cash investing and financing activity:
|
|
|
|
|
|
||
Fair value of contingent consideration issued in business combinations
|
$
|
1,060.0
|
|
|
$
|
—
|
|
Change in net unrealized (gain) loss on marketable securities available for sale
|
$
|
(132.3
|
)
|
|
$
|
(52.9
|
)
|
Investment in NantBioScience, Inc. preferred equity
|
$
|
90.0
|
|
|
$
|
—
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||
Interest paid
|
$
|
75.9
|
|
|
$
|
45.8
|
|
Income taxes paid
|
$
|
193.4
|
|
|
$
|
154.8
|
|
|
Fair Value at the Acquisition Date
|
||
Cash
|
$
|
710.0
|
|
Contingent consideration
|
1,060.0
|
|
|
Total fair value of consideration transferred
|
$
|
1,770.0
|
|
|
Fair Value at the Acquisition Date
|
||
In-process research and development product rights
|
$
|
1,620.0
|
|
Current deferred tax asset
|
1.3
|
|
|
Non-current deferred tax liability
|
(1.3
|
)
|
|
Total identifiable net assets
|
1,620.0
|
|
|
Goodwill
|
150.0
|
|
|
Total net assets acquired
|
$
|
1,770.0
|
|
|
Three-Month Periods Ended June 30,
|
|
Six-Month Periods Ended June 30,
|
||||||||||||
(Amounts in millions, except per share)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net income
|
$
|
597.8
|
|
|
$
|
478.1
|
|
|
$
|
877.5
|
|
|
$
|
863.0
|
|
Weighted-average shares:
|
|
|
|
|
|
|
|
||||||||
Basic
|
799.6
|
|
|
828.2
|
|
|
805.5
|
|
|
832.0
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Options, restricted stock units and other incentives
|
31.4
|
|
|
30.3
|
|
|
32.5
|
|
|
29.9
|
|
||||
Diluted
|
831.0
|
|
|
858.5
|
|
|
838.0
|
|
|
861.9
|
|
||||
Net income per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.75
|
|
|
$
|
0.58
|
|
|
$
|
1.09
|
|
|
$
|
1.04
|
|
Diluted
|
$
|
0.72
|
|
|
$
|
0.56
|
|
|
$
|
1.05
|
|
|
$
|
1.00
|
|
|
Pension
Liability
|
|
Net Unrealized
Gains (Losses) From
Marketable Securities
|
|
Net Unrealized
Gains (Losses)
From Hedges
|
|
Foreign
Currency
Translation
Adjustment
|
|
Total
Accumulated
Other
Comprehensive
Income (Loss)
|
||||||||||
Balance December 31, 2013
|
$
|
(6.9
|
)
|
|
$
|
137.3
|
|
|
$
|
(36.0
|
)
|
|
$
|
(0.4
|
)
|
|
$
|
94.0
|
|
Other comprehensive income (loss) before reclassifications
|
—
|
|
|
87.2
|
|
|
(27.7
|
)
|
|
4.1
|
|
|
63.6
|
|
|||||
Amounts reclassified from accumulated other comprehensive income
|
—
|
|
|
1.9
|
|
|
4.2
|
|
|
—
|
|
|
6.1
|
|
|||||
Net current-period other comprehensive income (loss)
|
—
|
|
|
89.1
|
|
|
(23.5
|
)
|
|
4.1
|
|
|
69.7
|
|
|||||
Balance June 30, 2014
|
$
|
(6.9
|
)
|
|
$
|
226.4
|
|
|
$
|
(59.5
|
)
|
|
$
|
3.7
|
|
|
$
|
163.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance December 31, 2012
|
$
|
(10.1
|
)
|
|
$
|
4.2
|
|
|
$
|
(16.0
|
)
|
|
$
|
(27.8
|
)
|
|
$
|
(49.7
|
)
|
Other comprehensive income (loss) before reclassifications
|
—
|
|
|
33.0
|
|
|
86.4
|
|
|
4.1
|
|
|
123.5
|
|
|||||
Amounts reclassified from accumulated other comprehensive income
|
—
|
|
|
2.2
|
|
|
(0.2
|
)
|
|
—
|
|
|
2.0
|
|
|||||
Net current-period other comprehensive income (loss)
|
—
|
|
|
35.2
|
|
|
86.2
|
|
|
4.1
|
|
|
125.5
|
|
|||||
Balance June 30, 2013
|
$
|
(10.1
|
)
|
|
$
|
39.4
|
|
|
$
|
70.2
|
|
|
$
|
(23.7
|
)
|
|
$
|
75.8
|
|
|
|
|
|
Gains (Losses) Reclassified Out of Accumulated
Other Comprehensive Income
|
||||||||||||||
Accumulated Other Comprehensive Income Components
|
|
Affected Line Item in the Consolidated Statements of Income
|
|
Three-Month Periods Ended June 30,
|
|
Six-Month Periods Ended June 30
|
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||||
Gains (losses) from cash-flow hedges:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
|
Net product sales
|
|
$
|
(2.0
|
)
|
|
$
|
2.1
|
|
|
$
|
(3.0
|
)
|
|
$
|
(4.3
|
)
|
Treasury rate lock agreements
|
|
Interest (expense)
|
|
(0.8
|
)
|
|
(0.9
|
)
|
|
(1.7
|
)
|
|
(1.7
|
)
|
||||
Interest rate swap agreements
|
|
Interest (expense)
|
|
(0.2
|
)
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
||||
|
|
Income tax benefit (expense)
|
|
0.4
|
|
|
2.8
|
|
|
0.7
|
|
|
6.2
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Gains (losses) from available-for-sale marketable securities:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Realized income (loss) on sales of marketable securities
|
|
Interest and investment income, net
|
|
(1.6
|
)
|
|
(2.4
|
)
|
|
(3.0
|
)
|
|
(3.2
|
)
|
||||
|
|
Income tax benefit (expense)
|
|
0.6
|
|
|
1.0
|
|
|
1.1
|
|
|
1.0
|
|
||||
Total reclassification, net of tax
|
|
|
|
$
|
(3.6
|
)
|
|
$
|
2.6
|
|
|
$
|
(6.1
|
)
|
|
$
|
(2.0
|
)
|
|
Balance at
June 30, 2014
|
|
Quoted Price in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant
Other Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Available-for-sale securities
|
$
|
2,993.5
|
|
|
$
|
647.1
|
|
|
$
|
2,346.4
|
|
|
$
|
—
|
|
Total assets
|
$
|
2,993.5
|
|
|
$
|
647.1
|
|
|
$
|
2,346.4
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Forward currency contracts
|
$
|
(26.4
|
)
|
|
$
|
—
|
|
|
$
|
(26.4
|
)
|
|
$
|
—
|
|
Contingent value rights
|
(112.5
|
)
|
|
(112.5
|
)
|
|
—
|
|
|
—
|
|
||||
Interest rate swaps
|
(4.0
|
)
|
|
—
|
|
|
(4.0
|
)
|
|
—
|
|
||||
Other acquisition related contingent consideration
|
(1,283.6
|
)
|
|
—
|
|
|
—
|
|
|
(1,283.6
|
)
|
||||
Total liabilities
|
$
|
(1,426.5
|
)
|
|
$
|
(112.5
|
)
|
|
$
|
(30.4
|
)
|
|
$
|
(1,283.6
|
)
|
|
|
|
|
|
|
|
|
||||||||
|
Balance at
December 31, 2013
|
|
Quoted Price in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant
Other Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Available-for-sale securities
|
$
|
2,452.6
|
|
|
$
|
433.1
|
|
|
$
|
2,019.5
|
|
|
$
|
—
|
|
Cash equivalents
|
20.0
|
|
|
—
|
|
|
20.0
|
|
|
—
|
|
||||
Total assets
|
$
|
2,472.6
|
|
|
$
|
433.1
|
|
|
$
|
2,039.5
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Forward currency contracts
|
$
|
(9.2
|
)
|
|
$
|
—
|
|
|
$
|
(9.2
|
)
|
|
$
|
—
|
|
Contingent value rights
|
(118.1
|
)
|
|
(118.1
|
)
|
|
—
|
|
|
—
|
|
||||
Interest rate swaps
|
(49.6
|
)
|
|
—
|
|
|
(49.6
|
)
|
|
—
|
|
||||
Other acquisition related contingent consideration
|
(228.5
|
)
|
|
—
|
|
|
—
|
|
|
(228.5
|
)
|
||||
Total liabilities
|
$
|
(405.4
|
)
|
|
$
|
(118.1
|
)
|
|
$
|
(58.8
|
)
|
|
$
|
(228.5
|
)
|
|
Six-Month Periods Ended June 30,
|
||||||
|
2014
|
|
2013
|
||||
Liabilities:
|
|
|
|
|
|
||
Balance at beginning of period
|
$
|
(228.5
|
)
|
|
$
|
(198.1
|
)
|
Amounts acquired or issued
|
(1,060.0
|
)
|
|
—
|
|
||
Net change in fair value
|
(15.1
|
)
|
|
(6.8
|
)
|
||
Settlements
|
20.0
|
|
|
—
|
|
||
Transfers in and/or out of Level 3
|
—
|
|
|
—
|
|
||
Balance at end of period
|
$
|
(1,283.6
|
)
|
|
$
|
(204.9
|
)
|
|
|
Notional Amount
|
||||||
Foreign Currency
|
|
June 30, 2014
|
|
December 31, 2013
|
||||
Australian Dollar
|
|
$
|
50.5
|
|
|
$
|
—
|
|
British Pound
|
|
437.8
|
|
|
279.4
|
|
||
Canadian Dollar
|
|
122.0
|
