Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message| ()  

Executives

Mark Alles -

Robert J. Hugin - Chairman, Chief Executive officer, President, Secretary and Chairman of Executive Committee

Jacqualyn A. Fouse - Chief Financial Officer and Senior Vice President

Patrick E. Flanigan III -

Analysts

Jim Birchenough - BMO Capital Markets U.S.

Brian Abrahams - Wells Fargo Securities, LLC, Research Division

Sapna Srivastava - Goldman Sachs Group Inc., Research Division

Michael J. Yee - RBC Capital Markets, LLC, Research Division

John S. Sonnier - William Blair & Company L.L.C., Research Division

Matthew Roden - UBS Investment Bank, Research Division

Robyn Karnauskas - Deutsche Bank AG, Research Division

Mark J. Schoenebaum - ISI Group Inc., Research Division

Rachel L. McMinn - BofA Merrill Lynch, Research Division

Eric Schmidt - Cowen and Company, LLC, Research Division

Geoffrey C. Porges - Sanford C. Bernstein & Co., LLC., Research Division

Christopher J. Raymond - Robert W. Baird & Co. Incorporated, Research Division

Yaron Werber - Citigroup Inc, Research Division

Howard Liang - Leerink Swann LLC, Research Division

George Farmer - Canaccord Genuity, Research Division

Geoffrey C Meacham - JP Morgan Chase & Co, Research Division

Maged S. Shenouda - Stifel, Nicolaus & Co., Inc., Research Division

Ryan Martins - Lazard Capital Markets LLC, Research Division

Gene Mack - Mizuho Securities USA Inc., Research Division

M. Ian Somaiya - Piper Jaffray Companies, Research Division

Michael G. King - Rodman & Renshaw, LLC, Research Division

Celgene (CELG) Q3 2011 Earnings Call October 27, 2011 9:00 AM ET

Operator

Good morning and welcome to the Celgene Third Quarter Earnings Call. Your host for the call is the Vice President of Investor Relations, Patrick Flanigan.

Patrick E. Flanigan III

Thanks, Mary, and good morning, everyone to Celgene Corporation's third quarter earnings conference call. The press release reporting our third quarter results in addition to the presentation for today's webcast could be accessed by going to the Investor Relations section of the corporate website located at www.celgene.com.

As a reminder, during today's call we'll 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-Q on file with the SEC. This statement speaks only as of today's date, and we undertake no duty to update or revise them. Finally, reconciliation of any non-GAAP financial measure to the most comparable gap measure is available as part of the earnings release.

I would now like to turn the call over to Celgene's Chairman and CEO, Bob Hugin.

Robert J. Hugin

Thank you, Patrick, and welcome to your Celgene quarterly conference call. In addition to Patrick, I'm joined this morning by Jackie Fouse, our Chief Financial Officer; and for the first time by Mark Alles, who has been an invaluable member of Celgene leadership team since 2004. Mark leads our commercial organization in the Americas, and earlier this year added a responsibility for our Asia-Pacific operations. He will become our global Chief Commercial Officer in January. Welcome, Mark.

Before Jackie and Mark review the financial and operating results of the quarter -- excuse me, I'd like to provide my perspective. It was an outstanding quarter for Celgene. Our teams continue to deliver excellent commercial and financial results were advancing our regulatory, clinical and research programs, all designed to produce sustained long-term growth and valued creation. The strong global performance of multiple products drove our outstanding financial results. These exceptional results support raising our financial outlook for the remainder of the year. Jackie will review this with you in just a few minutes.

During the quarter we also made substantial progress on all of our strategic initiatives. We strengthened and expanded the global reach of our hematology and oncology franchises, significantly advanced our development pipeline of 25 Phase III and pivotal clinical trials, and progressed our robust early pipeline of nearly 20 compounds in preclinical and clinical development. All of these initiatives are designed to enhance industry-leading growth well into the future, and are all the more impressive as they were achieved while simultaneously successfully navigating an Article 20 processes in Europe and overcoming strong economic headwinds.

Importantly, during the quarter, we advanced critical programs that has the potential to be significant near-term drivers for our business. As I just mentioned, the REVLIMID Article 20 processes was successfully concluded. This allows us to update our European newly diagnosed marketing application with analysis from the Article 20 process. We're also updating the filing with more mature data from the trials, including the survival data from the CALGB study, which became available during the review period. We're moving forward to complete this work and file the data with the responses to the 120-day questions as rapidly as possible this quarter.

We're optimistic that the review process can be completed in the first 3 to 4 months of 2012. It's also our intention to file this updated data in multiple countries including the United States throughout 2012.

There are a number of other important regulatory filings that are being finalized for submission. All that have the potential to have a meaningful impact on our commercial results in the coming quarters. We'll follow the submission of our responses to the 120-day questions on the myeloma application with our REVLIMID MDF del 5q application in Europe. Also during this quarter, we expect to support the expansion of our solid tumor franchise with the supplemental new drug application to the FDA for ABRAXANE, for first line treatment of non-small cell lung cancer and in reviewing our filing options in multiple international markets. And before the end of this year, we also plan on enhancing our global expansion initiative with the submission of a new drug application for REVLIMID in relapse refractory multiple myeloma in China. These are some of our near-term drivers.

Our Phase III programs reflect our long-term investment in R&D and the areas in which we believe we have a competitive advantage and can deliver innovative breakthrough therapies to patients suffering from serious debilitating diseases. The trials depicted on the slide has the potential to transform the way the patients suffering from these diseases are treated. Our myeloma program is designed to definitively establish REVLIMID as the backbone of therapy in all segments of the disease. With Thalidomide positioned as a potential breakthrough in relapse and refractory disease.

Our MDS trials can extend our MDS and AML franchise to broader patient populations with global potential. We also have encouraging pipeline in Phase II studies in MDS with oral azacitidine and ACE-536. Our lymphoma and CLL programs are advancing rapidly, capitalizing our increasing knowledge of REVLIMID's mechanism of action related to B-cell activity. These are extraordinarily high potential programs which are accruing well.

Mark will provide some additional insight on our progress in advancing ABRAXANE, but as you can tell from our Phase III program, we believe in this unique drugs potential and are investing accordingly. We're making outstanding progress in our new inflammatory franchise with the accelerating accrual of our Phase III trials for apremilast and psoriatic arthritis and psoriasis.

In the last few weeks, we fully accrued several significant trials, including our REVLIMID pivotal study in prostate cancer and our first 2 pivotal apremilast trials. Overall, our apremilast pivotal trials are now over 80% accrued.