|
|
—
|
|
||
Euro
|
|
3,870.6
|
|
|
3,318.2
|
|
||
Japanese Yen
|
|
618.8
|
|
|
559.1
|
|
||
Total
|
|
$
|
5,099.7
|
|
|
$
|
4,156.7
|
|
|
|
Notional Amount
|
||||||
|
|
June 30, 2014
|
|
December 31, 2013
|
||||
Interest rate swap contracts entered into as fair value hedges of the following fixed-rate senior notes:
|
|
|
|
|
|
|
||
2.450% senior notes due 2015
|
|
$
|
300.0
|
|
|
$
|
300.0
|
|
1.900% senior notes due 2017
|
|
300.0
|
|
|
300.0
|
|
||
2.300% senior notes due 2018
|
|
200.0
|
|
|
200.0
|
|
||
3.950% senior notes due 2020
|
|
500.0
|
|
|
500.0
|
|
||
3.250% senior notes due 2022
|
|
800.0
|
|
|
850.0
|
|
||
4.000% senior notes due 2023
|
|
—
|
|
|
150.0
|
|
||
Total
|
|
$
|
2,100.0
|
|
|
$
|
2,300.0
|
|
|
|
June 30, 2014
|
||||||||||
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||
Instrument
|
|
Balance Sheet Location
|
|
Fair Value
|
|
Balance Sheet Location
|
|
Fair Value
|
||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
||
Foreign exchange contracts*
|
|
Other current assets
|
|
$
|
29.4
|
|
|
Other current assets
|
|
$
|
16.7
|
|
|
Other current liabilities
|
|
21.9
|
|
|
Other current liabilities
|
|
44.6
|
|
|||
|
Other non-current assets
|
|
18.7
|
|
|
Other non-current assets
|
|
12.5
|
|
|||
|
Other non-current liabilities
|
|
12.6
|
|
|
Other non-current liabilities
|
|
28.2
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Interest rate swap agreements
|
|
Other current assets
|
|
17.3
|
|
|
Other current assets
|
|
—
|
|
||
|
Other non-current liabilities
|
|
—
|
|
|
Other non-current liabilities
|
|
22.7
|
|
|||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
||
Foreign exchange contracts*
|
|
Other current assets
|
|
3.4
|
|
|
Other current assets
|
|
—
|
|
||
|
Other current liabilities
|
|
1.4
|
|
|
Other current liabilities
|
|
11.8
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Interest rate swap agreements
|
|
Other current assets
|
|
0.1
|
|
|
Other current assets
|
|
0.1
|
|
||
|
|
Other non-current assets
|
|
1.4
|
|
|
Other non-current assets
|
|
—
|
|
||
Total
|
|
|
|
$
|
106.2
|
|
|
|
|
$
|
136.6
|
|
|
|
December 31, 2013
|
||||||||||
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||
Instrument
|
|
Balance Sheet Location
|
|
Fair Value
|
|
Balance Sheet Location
|
|
Fair Value
|
||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
||
Foreign exchange contracts*
|
|
Other current assets
|
|
$
|
63.6
|
|
|
Other current assets
|
|
$
|
24.9
|
|
|
Other current liabilities
|
|
41.5
|
|
|
Other current liabilities
|
|
84.7
|
|
|||
|
Other non-current assets
|
|
60.6
|
|
|
Other non-current assets
|
|
41.9
|
|
|||
|
Other non-current liabilities
|
|
4.3
|
|
|
Other non-current liabilities
|
|
25.6
|
|
|||
Interest rate swap agreements
|
|
Other current assets
|
|
17.1
|
|
|
Other current assets
|
|
—
|
|
||
|
Other non-current liabilities
|
|
—
|
|
|
Other non-current liabilities
|
|
68.3
|
|
|||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
||
Foreign exchange contracts*
|
|
Other current assets
|
|
11.3
|
|
|
Other current assets
|
|
0.7
|
|
||
|
Other current liabilities
|
|
6.0
|
|
|
Other current liabilities
|
|
18.7
|
|
|||
Interest rate swap agreements
|
|
Other current assets
|
|
0.1
|
|
|
Other current assets
|
|
—
|
|
||
|
Other non-current assets
|
|
1.5
|
|
|
Other non-current assets
|
|
—
|
|
|||
Total
|
|
|
|
$
|
206.0
|
|
|
|
|
$
|
264.8
|
|
|
Three-Month Period Ended June 30, 2014
|
|
|
|||||||||||||||
|
Amount of
Gain/(Loss)
Recognized in OCI
on Derivative (1)
|
|
Location of
Gain/(Loss)
Reclassified from
Accumulated OCI
into Income
|
|
Amount of
Gain/(Loss)
Reclassified from
Accumulated OCI
into Income
|
|
Location of
Gain/(Loss)
Recognized in
Income on
Derivative
|
|
Amount of
Gain/(Loss)
Recognized in
Income on
Derivative
|
|
|
|||||||
Instrument
|
(Effective Portion)
|
|
(Effective Portion)
|
|
(Effective Portion)
|
|
(Ineffective Portion
and Amount Excluded
From Effectiveness
Testing)
|
|
(Ineffective Portion
and Amount Excluded
From Effectiveness
Testing)
|
|
|
|||||||
Foreign exchange contracts
|
$
|
1.0
|
|
|
Net product sales
|
|
$
|
(2.0
|
)
|
|
Other income, net
|
|
$
|
0.7
|
|
|
(2
|
)
|
Treasury rate lock agreements
|
$
|
—
|
|
|
Interest expense
|
|
$
|
(0.8
|
)
|
|
|
|
|
|
|
|
||
Interest rate swap agreements
|
$
|
(22.7
|
)
|
|
Interest expense
|
|
$
|
(0.2
|
)
|
|
Other income, net
|
|
$
|
(3.6
|
)
|
|
(3)
|
|
|
Three-Month Period Ended June 30, 2013
|
|
|
||||||||||||||
|
Amount of
Gain/(Loss)
Recognized in OCI
on Derivative
|
|
Location of
Gain/(Loss)
Reclassified from
Accumulated OCI
into Income
|
|
Amount of
Gain/(Loss)
Reclassified from
Accumulated OCI
into Income
|
|
Location of
Gain/(Loss)
Recognized in
Income on
Derivative
|
|
Amount of
Gain/(Loss)
Recognized in
Income on
Derivative
|
|
|
||||||
Instrument
|
(Effective Portion)
|
|
(Effective Portion)
|
|
(Effective Portion)
|
|
(Ineffective Portion
and Amount Excluded
From Effectiveness
Testing)
|
|
(Ineffective Portion
and Amount Excluded
From Effectiveness
Testing)
|
|
|
||||||
Foreign exchange contracts
|
$
|
11.5
|
|
|
Net product sales
|
|
$
|
2.1
|
|
|
Other income, net
|
|
$
|
0.5
|
|
|
(1)
|
Treasury rate lock agreements
|
$
|
—
|
|
|
Interest expense
|
|
$
|
(0.9
|
)
|
|
|
|
|
|
|
|
Six-Month Period Ended June 30, 2014
|
|
|
|||||||||||||||
|
Amount of
Gain/(Loss)
Recognized in OCI
on Derivative (1)
|
|
Location of
Gain/(Loss)
Reclassified from
Accumulated OCI
into Income
|
|
Amount of
Gain/(Loss)
Reclassified from
Accumulated OCI
into Income
|
|
Location of
Gain/(Loss)
Recognized in
Income on
Derivative
|
|
Amount of
Gain/(Loss)
Recognized in
Income on
Derivative
|
|
|
|||||||
Instrument
|
(Effective Portion)
|
|
(Effective Portion)
|
|
(Effective Portion)
|
|
(Ineffective Portion
and Amount Excluded
From Effectiveness
Testing)
|
|
(Ineffective Portion
and Amount Excluded
From Effectiveness
Testing)
|
|
|
|||||||
Foreign exchange contracts
|
$
|
(7.9
|
)
|
|
Net product sales
|
|
$
|
(3.0
|
)
|
|
Other income, net
|
|
$
|
(2.8
|
)
|
|
(2
|
)
|
Treasury rate lock agreements
|
$
|
—
|
|
|
Interest expense
|
|
$
|
(1.7
|
)
|
|
|
|
|
|
|
|
||
Interest rate swap agreements
|
$
|
(32.4
|
)
|
|
Interest expense
|
|
$
|
(0.2
|
)
|
|
Other income, net
|
|
$
|
(3.6
|
)
|
|
(3)
|
|
|
Six-Month Period Ended June 30, 2013
|
|
|
|||||||||||||||
|
Amount of
Gain/(Loss)
Recognized in OCI
on Derivative
|
|
Location of
Gain/(Loss)
Reclassified from
Accumulated OCI
into Income
|
|
Amount of
Gain/(Loss)
Reclassified from
Accumulated OCI
into Income
|
|
Location of
Gain/(Loss)
Recognized in
Income on
Derivative
|
|
Amount of
Gain/(Loss)
Recognized in
Income on
Derivative
|
|
|
|||||||
Instrument
|
(Effective Portion)
|
|
(Effective Portion)
|
|
(Effective Portion)
|
|
(Ineffective Portion
and Amount Excluded
From Effectiveness
Testing)
|
|
(Ineffective Portion
and Amount Excluded
From Effectiveness
Testing)
|
|
|
|||||||
Foreign exchange contracts
|
$
|
86.6
|
|
|
Net product sales
|
|
$
|
(4.3
|
)
|
|
Other income, net
|
|
$
|
3.9
|
|
|
(1
|
)
|
Treasury rate lock agreements
|
$
|
—
|
|
|
Interest expense
|
|
$
|
(1.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Gain (Loss) Recognized in
Income on Derivative
|
||||||||||||||
|
|
Location of Gain (Loss) Recognized in Income on Derivative
|
|
Three-Month Periods Ended June 30,
|
|
Six-Month Periods Ended June 30,
|
||||||||||||
Instrument
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|||||||||
Foreign exchange contracts
|
|
Other income (expense), net
|
|
$
|
(7.7
|
)
|
|
$
|
30.6
|
|
|
$
|
(11.1
|
)
|
|
$
|
69.2
|
|
Put options on our common stock
|
|
Other income (expense), net
|
|
$
|
4.0
|
|
|
$
|
—
|
|
|
$
|
6.4
|
|
|
$
|
—
|
|
June 30, 2014
|
|
Amortized Cost
|
|
Gross Unrealized Gain
|
|
Gross Unrealized Loss
|
|
Estimated Fair Value
|
||||||||
U.S. Treasury securities
|
|
$
|
948.8
|
|
|
$
|
0.7
|
|
|
$
|
(0.2
|
)
|
|
$
|
949.3
|
|
U.S. government-sponsored agency securities
|
|
175.0
|
|
|
0.2
|
|
|
(0.1
|
)
|
|
175.1
|
|
||||
U.S. government-sponsored agency MBS
|
|
590.5
|
|
|
0.8
|
|
|
(3.3
|
)
|
|
588.0
|
|
||||
Non-U.S. government, agency and Supranational securities
|
|
19.9
|
|
|
—
|
|
|
—
|
|
|
19.9
|
|
||||
Corporate debt - global
|
|
418.3
|
|
|
1.6
|
|
|
(0.1
|
)
|
|
419.8
|
|
||||
Asset backed securities
|
|
194.2
|
|
|
0.1
|
|
|
—
|
|
|
194.3
|
|
||||
Marketable equity securities
|
|
297.9
|
|
|
350.6
|
|
|
(1.4
|
)
|
|
647.1
|
|
||||
Total available-for-sale marketable securities
|
|
$
|
2,644.6
|
|
|
$
|
354.0
|
|
|
$
|
(5.1
|
)
|
|
$
|
2,993.5
|
|
December 31, 2013
|
|
Amortized Cost
|
|
Gross Unrealized Gain
|
|
Gross Unrealized Loss
|
|
Estimated Fair Value
|
||||||||
U.S. Treasury securities
|
|
$
|
795.2
|
|
|
$
|
0.3
|
|
|
$
|
(0.4
|
)
|
|
$
|
795.1
|
|
U.S. government-sponsored agency securities
|
|
208.9
|
|
|
0.2
|
|
|
(0.2
|
)
|
|
208.9
|
|
||||
U.S. government-sponsored agency MBS
|
|
450.8
|
|
|
0.1
|
|
|
(6.9
|
)
|
|
444.0
|
|
||||
Non-U.S. government, agency and Supranational securities
|
|
10.4
|
|
|
—
|
|
|
—
|
|
|
10.4
|
|
||||
Corporate debt - global
|
|
379.2
|
|
|
1.1
|
|
|
(0.6
|
)
|
|
379.7
|
|
||||
Asset backed securities
|
|
181.6
|
|
|
—
|
|
|
(0.2
|
)
|
|
181.4
|
|
||||
Marketable equity securities
|
|
212.9
|
|
|
220.2
|
|
|
—
|
|
|
433.1
|
|
||||
Total available-for-sale marketable securities
|
|
$
|
2,239.0
|
|
|
$
|
221.9
|
|
|
$
|
(8.3
|
)
|
|
$
|
2,452.6
|
|
|
|
Amortized
Cost
|
|
Fair
Value
|
||||
Duration of one year or less
|
|
$
|
391.7
|
|
|
$
|
391.5
|
|
Duration of one through three years
|
|
1,744.9
|
|
|
1,745.9
|
|
||
Duration of three through five years
|
|
210.1
|
|
|
209.0
|
|
||
Total
|
|
$
|
2,346.7
|
|
|
$
|
2,346.4
|
|
|
June 30, 2014
|
|
December 31, 2013
|
||||
Raw materials
|
$
|
173.9
|
|
|
$
|
147.4
|
|
Work in process
|
111.0
|
|
|
99.6
|
|
||
Finished goods
|
75.1
|
|
|
93.4
|
|
||
Total
|
$
|
360.0
|
|
|
$
|
340.4
|
|
June 30, 2014
|
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Intangible Assets, Net
|
||||||
Amortizable intangible assets:
|
|
|
|
|
|
|
|
|
|
|||
Acquired developed product rights
|
|
$
|
3,405.9
|
|
|
$
|
(1,132.2
|
)
|
|
$
|
2,273.7
|
|
Technology
|
|
333.7
|
|
|
(111.2
|
)
|
|
222.5
|
|
|||
Licenses
|
|
66.2
|
|
|
(16.0
|
)
|
|
50.2
|
|
|||
Other
|
|
42.5
|
|
|
(21.0
|
)
|
|
21.5
|
|
|||
|
|
3,848.3
|
|
|
(1,280.4
|
)
|
|
2,567.9
|
|
|||
Non-amortized intangible assets:
|
|
|
|
|
|
|
|
|
|
|||
Acquired IPR&D product rights
|
|
1,757.9
|
|
|
—
|
|
|
1,757.9
|
|
|||
Total intangible assets
|
|
$
|
5,606.2
|
|
|
$
|
(1,280.4
|
)
|
|
$
|
4,325.8
|
|
|
|
|
|
|
|
|
||||||
December 31, 2013
|
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Intangible Assets, Net
|
||||||
Amortizable intangible assets:
|
|
|
|
|
|
|
|
|
|
|||
Acquired developed product rights
|
|
$
|
3,405.9
|
|
|
$
|
(1,026.4
|
)
|
|
$
|
2,379.5
|
|
Technology
|
|
333.7
|
|
|
(87.4
|
)
|
|
246.3
|
|
|||
Licenses
|
|
66.2
|
|
|
(13.9
|
)
|
|
52.3
|
|
|||
Other
|
|
42.5
|
|
|
(18.8
|
)
|
|
23.7
|
|
|||
|
|
3,848.3
|
|
|
(1,146.5
|
)
|
|
2,701.8
|
|
|||
Non-amortized intangible assets:
|
|
|
|
|
|
|
|
|
|
|||
Acquired IPR&D product rights
|
|
137.9
|
|
|
—
|
|
|
137.9
|
|
|||
Total intangible assets
|
|
$
|
3,986.2
|
|
|
$
|
(1,146.5
|
)
|
|
$
|
2,839.7
|
|
|
June 30, 2014
|
|
December 31, 2013
|
||||
2.450% senior notes due 2015
|
$
|
510.2
|
|
|
$
|
513.9
|
|
1.900% senior notes due 2017
|
501.9
|
|
|
499.9
|
|
||
2.300% senior notes due 2018
|
401.4
|
|
|
399.0
|
|
||
2.250% senior notes due 2019
|
498.8
|
|
|
—
|
|
||
3.950% senior notes due 2020
|
497.6
|
|
|
484.6
|
|
||
3.250% senior notes due 2022
|
990.5
|
|
|
956.6
|
|
||
4.000% senior notes due 2023
|
703.6
|
|
|
696.3
|
|
||
3.625% senior notes due 2024
|
996.6
|
|
|
—
|
|
||
5.700% senior notes due 2040
|
249.6
|
|
|
249.6
|
|
||
5.250% senior notes due 2043
|
396.6
|
|
|
396.6
|
|
||
4.625% senior notes due 2044
|
996.5
|
|
|
—
|
|
||
Total long-term debt
|
$
|
6,743.3
|
|
|
$
|
4,196.5
|
|
|
Three-Month Periods Ended June 30,
|
|
Six-Month Periods Ended June 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Cost of goods sold (excluding amortization of acquired intangible assets)
|
$
|
5.9
|
|
|
$
|
3.7
|
|
|
$
|
12.0
|
|
|
$
|
6.5
|
|
Research and development
|
45.8
|
|
|
31.8
|
|
|
92.8
|
|
|
58.8
|
|
||||
Selling, general and administrative
|
51.7
|
|
|
34.3
|
|
|
103.0
|
|
|
70.1
|
|
||||
Total share-based compensation expense
|
103.4
|
|
|
69.8
|
|
|
207.8
|
|
|
135.4
|
|
||||
Tax benefit related to share-based compensation expense
|
31.0
|
|
|
18.3
|
|
|
61.0
|
|
|
36.2
|
|
||||
Reduction in income
|
$
|
72.4
|
|
|
$
|
51.5
|
|
|
$
|
146.8
|
|
|
$
|
99.2
|
|
|
Stock
Options
|
|
Restricted Stock
Units
|
|
Performance-
Based Restricted Stock Units
(in thousands)
|
|||
Outstanding at December 31, 2013
|
79.2
|
|
|
10.2
|
|
|
115
|
|
Changes during the Year:
|
|
|
|
|
|
|
|
|
Granted
|
5.0
|
|
|
0.3
|
|
|
1
|
|
Exercised / Released
|
(5.9
|
)
|
|
(2.0
|
)
|
|
(24
|
)
|
Forfeited
|
(0.8
|
)
|
|
(0.2
|
)
|
|
(1
|
)
|
Outstanding at June 30, 2014
|
77.5
|
|
|
8.3
|
|
|
91
|
|
|
Stock
Options
|
|
Restricted Stock
Units
|
|
Performance-
Based Restricted
Stock Units
|
||||||
Unrecognized compensation cost
|
$
|
427.8
|
|
|
$
|
189.8
|
|
|
$
|
2.8
|
|
Expected weighted-average period in years of compensation cost to be recognized
|
2.1
|
|
|
1.3
|
|
|
1.7
|
|
|
|
Three-Month Periods Ended June 30,
|
||||||||
|
|
Research and Development Expense
|
|
Selling, General and Administrative Expense
|
|
|
||||
|
|
Upfront Fees
|
|
Milestones
|
|
Amortization of Prepaid R&D and Intangibles
|
|
|
Equity Investments Made During Period