I have to note that over the next 12 months, we'll see a steady flow of apremilast data. Beginning with data in ankylosing spondylitis in the next 2 weeks at the American College of Rheumatology meeting, followed by controlled Phase II data in rheumatoid arthritis in the spring, and in the summer, pivotal data from the psoriatic arthritis and psoriasis trials will begin to be available. We are approaching a major inflection point here.

The progress that we're making in our earlier stage program is consistent with that achieved our Phase III programs. Though we'll not go into depth on these programs on this call, we're making excellent progress in advancing our early clinical programs as evidenced by the acceleration of our oral azacitidine program and early clinical work in idiopathic pulmonary fibrosis, cutaneous lupus and systemic sclerosis. And for those of you who follow our cellular therapy program PDA001, we've completed accrual of our multiple sclerosis trial, and expect results from at least 3, if not 4, proof of concept studies in multiple indications in 2012.

In our drug discovery organization, we're capitalizing on the knowledge gained from our clinical programs, and from our investments in translational research, significantly enhancing our research productivity. In September, we initiated our first clinical study with our latest anticancer compound, CC-122. This is the second new compound from our labs standard clinical trials this year. Outstanding productivity. Across the board, tremendous progress during the quarter, we're well positioned for continued outstanding performance.

Let me now turn the call over to Jackie for her review.

Jacqualyn A. Fouse

Thank you, Bob. Good morning, everyone, and thank you for joining us on the call today. The Celgene team and business model continued to deliver superb operating and financial performance fueled by multiple value drivers.

In the third quarter, our non-GAAP total revenue grew 37%, and product revenue grew 38% on a year-over-year basis. All key product lines demonstrated strong growth and performed well in an overall difficult macro environment. Across the board, expenses grew slower than revenues, and operating profit grew 43%. Mark will cover the commercial aspects of our business more in a moment, but in general, all regions around the world were solid as we continue to execute on our global expansion and leverage our business model. We once again produced these results while investing in our own internal R&D, as well as expansion of our collaboration agreements with partners, so that we maintain our commitment to the research and innovation that will sustain our strong growth trajectory well into the future.

90% of third quarter revenue growth year-over-year came from volumes. REVLIMID and VIDAZA continue to perform extremely well, and VIDAZA grew in the U.S. despite the loss of exclusivity back in May. We have demonstrated our ability to deliver growth in the face of increasing price and reimbursement pressures, especially in Europe, as fundamental demand for our products remain sound. In addition, as we have mentioned in the past, we have relatively low volatility in our revenues as a result of changes in exchange rates and given the nature of our hedging program.

On a sequential basis, revenue growth remained strong and our momentum very good. As you can see from the webcast live, we started 2011 with a strong first quarter and we are maintaining that trajectory on a larger base of business, including now, the full integration of the ABRAXANE platform. On a 9 month year-to-date basis, 2011 revenues grew 39% including ABRAXANE, and 28% excluding ABRAXANE. An excellent result.

36% year-over-year third quarter growth in EPS, nears revenue growth. The $0.27 absolute year-over-year increase in third quarter EPS was driven by $0.31 of growth from operations. The impact of net financial income expense in the quarter was $0.07 negative, as we had net financial expense in 2011 versus net financial income in the period of 2010. The impact of a lower effective tax rate was $0.02 positive, and the impact of a lower share count was $0.01 positive in the quarter. You can therefore see that the clear driver of our year-over-year EPS growth is strong operating performance.

Turning to non-GAAP product sales. In the third quarter, REVLIMID posted very good year-over-year growth of 28%. REVLIMID is now a $3.2-billion-plus product and maintains a strong growth trajectory. REVLIMID's sequential growth was a solid 3.1% coming on top of quite strong 7.8% sequential growth in the second quarter. We did see some impact in the U.S. on REVLIMID sales from buyer behavior late in the quarter. Demand for the product is strong, and Mark will talk more about that in a moment.

I will cover the split of sales between the U.S. and international for REVLIMID and the other key products in the next slide. VIDAZA growth continues to be propelled by exceptional growth outside the U.S. and the product grew overall by 35% in the quarter on a year-over-year basis. In solid tumors, ABRAXANE posted 20% sequential growth Q3 over Q2 2011, on top of strong sequential growth in Q2.

Commercial momentum for the product is strong and we increased our share of voice for ABRAXANE globally. The U.S. commercial platform for solid tumor is now fully in place, and we continue rolling ABRAXANE out across Europe, as well as promoting it in other markets around the world.

Looking into the U.S. and international split of sales for the major products. We can see the solid contributions across the region. U.S. growth in REVLIMID remains strong. U.S. sequential growth in the quarter was 2% after a seller sequential growth of 9.6% in Q2. International growth was also excellent as markets outside of the EU5 more than made up for some softness in Europe. We previously told you that France was down sequentially from Q1 to Q2, that market was stable from Q2 to Q3 but not yet growing. We are seeing signs of a return to growth there in Q4.

For the third quarter, Celgene international grew sequentially by 4.7%. VIDAZA grew by 10% in the U.S. despite the loss of exclusivity and growth outside the U.S. was outstanding with 58% growth as markets like the U.K., Australia and Japan ramped up their sales following approvals earlier this year. Sales in Japan were particularly strong in the third quarter. As a reminder, these depends on our local partners buying pattern.

ABRAXANE momentum in the U.S. is excellent with 29% sequential growth, and Mark will talk more about that in a moment. You may remember, that last quarter, I mentioned a modest amount top line sale for ABRAXANE in Europe, and you see that reflected in the quarter-to-quarter figures here for international.

Moving on to the key line items in the P&L. We are seeing modest leverage in our gross margins in line with expectations. R&D expense for the third quarter, includes a $7.5 million milestone payment to Acceleron, and during the quarter, we extended that agreement to include a new compound. I will talk a bit more about SG&A in the next slide, and would only mention here the downward trend in SG&A expense as a percentage of revenue during 2011.

We see our non-GAAP operating profit margin improving by over 100 basis points in 2011, consistent with the expected leveraging of our business model. Last quarter, I told you that we could see as somewhat higher effective tax rate than our original guidance of 18.5%, due to the mix of revenues in the U.S., and outside the U.S., mostly impacted by VIDAZA, and we updated our guidance to a range of 19% to 19.5%. Further analysis of the impact of that mix on the full year leads me to confirm an expected full-year tax rate of about 19%.

During the third quarter, we utilized the tax credit for which the impact was booked in the quarter, thus pushing the write-down in the quarter.

Looking at little bit more at SG&A expense, I would like to briefly highlight the trends that we had seen in the period before, during and after the acquisition of Abraxis. These expenses included integration cost, as well as ongoing SG&A for the solid tumor platform.