|
|
Acceleron
(3)
|
2014
|
$—
|
|
$—
|
|
$—
|
|
$—
|
|
$37.4
|
|
2013
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Agios
|
2014
|
—
|
|
—
|
|
—
|
|
—
|
|
13.0
|
|
2013
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Epizyme
|
2014
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2013
|
—
|
|
—
|
|
—
|
|
—
|
|
1.0
|
FORMA
|
2014
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2013
|
23.8
|
|
—
|
|
—
|
|
—
|
|
—
|
NantBioScience
|
2014
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Other Collaboration Arrangements
|
2014
|
14.0
|
|
0.5
|
|
10.0
|
|
—
|
|
—
|
2013
|
43.0
|
|
18.4
|
|
1.1
|
|
—
|
|
4.0
|
|
|
Six-Month Periods Ended June 30,
|
||||||||
|
|
Research and Development Expense
|
|
Selling, General and Administrative Expense
|
|
|
||||
|
|
Upfront Fees
|
|
Milestones
|
|
Amortization of Prepaid R&D and Intangibles
|
|
|
Equity Investments Made During Period
|
|
Acceleron
(3)
|
2014
|
$—
|
|
$—
|
|
$—
|
|
$—
|
|
$52.4
|
|
2013
|
—
|
|
10.0
|
|
—
|
|
—
|
|
—
|
Agios
|
2014
|
—
|
|
—
|
|
—
|
|
—
|
|
13.0
|
|
2013
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
bluebird
|
2014
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2013
|
74.7
|
|
—
|
|
—
|
|
—
|
|
—
|
Epizyme
|
2014
|
—
|
|
—
|
|
—
|
|
—
|
|
9.9
|
|
2013
|
—
|
|
—
|
|
—
|
|
—
|
|
1.0
|
FORMA
|
2014
|
225.0
|
|
—
|
|
0.1
|
|
—
|
|
—
|
|
2013
|
23.8
|
|
—
|
|
—
|
|
—
|
|
—
|
NantBioScience
|
2014
|
50.0
|
|
—
|
|
—
|
|
25.0
|
|
90.0
|
Other Collaboration Arrangements
|
2014
|
48.0
|
|
0.5
|
|
13.8
|
|
—
|
|
20.9
|
2013
|
64.0
|
|
18.4
|
|
1.9
|
|
—
|
|
8.0
|
|
Balances as of:
|
|
Intangible Asset Balance
|
|
Equity Investment Balance
|
|
Percentage of Outstanding Equity
|
Acceleron
|
June 30, 2014
|
|
$—
|
|
$156.7
|
|
15%
|
|
December 31, 2013
|
|
—
|
|
127.2
|
|
11%
|
Agios
|
June 30, 2014
|
|
—
|
|
229.7
|
|
15%
|
|
December 31, 2013
|
|
—
|
|
113.0
|
|
15%
|
bluebird
|
June 30, 2014
|
|
0.2
|
|
—
|
|
N/A
|
|
December 31, 2013
|
|
0.2
|
|
—
|
|
N/A
|
Epizyme
|
June 30, 2014
|
|
—
|
|
114.4
|
|
11%
|
|
December 31, 2013
|
|
—
|
|
69.4
|
|
12%
|
FORMA
|
June 30, 2014
|
|
0.1
|
|
—
|
|
N/A
|
|
December 31, 2013
|
|
0.2
|
|
—
|
|
N/A
|
NantBioScience
|
June 30, 2014
|
|
—
|
|
90.0
|
|
14%
|
Other Collaboration Arrangements
|
June 30, 2014
|
|
54.3
|
|
162.9
|
|
N/A
|
December 31, 2013
|
|
61.3
|
|
141.6
|
|
N/A
|
Disease
|
Geographic Approvals
|
Breast Cancer
|
|
Metastatic breast cancer, after failure of combination chemotherapy for metastatic disease or relapse within six months of adjuvant chemotherapy. Prior therapy should have included an anthracycline unless clinically contraindicated.
|
- United States
- Other international markets
|
Metastatic breast cancer in adult patients who have failed first-line treatment for metastatic disease for whom standard, anthracycline containing therapy is not indicated
|
- European Union
|
Breast cancer
|
- Japan
|
Non-Small Cell Lung Cancer (NSCLC)
|
|
Locally advanced or metastatic NSCLC, as first-line treatment in combination with carboplatin, in patients who are not candidates for curative surgery or radiation therapy
|
- United States
- Other international markets
|
NSCLC
|
- Japan
|
Metastatic adenocarcinoma of the pancreas, a form of pancreatic cancer, as first line treatment in combination with gemcitabine
|
- United States
- European Union
- Other international markets
|
Gastric cancer
|
- Japan
|
Disease
|
Geographic Approvals
|
Multiple myeloma
|
|
Newly diagnosed multiple myeloma, in combination with dexamethasone
|
- United States
|
Thalomid in combination with dexamethasone is indicated for induction therapy prior to high dose chemotherapy with autologous stem cell rescue, for the treatment of patients with untreated multiple myeloma.
|
- Other international markets
|
Multiple myeloma after failure of standard therapies (relapsed or refractory)
|
- Other international markets
|
Thalidomide Celgene
TM
in combination with melphalan and prednisone as a first line treatment for patients with untreated multiple myeloma who are aged sixty-five years of age or older or ineligible for high dose chemotherapy
|
- European Union
- Other international markets |
Erythema Nodosum Leprosum
|
|
Cutaneous manifestations of moderate to severe erythema nodosum leprosum (ENL), an inflammatory complication of leprosy
|
- United States
- Other international markets |
Maintenance therapy for prevention and suppression of the cutaneous manifestation of ENL recurrence
|
- United States
- Other international markets |
Disease
|
Geographic Approvals
|
Adult patients with active psoriatic arthritis
|
- United States (Approved March 2014)
|
|
Three-Month Periods Ended June 30,
|
|
Increase
|
|
Percent Change
|
|||||||||
|
2014
|
|
2013
|
|
|
|||||||||
Total revenue
|
$
|
1,872.7
|
|
|
$
|
1,599.0
|
|
|
$
|
273.7
|
|
|
17.1
|
%
|
Net income
|
$
|
597.8
|
|
|
$
|
478.1
|
|
|
$
|
119.7
|
|
|
25.0
|
%
|
Diluted earnings per share
|
$
|
0.72
|
|
|
$
|
0.56
|
|
|
$
|
0.16
|
|
|
28.6
|
%
|
|
Six-Month Periods Ended June 30,
|
|
Increase
|
|
Percent Change
|
|||||||||
|
2014
|
|
2013
|
|
|
|||||||||
Total revenue
|
$
|
3,602.7
|
|
|
$
|
3,063.6
|
|
|
$
|
539.1
|
|
|
17.6
|
%
|
Net income
|
$
|
877.5
|
|
|
$
|
863.0
|
|
|
$
|
14.5
|
|
|
1.7
|
%
|
Diluted earnings per share
|
$
|
1.05
|
|
|
$
|
1.00
|
|
|
$
|
0.05
|
|
|
5.0
|
%
|
|
Three-Month Periods Ended June 30,
|
|
Increase (Decrease)
|
|
Percent Change
|
|||||||||
|
2014
|
|
2013
|
|
|
|||||||||
Net product sales:
|
|
|
|
|
|
|
|
|
|
|
|
|||
REVLIMID
®
|
$
|
1,213.7
|
|
|
$
|
1,051.5
|
|
|
$
|
162.2
|
|
|
15.4
|
%
|
ABRAXANE
®
|
215.3
|
|
|
154.8
|
|
|
60.5
|
|
|
39.1
|
%
|
|||
POMALYST
®
/IMNOVID
®
|
160.9
|
|
|
66.2
|
|
|
94.7
|
|
|
143.1
|
%
|
|||
VIDAZA
®
|
152.0
|
|
|
211.3
|
|
|
(59.3
|
)
|
|
(28.1
|
)%
|
|||
azacitidine for injection
|
24.4
|
|
|
—
|
|
|
24.4
|
|
|
N/M
|
|
|||
THALOMID
®
|
54.3
|
|
|
66.2
|
|
|
(11.9
|
)
|
|
(18.0
|
)%
|
|||
ISTODAX
®
|
17.1
|
|
|
13.5
|
|
|
3.6
|
|
|
26.7
|
%
|
|||
OTEZLA
®
|
4.6
|
|
|
—
|
|
|
4.6
|
|
|
N/M
|
|
|||
Other
|
2.3
|
|
|
0.6
|
|
|
1.7
|
|
|
283.3
|
%
|
|||
Total net product sales
|
$
|
1,844.6
|
|
|
$
|
1,564.1
|
|
|
$
|
280.5
|
|
|
17.9
|
%
|
Collaborative agreements and other revenue
|
2.7
|
|
|
3.1
|
|
|
(0.4
|
)
|
|
(12.9
|
)%
|
|||
Royalty revenue
|
25.4
|
|
|
31.8
|
|
|
(6.4
|
)
|
|
(20.1
|
)%
|
|||
Total revenue
|
$
|
1,872.7
|
|
|
$
|
1,599.0
|
|
|
$
|
273.7
|
|
|
17.1
|
%
|
|
Returns
and
Allowances
|
|
Discounts
|
|
Government
Rebates
|
|
Chargebacks
and Distributor
Service Fees
|
|
Total
|
||||||||||
Balance at March 31, 2014
|
$
|
12.2
|
|
|
$
|
12.5
|
|
|
$
|
151.0
|
|
|
$
|
82.7
|
|
|
$
|
258.4
|
|
Allowances for sales during prior periods
|
(0.1
|
)
|
|
—
|
|
|
(1.0
|
)
|
|
(2.2
|
)
|
|
(3.3
|
)
|
|||||
Allowances for sales during 2014
|
2.6
|
|
|
21.6
|
|
|
69.8
|
|
|
94.0
|
|
|
188.0
|
|
|||||
Credits/deductions issued for prior year sales
|
(1.4
|
)
|
|
(1.8
|
)
|
|
(23.6
|
)
|
|
(9.3
|
)
|
|
(36.1
|
)
|
|||||
Credits/deductions issued for sales during 2014
|
(0.6
|
)
|
|
(20.4
|
)
|
|
(75.8
|
)
|
|
(78.4
|
)
|
|
(175.2
|
)
|
|||||
Balance at June 30, 2014
|
$
|
12.7
|
|
|
$
|
11.9
|
|
|
$
|
120.4
|
|
|
$
|
86.8
|
|
|
$
|
231.8
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at March 31, 2013
|
$
|
15.0
|
|
|
$
|
14.1
|
|
|
$
|
157.8
|
|
|
$
|
58.7
|
|
|
$
|
245.6
|
|
Allowances for sales during prior periods
|
(1.7
|
)
|
|
—
|
|
|
(0.5
|
)
|
|
0.3
|
|
|
(1.9
|
)
|
|||||
Allowances for sales during 2013
|
2.5
|
|
|
19.1
|
|
|
63.4
|
|
|
74.1
|
|
|
159.1
|
|
|||||
Credits/deductions issued for prior year sales
|
(1.5
|
)
|
|
—
|
|
|
(33.5
|
)
|
|
(5.8
|
)
|
|
(40.8
|
)
|
|||||
Credits/deductions issued for sales during 2013
|
(0.6
|
)
|
|
(18.7
|
)
|
|
(68.0
|
)
|
|
(53.8
|
)
|
|
(141.1
|
)
|
|||||
Balance at June 30, 2013
|
$
|
13.7
|
|
|
$
|
14.5
|
|
|
$
|
119.2
|
|
|
$
|
73.5
|
|
|
$
|
220.9
|
|
|
Three-Month Periods Ended June 30,
|
|
Increase (Decrease)
|
|
Percent Change
|
|||||||||
|
2014
|
|
2013
|
|
|
|||||||||
Cost of goods sold (excluding amortization of acquired intangible assets)
|
$
|
98.9
|
|
|
$
|
80.9
|
|
|
$
|
18.0
|
|
|
22.2
|
%
|
Percent of net product sales
|
5.4
|
%
|
|
5.2
|
%
|
|
|
|
|
|
|
|||
Research and development
|
$
|
456.9
|
|
|
$
|
458.1
|
|
|
$
|
(1.2
|
)
|
|
(0.3
|
)%
|
Percent of total revenue
|
24.4
|
%
|
|
28.6
|
%
|
|
|
|
|
|
|
|||
Selling, general and administrative
|
$
|
491.8
|
|
|
$
|
418.1
|
|
|
$
|
73.7
|
|
|
17.6
|
%
|
Percent of total revenue
|
26.3
|
%
|
|
26.1
|
%
|
|
|
|
|
|
|
|||
Amortization of acquired intangible assets
|
$
|
65.3
|
|
|
$
|
65.7
|
|
|
$
|
(0.4
|
)
|
|
(0.6
|
)%
|
Acquisition related charges, net
|
$
|
0.9
|
|
|
$
|
12.5
|
|
|
$
|
(11.6
|
)
|
|
(92.8
|
)%
|
|
Three-Month Periods Ended June 30,
|
|
Increase (Decrease)
|
||||||||
|
2014
|
|
2013
|
|
|||||||
Human pharmaceutical clinical programs
|
$
|
195.0
|
|
|
$
|
198.0
|
|
|
$
|
(3.0
|
)
|
Other pharmaceutical programs
|
160.5
|
|
|
114.9
|
|
|
45.6
|
|
|||
Drug discovery and development
|
69.1
|
|
|
53.4
|
|
|
15.7
|
|
|||
Cellular therapy
|
7.8
|
|
|
5.5
|
|
|
2.3
|
|
|||
Collaboration arrangements
|
24.5
|
|
|
86.3
|
|
|
(61.8
|
)
|
|||
Total
|
$
|
456.9
|
|
|
$
|
458.1
|
|
|
$
|
(1.2
|
)
|
Product
|
|
Disease Indication
|
|||||
ABRAXANE
®
|
|
Adjuvant Pancreatic Cancer
|
Product
|
|
Disease Indication
|
|
Major
Market
|
|
Regulatory
Agency
|
|
Date of Submission or Filing
|
REVLIMID
®
|
|
NDMM
1
|
|
U.S.
|
|
FDA
|
|
Q2 2014
(Filed)
|
ABRAXANE
®
|
|
NSCLC
|
|
E.U.
|
|
EC
|
|
Q2 2014
(Submitted) |
|
|
Three-Month Periods Ended June 30,
|
||||||
Acquisitions
|
|
2014
|
|
2013
|
||||
Abraxis
|
|
$
|
39.7
|
|
|
$
|
40.0
|
|
Avila
|
|
11.8
|
|
|
11.8
|
|
||
Gloucester
|
|
12.8
|
|
|
12.9
|
|
||
Pharmion
|
|
1.0
|
|
|
1.0
|
|
||
Total amortization
|
|
$
|
65.3
|
|
|
$
|
65.7
|
|
|
|
Three-Month Periods Ended June 30,
|
|
|
||||||||
|
|
2014
|
|
2013
|
|
Change
|
||||||
Foreign exchange gains (losses) including foreign exchange derivative instruments not designated as hedging instruments
|
|
$
|
(3.6
|
)
|
|
$
|
17.2
|
|
|
$
|
(20.8
|
)
|
Premium paid on equity investment
|
|
(9.7
|
)
|
|
—
|
|
|
(9.7
|
)
|
|||
Impairment charges
|
|
(2.0
|
)
|
|
(9.5
|
)
|
|
7.5
|
|
|||
Other
|
|
(2.5
|
)
|
|
1.5
|
|
|
(4.0
|
)
|
|||
Total other income (expense), net
|
|
$
|
(17.8
|
)
|
|
$
|
9.2
|
|
|
$
|
(27.0
|
)
|
|
Six-Month Periods Ended June 30,
|
|
Increase (Decrease)
|
|
Percent Change
|
|||||||||
|
2014
|
|
2013
|
|
|
|||||||||
Net product sales:
|
|
|
|
|
|
|
|
|
|
|
|
|||
REVLIMID
®
|
$
|
2,357.5
|
|
|
$
|
2,054.3
|
|
|
$
|
303.2
|
|
|
14.8
|
%
|
ABRAXANE
®
|
400.1
|
|
|
277.5
|
|
|
122.6
|
|
|
44.2
|
%
|
|||
POMALYST
®
/IMNOVID
®
|
296.5
|
|
|
94.7
|
|
|
201.8
|
|
|
213.1
|
%
|
|||
VIDAZA
®
|
300.4
|
|
|
415.4
|
|
|
(115.0
|
)
|
|
(27.7
|
)%
|
|||
azacitidine for injection
|
42.8
|
|
|
—
|
|
|
42.8
|
|
|
N/M
|
|
|||
THALOMID
®
|
112.3
|
|
|
123.6
|
|
|
(11.3
|
)
|
|
(9.1
|
)%
|
|||
ISTODAX
®
|
33.2
|
|
|
26.4
|
|
|
6.8
|
|
|
25.8
|
%
|
|||
OTEZLA
®
|
4.6
|
|
|
—
|
|
|
4.6
|
|
|
N/M
|
|
|||
Other
|
4.7
|
|
|
1.5
|
|
|
3.2
|
|
|
213.3
|
%
|
|||
Total net product sales
|
$
|
3,552.1
|
|
|
$
|
2,993.4
|
|
|
$
|
558.7
|
|
|
18.7
|
%
|
Collaborative agreements and other revenue
|
4.6
|
|
|
10.2
|
|
|
(5.6
|
)
|
|
(54.9
|
)%
|
|||
Royalty revenue
|
46.0
|
|
|
60.0
|
|
|
(14.0
|
)
|
|
(23.3
|
)%
|
|||
Total revenue
|
$
|
3,602.7
|
|
|
$
|
3,063.6
|
|
|
$
|
539.1
|
|
|
17.6
|
%
|
|
Returns
and
Allowances
|
|
Discounts
|
|
Government
Rebates
|
|
Chargebacks
and Distributor
Service Fees
|
|
Total
|
||||||||||
Balance at December 31, 2013
|
$
|
15.5
|
|
|
$
|
12.1
|
|
|
$
|
134.1
|
|
|
$
|
83.2
|
|
|
$
|
244.9
|
|
Allowances for sales during prior periods
|
(1.9
|
)
|
|
—
|
|
|
(5.1
|
)
|
|
(6.7
|
)
|
|
(13.7
|
)
|
|||||
Allowances for sales during 2014
|
4.4
|
|
|
40.7
|
|
|
146.7
|
|
|
176.4
|
|
|
368.2
|
|
|||||
Credits/deductions issued for prior year sales
|
(3.7
|
)
|
|
(7.9
|
)
|
|
(71.1
|
)
|
|
(41.8
|
)
|
|
(124.5
|
)
|
|||||
Credits/deductions issued for sales during 2014
|
(1.6
|
)
|
|
(33.0
|
)
|
|
(84.2
|
)
|
|
(124.3
|
)
|
|
(243.1
|
)
|
|||||
Balance at June 30, 2014
|
$
|
12.7
|
|
|
$
|
11.9
|
|
|
$
|
120.4
|
|
|
$
|
86.8
|
|
|
$
|
231.8
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at December 31, 2012
|
$
|
13.3
|
|
|
$
|
11.2
|
|
|
$
|
125.8
|
|
|
$
|
61.2
|
|
|
$
|
211.5
|
|
Allowances for sales during prior periods
|
(1.1
|
)
|
|
—
|
|
|
(6.9
|
)
|
|
0.5
|
|
|
(7.5
|
)
|
|||||
Allowances for sales during 2013
|
5.3
|
|
|
38.5
|
|
|
130.2
|
|
|
129.8
|
|
|
303.8
|
|
|||||
Credits/deductions issued for prior year sales
|
(2.4
|
)
|
|
(5.2
|
)
|
|
(50.1
|
)
|
|
(41.7
|
)
|
|
(99.4
|
)
|
|||||
Credits/deductions issued for sales during 2013
|
(1.4
|
)
|
|
(30.0
|
)
|
|
(79.8
|
)
|
|
(76.3
|
)
|
|
(187.5
|
)
|
|||||
Balance at June 30, 2013
|
$
|
13.7
|
|
|
$
|
14.5
|
|
|
$
|
119.2
|
|
|
$
|
73.5
|
|
|
$
|
220.9
|
|
|
Six-Month Periods Ended June 30,
|
|
Increase (Decrease)
|
|
Percent Change
|
|||||||||
|
2014
|
|
2013
|
|
|
|||||||||
Cost of goods sold (excluding amortization of acquired intangible assets)
|
$
|
185.0
|
|
|
$
|
161.4
|
|
|
$
|
23.6
|
|
|
14.6
|
%
|
Percent of net product sales
|
5.2
|
%
|
|
5.4
|
%
|
|
|
|
|
|
|
|||
Research and development
|
$
|
1,170.6
|
|
|
$
|
910.5
|
|
|
$
|
260.1
|
|
|
28.6
|
%
|
Percent of total revenue
|
32.5
|
%
|
|
29.7
|
%
|
|
|
|
|
|
|
|||
Selling, general and administrative
|
$
|
985.9
|
|
|
$
|
787.1
|
|
|
$
|
198.8
|
|
|
25.3
|
%
|
Percent of total revenue
|
27.4
|
%
|
|
25.7
|
%
|
|
|
|
|
|
|
|||
Amortization of acquired intangible assets