On the webcast line, you can see that these expenses jumped as a percentage of revenues in the fourth quarter 2010, when we closed on the Abraxis acquisition, and since then have trended downward over the course of 2011, including the impact of integration costs, which were heaviest in Q1 and Q2 this year. These expenses also include stepping up our global share of voice for ABRAXANE and a staged buildout of the solid tumor commercial platform in Europe. In addition, in the third quarter this year, we incurred some launch related expenses for ISTODAX PTCL in the U.S. Overall, SG&A expenses on a positive leveraging trajectory, and you can see that in both the expected fourth quarter run rate, as we end 2011, and in the nearly 100 basis point reduction in SG&A as a percentage of revenue expected for the full year 2011 versus 2010.

Turning to the balance sheet. Our cash generation is strong in Q3 alone, operations generated just over $600 million. As a result, our financial position continues to be excellent, and cash and marketable securities are stable, at about $2.6 billion while we redeploy capital into both the business, as well as return funds to shareholders via share repurchases. These repurchases total just under $900 million during the third quarter, about 15.5 million shares. Year-to-date, we have repurchased 28.1 million shares for $1.57 billion, all while maintaining a strong balance sheet and financial flexibility.

During the quarter, we launched a $1 billion commercial paper program, so that we have access to the short-term debt markets as a low-cost flexible source of debt capital.

Turning to our updated financial outlook, given our operating and financial performance to date, we are updating our full-year non-GAAP guidance as follows: We are increasing total revenue to a range of $4.8 billion to $4.85 billion, including that we now do not expect to see a generic competitor to VIDAZA in 2011; we are increasing the lower end of the range on REVLIMID revenues by $50 million to $3.2 billion, on a solid global performance of the product and strong demand thus far in the fourth quarter. We are increasing earnings per share to a range of $3.78 to $3.80, with the expectation of strong momentum in our P&L through the end of the year and continuing into 2012, this is an increase of $0.29 to the midpoint of the range, of which $0.23 comes from operations.

This guidance includes our estimates for the full-year impact of healthcare reform in the U.S. in line with the lower end of the estimate we provided you back in Q2, and we assume approximately $451 million weighted average shares outstanding for the fourth quarter and $463 million for the full year.

To summarize, the main drivers of our growth are operational. These are complemented by added value from financial management. We see this reflected in the strength of our operating profit growth and operating margins and in our EPS growth. Our performance is robust and broad-based, covering all of the key operating and financial metrics. Not only are we producing industry-leading growth in both the top and bottom lines of our P&L, we are doing that while investing for the future in multiple research programs and strong product franchises, all as we generate robust cash flows that allow to invest in the business and return capital to shareholders.

Thank you. And I will now turn the call over to Mark.

Mark Alles

Thank you, Jackie. Thank you, Bob, for the kind introduction, and good morning, everyone. It is a pleasure to be part of the team reviewing our operating results with you today.

In the third quarter and through the first 9 months of this year, our global commercial teams consistently produced excellent top line sales results. REVLIMID sales in the quarter grew 3% sequentially to $820 million, and an impressive 28% year-over-year. Year-to-date sales reached $2.35 billion, representing a 34% increase, compared with the same 9-month period in 2010. The primary commercial drivers for the expansion of REVLIMID sales remain constant. The market share gains, increases in total prescription volume from demand and duration of treatment, and continued geographic expansion from new market approvals with favorable market access.

In the United States, REVLIMID now has an approximately 52% share of the overall myeloma market, an increase of 2 points from last quarter. Our share in second line remain strong at 44%. International REVLIMID sales grew 32% year-over-year, the line 2 share of multiple myeloma in the 4 major European markets with full reimbursement, grew to approximately 52%. The combined third line market share of our 5 major European markets is steady at just over 40%.

REVLIMID demand is strong. Prescription volume growth across all regions, net or exceeded our third quarter targets, and we see continued growth into the fourth quarter. Of course, extending duration of therapy is an important contributor of sales growth, but even more importantly, continuous treatment is critical for patients if they are to realize the full clinical benefit of REVLIMID. Duration continues to improve. Increasing the total number of patients treated with REVLIMID until disease progression remains the key clinical priority and commercial opportunity.

Our global regulatory clinical and commercial teams are making good progress, extending market access to new markets. Our launch in Japan is on track, we plan to submit the deletion 5q MDS marketing application to European regulatory authorities in the first quarter 2012, and we are aggressively pursuing full reimbursement in Russia next year.

Our team in China has made solid progress. Their focused efforts led to the rapid completion of the REVLIMID Phase II bridging study and M21, creating the opportunity for a late 2011 submission to the State Food and Drug Administration or SFDA. The clinical results of MM-21 are consistent with our current global label for relapse refractory multiple myeloma. We think these promising results, coupled with the mature data from an MM-009 and MM-010, would support an expedited regulatory review and approval, followed by an immediate commercial launch by late 2012.

Third quarter VIDAZA sales are a clear demonstration of our commercial capabilities. Our teams are maintaining excellent momentum in key international markets, including the United Kingdom, Canada, Japan and Australia. Sequential quarterly sales grew 18%, to $191 million, up 35% year-over-year. Importantly, international sales grew 58% year-over-year. As Jackie outlined, a generic entrant did not launch in the U.S. market during the quarter. Expanding our global leadership position and franchise opportunity, MDS is a poor strategic imperative. We are making strong progress. Several key development programs for VIDAZA, REVLIMID and oral azacitidine are advancing, and we expect these therapies to deliver improved outcomes for patients across all MDS risk classifications.

We completed the acquisition of Abraxis BioSciences one year ago this month. We are beginning to realize the full strategic and financial value of ABRAXANE and we continue to aggressively pursue additional areas of growth. ABRAXANE net sales grew by 20% quarter-over-quarter, to $114 million. In the United States, our solid tumor commercial team grew sales 29%, quarter-over-quarter, to $94 million. Our dedicated team in Europe continue to make progress launching ABRAXANE in key markets, expanding reimbursement and advancing commercial programs designed to accelerate sales in 2012 and beyond.

New clinical data for ABRAXANE will be the primary driver of future growth. In breast cancer, the final results of our randomized Phase II trial, CA-24, will be featured during the San Antonio Breast Cancer Conference in December. This is another head-to-head comparison of ABRAXANE to Taxotere, now generic docetaxel in first line metastatic breast cancer, in which ABRAXANE produced significantly improved outcomes. These results will provide the clearest evidence yet that the ABRAXANE clinical profile in breast cancer improves when a higher dose is used on a weekly schedule.

Planning is ongoing for major early and late stage breast cancer pivotal studies built on weekly ABRAXANE. We are also advancing additional studies and subsets of first line non-small cell lung cancer, pancreatic cancer, melanoma, and other solid tumors. Once completed, these studies should provide multiple opportunities for significant additional growth. Establishing Celgene as a global leader in oncology is a long-standing objective, and ABRAXANE is rapidly becoming an internal and external driver for us to achieve this goal.

Turning to the American Society of Hematology meeting, which is just a few weeks away from now. Important new data on each of our hematology products, REVLIMID, VIDAZA, ISTODAX and pomalidomide will be featured. Data presented at ASH is one of the best indicators of the breadth and depth of our going research investment. This year's meeting will be no exception. Importantly, the final results of our pomalidomide Phase II study, MM-002, will be presented. We expect other important abstracts to provide updates to many of the REVLIMID Phase III studies in newly diagnosed multiple myeloma, Phase II studies of REVLIMID and novel combinations across blood cancers, VIDAZA and REVLIMID and MDS and ISTODAX in cutaneous and peripheral T-cell lymphoma. With an abstract count already well over 100, ASH will again showcase the tremendous benefits our products offer to thousands of patients worldwide.

I'd like to thank our global commercial team for producing excellent third quarter sales results. We look forward to delivering a strong fourth quarter, and to the transformational data that we think has the potential to substantially increase our commercial prospects for all brands in 2012 and beyond.

Thank you. Please welcome Bob back to the call.

Robert J. Hugin

Thanks, Mark, and thanks, Jackie. Exceptional operating results and tremendous progress in advancing important programs, all with the potential of enhancing our long-term growth. We're strategically positioned to capture our full global potential.

These results were accomplished by our teams across the company and across the globe, unified by our mission of addressing the unmet medical needs of patients through innovative research and breakthrough therapies and delivering value to our shareholders through operational excellence in all aspects of our business.

The advancements that we have made this quarter and in the first 9 months of this year have led a solid foundation for the fourth quarter and for 2012. The coming quarters will be exciting as we deliver on key development milestones and value drivers for our portfolio, many of which are outlined on this slide.

Significant label expansions for REVLIMID, newly diagnosed myeloma and MDS, expansion into China, ABRAXANE and first line non-small cell lung cancer, new data and other indications for REVLIMID and ABRAXANE, potentially transformational data for apremilast, pomalidomide and PDA-001.

Meaningful milestones across our portfolio in the very near term. We're making excellent progress and are well positioned for sustained high growth and value creation in the months and years to come.

Thank you very much for joining us today. And operator, would you please now open the line for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Yaron Werber from Citi.

Yaron Werber - Citigroup Inc, Research Division

So maybe a question for Mark first, just help us understand a little bit. It sounds like you said there were some "changes in buying patterns for REVLIMID in the U.S.," and we're hoping maybe you can help us understand that a little bit. And then maybe a question for the group, just help us understand a little bit it looks like -- just the timing in Europe for the decision, it sounds like you're expecting March, April, and I don't know if you can help us understand a little bit, what are some of the outstanding issues that you guys are still talking to the EMA about. And are they waiting for your mature survival data from your first-line of study for approval?

Jacqualyn A. Fouse

Yaron it's Jackie. Let me jump in quickly, because it was me who said something about buying patterns. So as we moved through the quarter, we saw buyers behaving in a certain way, and as we got to later in the quarter, right towards the end of the quarter dnd the last few days of the quarter, they adjusted their buying a little bit, right towards the end of the quarter. So they're probably a few days in there where buying was a little bit lighter right at the end of the quarter than it had been throughout the quarter before that. With that backdrop, maybe I'll let Mark make just a couple of comments about demand.

Mark Alles

Yes. And that's exactly right. We saw just a little shift towards the end of Q3, as Jackie said. And then our fundamental picture in terms of our forecasted and expected trends in prescription volume around the regions of the world are very much on track.

Robert J. Hugin

And then to your -- the second question, about the application of newly diagnosed myeloma and maintenance in Europe. I first want to show you that nothing has significantly changed in the overall tone of the application or what we're doing. We're just simply ensuring that any of the analysis that we've done on the newly diagnosed maintenance trial and the Article 20 process is included in the application. And obviously, we have some important new data from the trials that are part of the package that have matured during this Article 20 process. So we're putting all of that in the package, and ensuring that we have the strongest package for review. So there really hasn't been any significant change to the review process. Now we're going to get this done as quickly as possible. And we anticipate a good rigorous expeditious review during the first quarter of next year and hopefully late this quarter and certainly the first quarter of next year.

Yaron Werber - Citigroup Inc, Research Division

Is there any way perhaps for the mature 015 survival data?

Robert J. Hugin

I don't think -- in our discussion, there hasn't been any change in the expectation of what's in the application and we're going to obviously update it with all the mature data. But there hasn't been any change in the scope of the requirements of the filing.

Yaron Werber - Citigroup Inc, Research Division

Yes, and pointing at ASH, 015 would be updated. So we would see, as the data how matured, another update on 015 at ASH.

Robert J. Hugin

But we're not waiting for any more data. We're just giving what we have now to finish off the questions and finalize the application and move on with the review process.

Operator

Our next question comes from Geoff Meacham from JPMorgan.

Geoffrey C Meacham - JP Morgan Chase & Co, Research Division

When you look to the U.S. filing and in first line for 2012, as the maintenance data matures, is there any change as to what date will go in the filing? And then from a commercial perspective, do you think that first sign approval in the U.S. will be a gating factor? And then I have one more follow-up.

Robert J. Hugin

Yes. I mean, obviously, we clearly are prioritizing the newly diagnosed and the maintenance filing in Europe, whereas the importance for reimbursement and access to those patients is dependent on having the label and then the subsequent reimbursement based on that label. So that's absolutely our number one priority. And our regulatory teams are working on many fronts simultaneously. As you heard, we want to get the MDS 5Q filed in Europe as soon as we can get the 120-day questions completed and the application moving on myeloma. And one thing we didn't mention on the call also, we're finalizing, hopefully, our label discussions on with the Swiss on the MDS 5Q. So we're making good progress on MDS, and we're going to expand that globally. So we want to take the newly diagnosed application, and apply it as broadly across the world as possible. So we have an opportunity to expand on MM-015 and the CALGB and IFM studies, we're going to do that, and we want to ensure that's in the U.S. label, and that's going to be throughout the process as we see the data. Ultimately, as we think about the overall REVLIMID label, MM-020 is a very important feature to it. And as you remember, 1 year ago or in December of last year, we fully accrued the 1600-patient study. So that trial is also maturing nicely. And so we could see data in 2012 from that trial. But we wouldn't wait for that data for filing in any market, but we would supplement. Because overall, we do believe that there are clear patient populations where RD is absolutely the best therapy. And so I think we have a good program, we're moving forward with so many applications, the non-small cell lung cancer, the China filing, so we've got a very robust regulatory program in the coming months that really are important revenue drivers for us. And newly diagnosed myeloma starting in Europe is on top of that list.