|
$
|
131.0
|
|
|
$
|
131.4
|
|
|
$
|
(0.4
|
)
|
|
(0.3
|
)%
|
Acquisition related charges, net
|
$
|
9.5
|
|
|
$
|
45.7
|
|
|
$
|
(36.2
|
)
|
|
(79.2
|
)%
|
|
Six-Month Periods Ended June 30,
|
|
Increase
|
||||||||
|
2014
|
|
2013
|
|
|||||||
Human pharmaceutical clinical programs
|
$
|
386.3
|
|
|
$
|
374.5
|
|
|
$
|
11.8
|
|
Other pharmaceutical programs
|
296.2
|
|
|
233.2
|
|
|
63.0
|
|
|||
Drug discovery and development
|
136.5
|
|
|
98.5
|
|
|
38.0
|
|
|||
Cellular therapy
|
14.2
|
|
|
11.5
|
|
|
2.7
|
|
|||
Collaboration arrangements
|
337.4
|
|
|
192.8
|
|
|
144.6
|
|
|||
Total
|
$
|
1,170.6
|
|
|
$
|
910.5
|
|
|
$
|
260.1
|
|
|
|
Six-Month Periods Ended June 30,
|
||||||
Acquisitions
|
|
2014
|
|
2013
|
||||
Abraxis
|
|
$
|
79.7
|
|
|
$
|
80.0
|
|
Avila
|
|
23.6
|
|
|
23.6
|
|
||
Gloucester
|
|
25.7
|
|
|
25.8
|
|
||
Pharmion
|
|
2.0
|
|
|
2.0
|
|
||
Total amortization
|
|
$
|
131.0
|
|
|
$
|
131.4
|
|
|
|
Six-Month Periods Ended June 30,
|
|
|
||||||||
|
|
2014
|
|
2013
|
|
Change
|
||||||
Foreign exchange gains (losses) including foreign exchange derivative instruments not designated as hedging instruments
|
|
$
|
(6.8
|
)
|
|
$
|
22.2
|
|
|
$
|
(29.0
|
)
|
Premium paid on equity investment
|
|
(9.7
|
)
|
|
—
|
|
|
(9.7
|
)
|
|||
Impairment charges
|
|
(2.0
|
)
|
|
(18.8
|
)
|
|
16.8
|
|
|||
Other
|
|
(5.9
|
)
|
|
3.5
|
|
|
(9.4
|
)
|
|||
Total other income (expense), net
|
|
$
|
(24.4
|
)
|
|
$
|
6.9
|
|
|
$
|
(31.3
|
)
|
|
June 30, 2014
|
|
December 31, 2013
|
|
Increase (Decrease)
|
||||||
Financial assets:
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents
|
$
|
3,219.5
|
|
|
$
|
3,234.4
|
|
|
$
|
(14.9
|
)
|
Marketable securities available for sale
|
2,993.5
|
|
|
2,452.6
|
|
|
540.9
|
|
|||
Total financial assets
|
$
|
6,213.0
|
|
|
$
|
5,687.0
|
|
|
$
|
526.0
|
|
Debt:
|
|
|
|
|
|
|
|
|
|||
Short-term borrowings
|
$
|
192.3
|
|
|
$
|
544.8
|
|
|
$
|
(352.5
|
)
|
Long-term debt, net of discount
|
6,743.3
|
|
|
4,196.5
|
|
|
2,546.8
|
|
|||
Total debt
|
$
|
6,935.6
|
|
|
$
|
4,741.3
|
|
|
$
|
2,194.3
|
|
|
|
|
|
|
|
||||||
Working capital (1)
|
$
|
6,621.9
|
|
|
$
|
5,607.4
|
|
|
$
|
1,014.5
|
|
|
Six-Month Periods Ended June 30,
|
|
|
||||||||
|
2014
|
|
2013
|
|
Change
|
||||||
Net cash provided by operating activities
|
$
|
1,072.8
|
|
|
$
|
1,104.1
|
|
|
$
|
(31.3
|
)
|
Net cash used in investing activities
|
$
|
(1,205.9
|
)
|
|
$
|
(526.9
|
)
|
|
$
|
(679.0
|
)
|
Net cash provided by (used in) financing activities
|
$
|
110.0
|
|
|
$
|
(899.0
|
)
|
|
$
|
1,009.0
|
|
|
Duration
|
||||||||||||||
|
Less Than
1 Year
|
|
1 to 3 Years
|
|
3 to 5 Years
|
|
Total
|
||||||||
Principal amount
|
$
|
388.2
|
|
|
$
|
1,725.3
|
|
|
$
|
200.9
|
|
|
$
|
2,314.4
|
|
Fair value
|
$
|
391.5
|
|
|
$
|
1,745.9
|
|
|
$
|
209.0
|
|
|
$
|
2,346.4
|
|
Weighted average interest rate
|
0.6
|
%
|
|
0.7
|
%
|
|
1.7
|
%
|
|
0.8
|
%
|
|
Principal
Amount
|
|
Carrying
Value
|
||||
2.450% senior notes due 2015
|
$
|
500.0
|
|
|
$
|
510.2
|
|
1.900% senior notes due 2017
|
500.0
|
|
|
501.9
|
|
||
2.300% senior notes due 2018
|
400.0
|
|
|
401.4
|
|
||
2.250% senior notes due 2019
|
500.0
|
|
|
498.8
|
|
||
3.950% senior notes due 2020
|
500.0
|
|
|
497.6
|
|
||
3.250% senior notes due 2022
|
1,000.0
|
|
|
990.5
|
|
||
4.000% senior notes due 2023
|
700.0
|
|
|
703.6
|
|
||
3.625% senior notes due 2024
|
1,000.0
|
|
|
996.6
|
|
||
5.700% senior notes due 2040
|
250.0
|
|
|
249.6
|
|
||
5.250% senior notes due 2043
|
400.0
|
|
|
396.6
|
|
||
4.625% senior notes due 2044
|
1,000.0
|
|
|
996.5
|
|
||
Total long-term debt
|
$
|
6,750.0
|
|
|
$
|
6,743.3
|
|
|
|
Notional Amount
|
||||||
Foreign Currency
|
|
June 30, 2014
|
|
December 31, 2013
|
||||
Australian Dollar
|
|
$
|
50.5
|
|
|
$
|
—
|
|
British Pound
|
|
437.8
|
|
|
279.4
|
|
||
Canadian Dollar
|
|
122.0
|
|
|
—
|
|
||
Euro
|
|
3,870.6
|
|
|
3,318.2
|
|
||
Japanese Yen
|
|
618.8
|
|
|
559.1
|
|
||
Total
|
|
$
|
5,099.7
|
|
|
$
|
4,156.7
|
|
|
|
Notional Amount
|
||||||
|
|
June 30, 2014
|
|
December 31, 2013
|
||||
Interest rate swap contracts entered into as fair value hedges of the following fixed-rate senior notes:
|
|
|
|
|
|
|
||
2.450% senior notes due 2015
|
|
$
|
300.0
|
|
|
$
|
300.0
|
|
1.900% senior notes due 2017
|
|
300.0
|
|
|
300.0
|
|
||
2.300% senior notes due 2018
|
|
200.0
|
|
|
200.0
|
|
||
3.950% senior notes due 2020
|
|
500.0
|
|
|
500.0
|
|
||
3.250% senior notes due 2022
|
|
800.0
|
|
|
850.0
|
|
||
4.000% senior notes due 2023
|
|
—
|
|
|
150.0
|
|
||
Total
|
|
$
|
2,100.0
|
|
|
$
|
2,300.0
|
|
•
|
In general, preclinical tests and clinical trials can take many years and require the expenditure of substantial resources, and the data obtained from these tests and trials may not lead to regulatory approval;
|
•
|
Delays or rejections may be encountered during any stage of the regulatory process if the clinical or other data fails to demonstrate compliance with a regulatory agency’s requirements for safety, efficacy and quality;
|
•
|
Requirements for approval may become more stringent due to changes in regulatory agency policy or the adoption of new regulations or legislation;
|
•
|
Even if a product is approved, the scope of the approval may significantly limit the indicated uses for which the product may be marketed and may impose significant limitations in the nature of warnings, precautions and contra-indications that could materially affect the sales and profitability of the product;
|
•
|
After a product is approved, the FDA or other international regulatory agency may withdraw or modify an approval in a significant manner or request that we perform additional clinical trials or change the labeling of the product due to a number of reasons, including safety concerns, adverse events and side effects;
|
•
|
Products, such as REVLIMID
®
and POMALYST
®
/IMNOVID
®
, that are subject to accelerated approval can be subject to an expedited withdrawal if post-marketing restrictions are not adhered to or are shown to be inadequate to assure safe use, or if the drug is shown to be unsafe or ineffective under its conditions of use;
|
•
|
Guidelines and recommendations published by various governmental and non-governmental organizations can reduce the use of our approved products;
|
•
|
Approved products, as well as their manufacturers, are subject to continuing and ongoing review by regulatory agencies, and the discovery of previously unknown problems with these products or the failure to comply with manufacturing or quality control requirements may result in restrictions on the manufacture, sale or use of a product or its withdrawal from the market; and
|
•
|
Changes in regulatory agency policy or the adoption of new regulations or legislation could impose restrictions on the sale of our approved products.