Operator

[Operator Instructions] Our next question comes from Rachel McMinn from Bank of America.

Rachel L. McMinn - BofA Merrill Lynch, Research Division

Maybe 2 unrelated part questions, really quickly on EU U.S. disparity, I just want to know, Jackie, if you're seeing also around a 5% price pressure like other pharma companies you're seeing? I guess just separately on ABRAXANE, can you just give us a little bit more color? You didn't talk about any generic Taxotere manufacturing issues. Do you think this didn't have anything to do with the gains in U.S.?

Jacqualyn A. Fouse

In the EU, and we do continue to see across-the-board average price declines. I think we talked about that somewhat in the past that in any given year, for the last couple of years, we're seeing declines of 5%, 6%, 7%. We baked that into our forecast. We continue to see that over the course of 2011, which is one of the growth is even more impressive, and I'll hold it to highlight the volume contribution from that. So we continue to see that in the EU. It's roughly in line with the experience this company has had for the last couple of years. So we're very attentive to it. Regarding ABRAXANE and -- I think you meant the generic chemo shortage of small cell paclitaxel in the U.S. that we've seen in the market recently. We probably are benefiting by a few million dollars from that in the quarter. So there is a little bit of that, at the same time, the core performance by ABRAXANE is very strong and the momentum there continues to be good, and I'll just let Mark add to that if he wants to do so.

Mark Alles

Rachel, it's Mark. Jackie is exactly right. We benefited somewhat a few million dollars from the shortages broadly. Ironically, it was not necessarily the taxane shortage, but other products that are used in solid tumors, particularly in heavily treated ovarian cancer. In the case of Taxotere comparison, of course, we've been working our way through a marketplace where multiple generic entrants of docetaxel, Taxotere have launched. And so going into 2012, one would expect that the ASP that catches up over time with the actual price of the generic will no longer be a headwind for us, and for these market dynamics are on pricing, reimbursement, but then importantly, the value proposition of ABRAXANE as a novel agent in the space and what we're doing commercially, clinically and from a regulatory point of view, we think that we can advance in that environment quite nicely.

Operator

Our next question comes from Mark Schoenebaum from ISI Group.

Mark J. Schoenebaum - ISI Group Inc., Research Division

I was just wondering -- I heard you say in 020, that could be out next year? Could you just -- would that be an interim if we saw the data in next year or would that be an actual final analysis, if you could please clarify that? And then on the apremilast, I just had a simple question, is it your current thinking, Bob, to go alone commercially or to partner?

Robert J. Hugin

On MM-020, it's obviously an event-driven analysis. But one of the things we're extremely sensitive to is that if you look at the history of REVLIMID and the pivotal trials that we've done, the results have been so significant that the trials have often been stopped early. And in many ways, we're hopeful that's the same case with MM-020, but it is such a pivotal trial in the sense of really defining the upfront therapy of our little D [ph] as being an important component of that upfront therapy that we really want to make sure that the trial does answer definitively the question it seeks to answer. So we're optimistic that even though it is an event driven trial that we will, when we get the results, it will give us a clear and definitive answer on the questions that we're focused on. On apremilast, it's just a very good question, because as we continue to observe the marketplace in the arthritis and psoriasis, it is a changing marketplace with some interesting competition in some areas where some of the competition is falling to way side. And so what we're doing right now and the next few months, is really examining the range of data that we expect over the next 12 months and understanding what our capabilities are, and where we should be focused. I would say that our base case is that we believe the indications for the most part will be in the specialty areas where we can commercially access those patient populations in those physician communities. So we think this is a tremendously undervalued asset, and we're going to ensure that we take the strategy that maximizes the return to us and to our shareholders.

Operator

Our next question comes from Ian Somaiya from Piper Jaffray.

M. Ian Somaiya - Piper Jaffray Companies, Research Division

So a question on apremilast, I've definitely noticed a change in your tone, Bob, when you speak about apremilast, just the confidence that you have. Can you just gives us as sense of what gives you that confidence, what aspects of the trial are providing you information that will lead you to start thinking about not only Phase III data, but also what the market opportunity could look like and how you'll capture that?

Robert J. Hugin

Yes. I think there's numerous factors. And I think we all have to recognize that it's the Phase III data that will matter. But in that trend, the accrual has been accelerating. As I mentioned, 2 of the pivotal trials have already accrued, and we're 80%-plus accrued on all the pivotal trials that we need for filing in both psoriasis and psoriatic arthritis, we fully accrued that the important controlled rheumatoid arthritis trial, we were going to see data in the first -- next couple of weeks at ACR, on ankylosing spondylitis. We're going to begin a Phase III trial in ankylosing spondylitis likely in January, based on what we expect and hopefully are encouraged by what we'll see in the next couple of weeks to support that. And I think, as we've done market research and add boards around the world, if we maintain the kind of encouraging side effect profile and that we've seen in the Phase II data, and what we hopefully will see, and what people are telling us they're seeing on a blinded basis on the side effect profile in the Phase III trial, there is a very attractive marketplace, prebiologics, for a drug that is less expensive in biologics, orally available with an attractive side effect profile. Clearly, this Phase III trial have to produce that. But we're encouraged by what the anecdotes are. But again, that's not something I would count on, it's the Phase III data. But we're now in the very near term, ankylosing spondylitis data in the early next year, in the first half of the year we're going to see the rheumatoid arthritis data, and we're going to see in the second half of the next year, psoriasis and psoriatic arthritis pivotal data out there. So we're encouraged, we're obviously hopeful we're going to see a great relationship between activity, efficacy and the side effect profile. And if this program, this product, has the profile we think it has the potential to produce, there is a great marketplace opportunity for it.

Operator

Our next question comes from Chris Raymond from Robert Baird.

Christopher J. Raymond - Robert W. Baird & Co. Incorporated, Research Division

I just wanted to circle back on the REVLIMID changes in buyer behavior sort of at the end of the quarter. To the extent you can, can you maybe give a little more color on what specifically these buyers were doing? And maybe you just described it, is this a phenomenon that might crop up again? And also, could you maybe just put some brackets around specifically what, from a dollar standpoint, that impact was? And if we should just assume that it's just a carry-through of revenue into Q4 or something else.

Jacqualyn A. Fouse

Chris, thanks for the questions. What we think went on is a little bit of balance sheet management on the part of the distributors, right at the end of the quarter. So you're talking about a product here that has a couple of weeks of inventory. We're talking about days here, and on a $3.2 billion product, I think we should just put that into perspective. But as we saw what looked like, that bit of a balance sheet management by the buyers towards the end of the quarter, we figure that, that probably impacted, from a negative standpoint REVLIMID sales in the quarter by $10 million to $15 million or so, more or less. Underlying demand volume very, very good and strong, as Mark already said. I don't think that this is an issue that particularly I would consider it to be something that will repeat itself every quarter. Again, we're talking about a couple of days, few days here and there. And it's just going to be something that's there. But I just -- again, will remind everybody that the base for this product is now over $3.2 billion. And that little bit of impact is not something that I will be too concerned about. And perfectly understandable, given the overall economic environment.

Christopher J. Raymond - Robert W. Baird & Co. Incorporated, Research Division

If I could ask a follow-up, you talked about the taxane shortage from sort of pulling ABRAXANE into ovarian. Can you tell us if you've seen any use in long? And if so, how durable do you think that might be due to the taxane shortage?

Mark Alles

Yes -- no. It's an important question. There is a little post-ASCO improvement in the use of ABRAXANE in lung cancer. We don't think that, that's linked to any shortages, because docetaxel, as far as we understand, is not in a short supply situation. Paclitaxel, as you pointed out, is. So I think there's an easy switch in that setting because of the base drug carboplatin. Now having said that, we, of course are looking forward to the submission of our application for our first line non-small cell lung cancer by the end of the year, and expect that at the point we get approved, we would see a substantial uptake in ABRAXANE in lung cancer. But of course, we're limited today to our current label, which is only metastatic breast cancer.

Operator

Our next question comes from Geoff Porges from Bernstein.

Geoffrey C. Porges - Sanford C. Bernstein & Co., LLC., Research Division

I think this is Jackie's question, but perhaps you could tackle both. You'd understand $1.2 billion approximately on R&D this year, you've got 24, 25, 33 trials. You're suggesting that most of them will be accrued by the end of the year. It's hard to understand why your R&D wouldn't be essentially flat for next year. I know you can't give us guidance at this point, but could you give us a sense of are there additional Phase III trials that you're going to roll into next year that might occupy the budgetary space that you're going to sort of run out essentially with all these Phase III trials either fully accruing or in the middle of the year ending at some point?

Jacqualyn A. Fouse

Jeff, it's Jackie. Let me start, and Bob may want to come in and compliment my answer. So just with respect to next year, and obviously we'll talk a lot more about that when we give the 2012 guidance. But when you're in a situation with this many late-stage Phase III trial hitting their peak enrollment, and then when you have the data coming out of those and the preparation and all the work that has to be done to actually run the trial successfully, finish them, get the data, analyze the data, process and to prepare the number of filings that this company is looking at being able to produce next year, that means that, that spend is not necessarily going to come down in a relative sense. That being said, you are right, that as we continue to move things forward, we will have more and more, hopefully, trials moving along and moving into the later of stages. But when we look out to maybe 2013, 2014, we should have additional capacity to absorb those trials that would then be coming through the pipeline given the large number of Phase III trials that we are going to be wrapping up or are seeing come to conclusion and full read out next year. And so I'll think about that a little bit more as an impact beyond 2012. And as we've said, I think on a multiple occasions, if our R&D spend continues to be at the relative level it is today, that would be because we're so successful that we're going to be very happy to feed that, and otherwise we will be creating capacity to take on appropriate additional projects or we would see some leverage in that metric as a percentage of revenue.

Robert J. Hugin

I certainly do complement that answer. And I absolutely agree. I think it was exactly right on. I think that -- we benefit today because we've invested for 10 years in R&D to be able to be in a position to have 25 pivotal in Phase III studies. So it didn't happen by accident. But this is a risky business and that's why we are continuing to accelerate the development of early-stage programs. So that in the 2014, 2015 and 2016 program -- period of time, we're in the same positive position that we've got multiple late stage programs that are going to produce high growth for this company into 2020 and beyond. But we do not -- we're not going to change our standard as to what we invest and what we don't. If we don't have programs that can invest, we're going to get P&L leverage out of that, and if we could invest in the future, we will, as long as we continue to maintain the growth trajectory that we're on.

Operator

Our next question comes from Sapna Srivastava from Goldman Sachs.

Sapna Srivastava - Goldman Sachs Group Inc., Research Division

I have a couple of quick questions. The first one was just to -- if you can give us an update on the U.S. FDA safety review for REVLIMID, when should we expect that? And the second was the potential for pom to get an accelerated filing? And the last one could be, Jackie, for you, is the $10 million to $15 million, in the buying patterns, should we expect that to come through in 4Q?

Robert J. Hugin

What U.S. safety FDA review are you referring to? I'm not aware of anything that is ongoing safety review. We obviously keep all regulatory agencies around the world, but we're not expecting -- we've completed the article 20 process in Europe, and we've updated everybody and we're not -- really, there's not any process underway and we don't expect any significant changes, anything to label in the U.S. at this point.

Sapna Srivastava - Goldman Sachs Group Inc., Research Division

Just a few weeks after the Article 20 when the U.S. FDA had started a safety review for REVLIMID and Thalidomide, is that completely concluded as well?

Robert J. Hugin

I don't think there's -- there's a new process at the FDA in the last few years that we've obviously been a party to, like all companies that they make sure that people are aware of any danger that comes out about all products. But there is not anything specific in terms of a safety review. We're moving forward in reviewing the label indications as we produce new data and put it out there. So I don't think there's any issue to be -- anything to be finalized or completed. There's nothing formal that's going to happen.

Sapna Srivastava - Goldman Sachs Group Inc., Research Division

Okay. That's helpful to know. And just on pom and the $10 million to $15 million in buying patterns?

Jacqualyn A. Fouse

Yes, Sapna, let me just jump in on the buyer behavior. So as I mentioned, what we saw is we went through the quarter, the usual buying behavior that we would see. I mean, it was a normal quarter. It's just that as we got right to the end of the quarter it looked to us like distributors did a little bit of their own balance sheet management by adjusting maybe a couple of days versus where they had been over the course of the quarter. Again, we're talking about a couple of days issue here, but that would have impacted REVLIMID by $10 million to $15 million in the quarter. It's the only thing that people are looking at, is the quarterly sales on a $3.2-plus-billion annual sales price.

Robert J. Hugin

Now let me just emphasize -- we want to make sure we're transparent about these issues. But when you think about what the daily sales are for REVLIMID in the U.S., one day, plus or minus. And this is something that happens all the time, right? In some quarters, you may have a holiday in a certain time at the end of the quarter that will lead to people having a little bit more inventory at the end of the quarter versus others. And again, as Jackie pointed out, we have -- we deserted REVLIMID through a specialty pharmacy, we do not have significant inventory. And the type of little amount we're talking about here, is just to make sure people understand, things can be $5 million, $10 million, $15 million, plus or minus, in a quarter by just actions that naturally happen from quarter-to-quarter. And it's not something that is either a trend one way or the other, it goes back and forth in over the last 8, 10, 12 quarters, we've seen little pluses and minuses both ways throughout the period of time.