|
•
|
protection of the environment, privacy, healthcare reimbursement programs, and competition;
|
•
|
parallel importation of prescription drugs from outside the United States at prices that are regulated by the governments
|
•
|
premature or mandated disclosures of clinical trial or other data.
|
•
|
Hematology and Oncology: Amgen, AstraZeneca, Bristol-Myers-Squibb, Eisai, Gilead, Johnson & Johnson, Novartis, Pharmacyclics, Roche/Genentech, Sanofi and Takeda.
|
•
|
Inflammation and Immunology: AbbVie, Amgen, Biogen Idec, Eisai, Johnson & Johnson, Merck, Pfizer and UCB S.A.
|
•
|
significant damage awards, fines, penalties or other payments, and administrative remedies, such as exclusion and/or debarment from government programs, or other rulings that preclude us from operating our business in a certain manner;
|
•
|
changes to our business operations to avoid risks associated with such litigation or investigations;
|
•
|
product recalls;
|
•
|
reputational damage and decreased demand for our products; and
|
•
|
expenditure of significant time and resources that would otherwise be available for operating our business.
|
•
|
the failure of the product candidate in preclinical or clinical studies;
|
•
|
adverse patient reactions to the product candidate or indications of other safety concerns;
|
•
|
insufficient clinical trial data to support the effectiveness or superiority of the product candidate;
|
•
|
our inability to manufacture sufficient quantities of the product candidate for development or commercialization activities in a timely and cost-efficient manner;
|
•
|
our failure to obtain, or delays in obtaining, the required regulatory approvals for the product candidate, the facilities or the process used to manufacture the product candidate;
|
•
|
changes in the regulatory environment, including pricing and reimbursement, that make development of a new product or of an existing product for a new indication no longer attractive; and
|
•
|
the failure to obtain or maintain satisfactory drug reimbursement rates by governmental or third-party payers.
|
•
|
increased management, travel, infrastructure and legal compliance costs;
|
•
|
longer payment and reimbursement cycles;
|
•
|
difficulties in enforcing contracts and collecting accounts receivable;
|
•
|
local marketing and promotional challenges;
|
•
|
lack of consistency, and unexpected changes, in foreign regulatory requirements and practices;
|
•
|
increased risk of governmental and regulatory scrutiny and investigations;
|
•
|
increased exposure to fluctuations in currency exchange rates;
|
•
|
the burdens of complying with a wide variety of foreign laws and legal standards;
|
•
|
operating in locations with a higher incidence of corruption and fraudulent business practices;
|
•
|
difficulties in staffing and managing foreign sales and development operations;
|
•
|
import and export requirements, tariffs, taxes and other trade barriers;
|
•
|
weaker protection of intellectual property rights;
|
•
|
possible enactment of laws regarding the management of and access to data and public networks;
|
•
|
possible future limitations on foreign-owned businesses;
|
•
|
increased financial accounting and reporting burdens and complexities; and
|
•
|
other factors beyond our control, including political, social and economic instability, popular uprisings, war, terrorist attacks and security concerns in general.
|
•
|
demands on management related to the increase in our size after the acquisition;
|
•
|
the diversion of management’s attention from daily operations to the integration of acquired businesses and personnel;
|
•
|
higher than anticipated integration costs;
|
•
|
failure to achieve expected synergies and costs savings;
|
•
|
difficulties in the assimilation and retention of employees;
|
•
|
difficulties in the assimilation of different cultures and practices, as well as in the assimilation of broad and geographically dispersed personnel and operations; and
|
•
|
difficulties in the integration of departments, systems, including accounting systems, technologies, books and records and procedures, as well as in maintaining uniform standards and controls, including internal control over financial reporting, and related procedures and policies.
|
•
|
results of our clinical trials or adverse events associated with our marketed products;
|
•
|
fluctuations in our commercial and operating results;
|
•
|
announcements of technical or product developments by us or our competitors;
|
•
|
market conditions for pharmaceutical and biotechnology stocks in particular;
|
•
|
changes in laws and governmental regulations, including changes in tax, healthcare, environmental, competition and patent laws;
|
•
|
new accounting pronouncements or regulatory rulings;
|
•
|
public announcements regarding medical advances in the treatment of the disease states that we are targeting;
|
•
|
patent or proprietary rights developments;
|
•
|
changes in pricing and third-party reimbursement policies for our products;
|
•
|
the outcome of litigation involving our products, processes or intellectual property;
|
•
|
the existence and outcome of governmental investigations and proceedings;
|
•
|
regulatory actions that may impact our products or potential products;
|
•
|
disruptions in our manufacturing processes or supply chain;
|
•
|
failure of our collaboration partners to successfully develop potential drug candidates;
|
•
|
competition; and
|
•
|
investor reaction to announcements regarding business or product acquisitions.
|
•
|
restructuring or refinancing our debt;
|
•
|
seeking additional debt or equity capital;
|
•
|
reducing or delaying our business activities, acquisitions, investments or capital expenditures, including research and development expenditures; or
|
•
|
selling assets, businesses, products or other potential revenue streams.
|
•
|
an active public market for the CVRs may not continue to exist or the CVRs may trade at low volumes, both of which could have an adverse effect on the market price, if any, of the CVRs;
|
•
|
if the clinical approval milestones or net sales targets specified in the CVR Agreement are not achieved for any reason within the time periods specified therein, no payment will be made under the CVRs and the CVRs will expire valueless;
|
•
|
since the U.S. federal income tax treatment of the CVRs is unclear, any part of a CVR payment could be treated as ordinary income and the tax thereon may be required to be paid prior to the receipt of the CVR payment;
|
•
|
any payments in respect of the CVRs are subordinated to the right of payment of certain of our other indebtedness;
|
•
|
we may under certain circumstances redeem the CVRs; and
|
•
|
upon expiration of our obligations under the CVR Agreement to continue to commercialize ABRAXANE
®
or any of the other Abraxis pipeline products, we may discontinue such efforts, which would have an adverse effect on the value, if any, of the CVRs.
|
Period
|
|
Total Number of
Shares Purchased
|
|
Average Price Paid
per Share
|
|
Total Number of Shares
Purchased as Part of
Publicly Announced Plans or Programs
|
|
Approximate Dollar Value
of Shares That May Yet be
Purchased Under the Plans
or Programs
|
||||||
April 1 - April 30
|
|
435,943
|
|
|
$
|
144.07
|
|
|
435,943
|
|
|
$
|
4,343,964,019
|
|
May 1 - May 31
|
|
2,168,802
|
|
|
$
|
148.90
|
|
|
2,168,802
|
|
|
$
|
4,021,031,132
|
|
June 1 - June 30
|
|
566,651
|
|
|
$
|
157.71
|
|
|
566,651
|
|
|
$
|
3,931,665,431
|
|
Total
|
|
3,171,396
|
|
|
$
|
149.81
|
|
|
3,171,396
|
|
|
|
|
|
|
CELGENE CORPORATION
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date:
|
July 29, 2014
|
By:
|
/s/Jacqualyn A. Fouse
|
|
|
|
|
Jacqualyn A. Fouse, Ph.D.