Mark Alles

With underlying prescription volume growth as expected or even better than expected depending on the market which one looks at.

Jacqualyn A. Fouse

Pomalidomide. She asked about pomalidomide.

Robert J. Hugin

And then pomalidomide, as Mark mentioned, we're going to see Aurel presentation at Ashbury, the MM-002 -- data presented that's very important to us. We're hopefully in the next few months, fully accrued the Phase III fibrosis study, we're accruing the international Phase III myeloma study, and we're working as attentively and expeditiously in every single market where there's an opportunity to accelerate filings to do so. And as soon as there's any clarity in any market about our ability timing of filing, we will communicate that.

Operator

Our next question comes from Jim Birchenough from BMO Capital.

Jim Birchenough - BMO Capital Markets U.S.

Just a quick question on the frontline filing in Europe. I want to understand your confidence that you'll get a frontline approval for REVLIMID. And in answering that, I'm wondering if you could address the following, and that is, is it your sense that EMA is still focused on RMP plus R versus MP? If they're not, what's the chance that RMP will separate from MP in 015? Is there any chance that ECOG and SWOG data could be used to support a Rev/Dex approval, and remind us in 020 what Rev/Dex needs to do to show superiority over MPD?

Robert J. Hugin

First on the filing in Europe. No change to the expected review of strategy process. It's the label, we're successful and obviously, we've got to be careful about the discussion of ongoing regulatory discussions. But there's no change to the fundamental assessment here. And the label for success will depend on the data that's been submitted, and that's MM-015, the IFM-0502 and the CALGB study. And you've saw consistent, very powerful TFS and OS data in the CALGB and the other pre-specified patient population trends, et cetera. But there's no change to the regulatory process and review requirements, etc., in that regard. And so that to us -- there really isn't anything new we can tell you there. The review process will run its course, and we think the data in those 3 trials was all very strong patient positive impact with very attractive hazard ratio. And so we'll work hard to ensure we have a positive outcome and then leverage that commercially.

Mark Alles

On 020, the assumption built into the performance in 020 is that Rev/Dex would improve progression-free survival by 50% over MPT.

Jim Birchenough - BMO Capital Markets U.S.

And just on the MPR -- sorry MPR versus MP in 015, any chance that those 2 induction arms will separate or is that unlikely at this point?

Robert J. Hugin

I think the data continues to mature, and as it is presented to regulators and once that's completed, it will be presented at major medical meetings. So there will be a continued update on the maturity of that data, following updates to regulatory agencies on that data.

Jim Birchenough - BMO Capital Markets U.S.

And the next update will be ASH?

Robert J. Hugin

Yes, so we'll see updated data at ASH.

Operator

Our next question comes from Eric Schmidt from Cowan and Company.

Eric Schmidt - Cowen and Company, LLC, Research Division

I just wanted to follow up on Sapna's question about the FDA label. Bob, do I understand that you do not expect an update similar to what you had in Europe for SPN? So we shouldn't expect the new data to come on the U.S. label as well?

Robert J. Hugin

Again -- I mean, we talk about regulatory interactions. We have to be careful. Those are generally private discussions between agencies around the world and companies. But I think if you look at most actions by the FDA, that any actions that would refer to labels would be based on data for the label's indication. And when you look at the analysis that we saw in the Article 20 process in their last previously treated myeloma population, we were very pleased by the outcome of that analysis. It was very clear. Actually we were very pleased with the analysis of the newly diagnosed and maintenance population on the SBM issue. So the Article 20 is in our view and the SBM issue has been so thoroughly studied, and we believe has reached the kind of conclusions that are appropriate that this rigorous analysis produce. So I personally, I can't predict all regulatory actions, but we don't see any reason why you would expect to see any label change for the approved indications. When we submit newly diagnosed applications to regulatory agencies, you would expect that whatever the data is on those filings would be represented in the label, both activity, side effects profile, safety, et cetera. And we're very glad to have any and all data that we're aware of that has been uncovered and researched and analyzed in this process to be in the REVLIMID label, because it has a very positive benefit risk profile.

Mark Alles

Regulatory review is critical. Of course, we embrace all that. Importantly, in parallel to all of these questions, the global myeloma community has been very well aware of all of the benefit risk questions that we're referring to here. And I think it's a very, very important, almost complement to the group, that they are out ahead of this almost as much as we are and the regulators are.

Operator

Our next question comes from Robyn Karnauskas from Deutsche Bank.

Robyn Karnauskas - Deutsche Bank AG, Research Division

I guess, I was wondering if maybe you could comment a little bit about volume-based pricing contracts given that you're waiting approval in Europe and that's getting close. Should we expect that those negotiations have already taken place, are they ongoing, or would they occur after approval?

Robert J. Hugin

Are you referring to a specific product, Robyn?

Robyn Karnauskas - Deutsche Bank AG, Research Division

Yes, REVLIMID. So REVLIMID is growing and then you would have EU approval in earlier lines?

Robert J. Hugin

Yes. I mean, generally in Europe, when we look at reimbursement and pricing, et cetera, there isn't a standard practice. There are in fact multiple practices among payers in the same countries and within countries. So we believe we should have a very proactive discussion with payers based on the value proposition. We have been very successful in being able to articulate the value proposition of REVLIMID throughout countries, whether it's Nice, Germany, France, Australia, Canada, U.S. payers. So REVLIMID has had a great value proposition, and as we get new data and we had regulatory and label expansion, we want to be and are proactive in discussing with payers around the world, but there isn't one formula to ensure that we balance the increased access of REVLIMID to patients in broader populations, and understanding how to consider value proposition works to payers and around the world. So there isn't one model for it. We want to be proactive where we should be proactive and we'll engage in a wide range of discussions as we expand the label, but there isn't one specific activity. But it's an ongoing, everyday proposition to maintain and defend the value proposition of REVLIMID.

Operator

Our next question comes from Mike King from Rodman.

Michael G. King - Rodman & Renshaw, LLC, Research Division

Most of my questions were answered. Just a question for Jackie, you gave a great breakdown on the contributors -- to your beat in the quarter. I just wanted to ask you about currency, was there any of effect? And how should we think about currency going forward as far as its impact on EPS?

Jacqualyn A. Fouse

Mike thanks for the question. Well what we saw in terms of on the webcast slides in terms of the year-over-year growth just in the Q3 comparison of the 37 percentage points of growth, I highlighted the 33, our volume, to our net price on global basis to our net FX, and that's again on a year-over-year comparison. If I looked at the change in our guidance, almost nothing retained from FX in that. Again, we had our net operating profit exposure, we hedged our revenues to the extent of our net operating profit exposure. So you'll see less volatility for us in our revenue line and very little volatility in our operating profits and net profits because of currency. On a go-forward basis, we are relatively well hedged, I would say, against potential weakness in both the euro and the yen, as we move into 2012 and we put those hedges into place some time ago. So again, our objective is to take volatility out of the P&L as a result of FX.