|
|
|
|
|
Executive Vice President and
Chief Financial Officer
|
|
|
|
|
(principal financial and accounting officer)
|
◦
|
N = the number of days between (i) the date that, in connection with the consummation of the initial purchase of the Preferred Stock from the Company, the escrow agent first had in its possession funds representing full payment for the Preferred Stock for which conversion is being elected, and (ii) the Date of Conversion;
|
◦
|
Issue Price = the Original Series A Issue Price, as defined in Section 4(a);
|
◦
|
Accretion Conversion Price equals the average Closing Price for the Common Stock as that term is defined below, for the 30 calendar days prior to the Date of Conversion; and
|
◦
|
Conversion Price = the lesser of (x) $18.81 (the "Fixed Conversion Price") (which equals 110% of $17.1, which is the average closing bid price for the seven (7) trading days ending on February 29, 1996), or (y) 90% of the average Closing Price, as that term is defined below, of the Company's Common Stock for the seven (7) trading days immediately preceding the Date of Conversion. For purposes hereof, the term "Closing Price" shall mean the closing price of the Company's Common Stock as reported by NASDAQ (or, if not reported by NASDAQ, as reported by such other exchange or market where traded).
|
◦
|
N = the number of days between (i) the date that, in connection with the consummation of the initial purchase of the Preferred Stock from the Company, the escrow agent first had in its possession funds representing full payment for the Preferred Stock for which conversion is being elected, and (ii) the Date of Conversion;
|
◦
|
Issue Price = the Original Series A Issue Price, as defined in Section 4(a);
|
◦
|
Accretion Conversion Price equals the average Closing Price for the Common Stock as that term is defined below, for the 30 calendar days prior to the Date of Conversion; and
|
◦
|
Conversion Price = the lesser of (x) $18.81 (the "Fixed Conversion Price") (which equals 110% of $17.1, which is the average closing price for the seven (7) trading days ending on February 29, 1996), or (y) 90% of the average Closing Price, as that term is defined below, of the Company's Common Stock for the seven (7) trading days immediately preceding the Date of Conversion. For purposes hereof, the term "Closing Price" shall mean the closing price of the Company's Common Stock as reported by NASDAQ (or, if not reported by NASDAQ, as reported by such other exchange or market where traded).
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(i)
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the dates of the Second Closing, Third Closing or Fourth Closing (all as defined in the Securities Purchase Agreement dated June 9, 1997 between the Company and certain investors);
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(ii)
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June 1, 1998; and
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(iii)
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July 9, 2002, with respect to the Shares of Preferred Stock that have not been redeemed pursuant to Section 6 below.
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Section 1.
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Definitions
.
|
Defined Term
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Section
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AAA
|
Section 13.7(b)
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Acquisition Third Party
|
Section 3.3(c)
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Acquisition Transaction
|
Section 3.3(c)
|
Affected Party
|
Section 12.3
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Agreement
|
Introductory Paragraph
|
Alliance Manager
|
Section 2.8
|
Alternative Product
|
Section 3.3(e)
|
Antitrust Clearance Date
|
Section 13.15(b)
|
Audited Site
|
Section 5.4(d)
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Bankruptcy Event
|
Section 12.3
|
Defined Term
|
Section
|
CAPA
|
Section 5.4(d)
|
Celgene Alpine
|
Introductory Paragraph
|
Celgene Corp.
|
Introductory Paragraph
|
Claim
|
Section 11.5(c)
|
Competition Laws
|
Section 13.15(b)
|
Competition Law Filing
|
Section 13.15(b)
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CREATE Act
|
Section 9.1(g)
|
CRE Considerations
|
Section 1.8
|
Disclosing Party
|
Section 10.1(a)
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DOJ
|
Section 13.15(b)
|
Execution Date
|
Introductory Paragraph
|
Existing Manufacturing Contracts
|
Section 7.2(b)
|
FTC
|
Section 13.15(b)
|
Group
|
Section 1.5
|
Hatch-Waxman Time Period
|
Section 9.2(b)
|
HSR Act
|
Section 13.15(b)
|
HSR Filing
|
Section 13.15(b)
|
Incumbent Board
|
Section 1.5
|
Indemnitee
|
Section 11.5(c)
|
Indemnitor
|
Section 11.5(c)
|
Issuing Party
|
Section 10.2(c)
|
JCC
|
Section 2.3(a)
|
JDC
|
Section 2.2(a)
|
JRC
|
Exhibit D
|
JSC
|
Section 2.1(a)
|
Knowledge
|
Section 11.1(h)
|
Licensee
|
Introductory Paragraph
|
Licensee Indemnitees
|
Section 11.5(b)
|
Licensee ROFN Notice
|
Section 3.7
|
Litigation Conditions
|
Section 11.5(c)
|
Losses
|
Section 11.5(a)
|
Milestone Events
|
Section 8.2(a)
|
Milestone Payments
|
Section 8.2(a)
|
Nogra
|
Introductory Paragraph
|
Nogra Indemnitees
|
Section 11.5(a)
|
Nogra RI Notice
|
Section 3.6
|
Nogra ROFN Notice
|
Section 3.7
|
Party
|
Introductory Paragraph
|
Pre-Acquisition Agreement
|
Section 3.3(c)
|
Receiving Party
|
Section 10.1(a)
|
Release
|
Section 10.2(c)
|
Research Collaboration Agreement
|
Exhibit D
|
Defined Term
|
Section
|
Research Plan
|
Exhibit D
|
Research Program
|
Exhibit D
|
Research Program IP
|
Exhibit D
|
Research Term
|
Exhibit D
|
Research Program Patents
|
Exhibit D
|
Revenue Interests
|
Section 3.6
|
Reversion IP
|
Section 12.6(f)
|
Reversion License
|
Section 12.6(f)
|
Reviewing Party
|
Section 10.2(c)
|
ROFN Negotiation Period
|
Section 3.7
|
ROFN Product Assets
|
Section 3.7
|
SEC
|
Section 1.5
|
Sublicense
|
Section 3.2(b)
|
Term
|
Section 12.1
|
Third Party Offer
|
Section 3.7
|
Third Party Patent Counsel
|
Section 9.1(d)
|
Third Party RI Agreement
|
Section 3.6
|
[***]
|
Section 1.67
|
Working Group
|
Section 2.4
|
Section 2.
|
Management of Development and Commercialization
.
|
Section 3.
|
License Grants
.
|
Section 4.
|
Transfer of Nogra Know-How
.
|
Section 5.
|
Development
.
|
Section 6.
|
Commercialization
.
|
Section 7.
|
Manufacturing
.
|
Section 8.
|
Licensee Payments
.
|
Milestone Event
|
Milestone Payment
|
Total Net Sales of Licensed Products in the Territory in a Calendar Year equal to or greater than US$500 million
|
[***]
|
Total Net Sales of Licensed Products in the Territory in a Calendar Year equal to or greater than
[***]
|
[***]
|
Total Net Sales of Licensed Products in the Territory in a Calendar Year equal to or greater than
[***]
|
[***]
|
Total Net Sales of Licensed Products in the Territory in a Calendar Year equal to or greater than
[***]
|
[***]
|
Total Net Sales of Licensed Products in the Territory in a Calendar Year equal to or greater than US$4 billion
|
[***]
|
Aggregate Annual Worldwide Net Sales of All Licensed Products in a Calendar Year
|
Royalty Rate
|
Portion of aggregate Annual Net Sales by Licensee, its Affiliates and Sublicensees up to and including US$
[***]
|
[***]
|
Portion of aggregate Annual Net Sales by Licensee, its Affiliates and Sublicensees greater than US$ up to and including US$
[***]
|
[***]
|
Portion of aggregate Annual Net Sales by Licensee, its Affiliates and Sublicensees greater than US$
[***]
|
[***]
|
Section 9.
|
Patent Prosecution, Infringement and Extensions
.
|
Section 10.
|
Confidential Information and Publicity
.
|
Section 11.
|
Warranties; Limitations of Liability; Indemnification
.
|
Section 12.
|
Term, Termination and Survival
.
|
Section 13.
|
General Provisions
.
|
(Dollar amounts in thousands)
|
|
|
|
|
|
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
•
|
GED-0301 Is a First-in-Class, Oral Antisense Drug Targeting Smad7 mRNA
|
•
|
Phase III Program for Crohn’s Disease Targeted to Begin by Year-end 2014
|
Date: July 29, 2014
|
/s/Robert J. Hugin
|
|
|
Robert J. Hugin
|
|
|
Chief Executive Officer
|
Date: July 29, 2014
|
/s/Jacqualyn A. Fouse
|
|
|
Jacqualyn A. Fouse, Ph.D.
|
|
|
Executive Vice President
|
|
|
Chief Financial Officer
|
|
|
(principal financial and accounting officer)
|
Date:
|
July 29, 2014
|
|
|
/s/Robert J. Hugin
|
|
|
|
|
Robert J. Hugin
|
|
|
|
|
Chief Executive Officer
|
Date:
|
July 29, 2014
|
|
|
/s/Jacqualyn A. Fouse
|
|
|
|
|
Jacqualyn A. Fouse, Ph.D.
|
|
|
|
|
Executive Vice President
Chief Financial Officer
|
|
|
|
|
(principal financial and accounting officer)
|