Operator

Our next question comes from Matt Roden from UBS.

Matthew Roden - UBS Investment Bank, Research Division

Interesting to hear you guys a little bit more vocal on the Chinese opportunity here. I was wondering if you could talk a little bit about how you visualize the review timelines there, the sort of approval process, reimbursement, negotiating for price and then, finally adoption. What sort of segments of the Chinese market would you expect to hit? And then lastly, and related, would you point to any other particular drug launches in Europe as a proxy for the way you're thinking about the uptake of REVLIMID?

Jacqualyn A. Fouse

China and Europe...

Robert J. Hugin

China is obviously a very, very important market with the size of the population, the growing coverage and the growing wealth and increasing upper and middle-class. I think that anyone who worked closely in China, I spent time in August in China, that you have to look at the Chinese market as a unique marketplace, and the metrics you set need to be appropriate for that marketplace. So I think we have to all go into that with our eyes open. That being said, it's very clear that the Chinese front leaders in the hematology space, REVLIMID is a much needed product for Chinese patients. And I think that the fact that we've been able to -- as Mark pointed out, finished the MM-021 bridging study, and produced results consistent with the labels that we had proposed and discussed with them from the '09 and '10 dated myeloma, that we are being led to believe that we have a very expeditious review get it submitted before the end of the year and have the opportunity in the second half of next year and to have an answer, and hopefully an approval there. And we have, because of the Abraxis acquisition, we have a commercial force in place, that's making good progress with ABRAXANE there. And it's a very highly skilled organization led by multiple physicians and well trained. So we do think that the Chinese opportunity is unique, and I don't think you should a step-look at other countries as benchmarks for what can happen in China. We're taking it and looking at it as a unique and discrete opportunity, and we'll set the metrics based on our view, exactly what's available there and we'll try to keep you up on that. But we think, by the of next year, we'll have a good idea of what that potential is going to be.

Matthew Roden - UBS Investment Bank, Research Division

Can you comment on pricing and sort of how you think about reimbursement if whether or not it's a subset of the Chinese market that would be addressable?

Robert J. Hugin

Yes. I mean, it's obviously, as there are complex markets there, there's provincial pricing, there is Federal opportunities also, and often start at the provincial level. And we are fortunate that we've been through the process, our team has been through the process with ABRAXANE. I think we understand what the priorities are, where we're going to go first, but I think we've got to get the label approved and throughout 2012, we'll be engaged in those discussions. And if we see clear issues, we'll keep you up as that develops.

Operator

Our next question comes from Michael Yee from RBC Capital Markets.

Michael J. Yee - RBC Capital Markets, LLC, Research Division

Question on the Article 20, first kudos for getting through it. For clarity sakes, do you think that one of the conclusions that we will get out of that is that duration of therapy is not related to SPM. I know that pom [ph] is obviously stressed that point, in his presentation, but do you think that's the conclusion we'll get when we read that? And then secondly, just for clarification, do you expect to have it resubmitted, the 120-day questions before year end?

Robert J. Hugin

Yes. Well, thanks for the question and certainly, yes, obviously are sensitive that we don't want -- too much discussion about dialogue that goes on between us and regulatory agencies. But our analysis of data is pretty clear that there is no correlation between dose and duration of REVLIMID and any kind of second primary malignancy issue. And absolutely, it is our goal and intention to have the 120 day question submitted as soon as possible, and certainly before year end.

Operator

Our next question comes from George Farmer from Canaccord.

George Farmer - Canaccord Genuity, Research Division

Can you just help us in figuring out more of your pomalidomide strategy? do you think you can accelerate approvals on the table, or do you anticipate doing another Phase III trial, randomized?

Robert J. Hugin

Yes. I mean, obviously, the base case for any company, you really want to make sure you have a Phase III program in place. Because even if you are fortunate enough to get an accelerated filing in whatever countries you achieve that, you're going to need to document that and validate that with a Phase III study. So Phase III is clearly always going to be the base case that certainly we operate with. That being said, we certainly believe that the last refractory multiple myeloma remains an unmet medical condition and we think the data with pomalidomide is very compelling. And we're working with regulatory agencies around the world to ensure that if there's any potential with existing data or augmented data, and ultimately it has to be Phase III, we're -- as I mentioned earlier, with the myelofibrosis study in Phase III will be fully accrued in the next few months. And we're accruing a Phase III that we're expanding around the world in multiple myeloma with pomalidomide. So it's clear, a high priority for us. Myeloma is an important business for us. We're very close to myeloma treaters. We understand the need and urgency and intensity for patients in myeloma to have access to new drugs like pomalidomide, and I can assure you we're doing everything we can to accelerate its availability to patients. And as soon as we have any more clarity on any marketplace, we'll keep you up on that.

Operator

Our next question comes from John Sonnier from William Blair.

John S. Sonnier - William Blair & Company L.L.C., Research Division

I think during the call, the strength in Japan was highlighted. And I just want to follow-up on that. Can you guys, I guess, characterize the use there? And talk a little bit about what the strategy is for front-line maintenance in that market?

Robert J. Hugin

Yes, so we are progressing nicely in our launch phase still. And I think that this market is unique and that REVLIMID is almost the -- if there is such a thing as a perfect product for a cancer market, REVLIMID's unique mix of efficacy and safety is very much an ideal therapy for the Japanese market. So we've had the logistical steps of the launch, really, covered well from risk management through educating the marketplaces, and now we're entering a phase we think of the launch where those logistical steps around regulatory risk management, having the team get in place and get traction are more behind us than in front of us. And we see a very, very strong future for the brand in Japan, including newly diagnosed myeloma. Remember, we are, as Bob pointed out, in a position where for Japan, we may be in the fortunate circumstance of bringing not only Rev/Dex to the marketing relapse disease. But on the strength of MM-020, we would be relatively early in the launch of relapse refractory and have data from MM-020 come into the market, which we think in that space, would be almost a cornerstone for newly diagnosed approval.

Operator

Our next question comes from Gene Mack from Mizuho Securities.

Gene Mack - Mizuho Securities USA Inc., Research Division

Maybe just on France, I just wonder if you guys have anything lingering data -- I mean, lingering concern at all that demand levels might not get back to what they were pre-Article 20 days?

Robert J. Hugin

Yes, I think the prospects in France are very positive. Clearly, you have a tough economic conditions, which are a backdrop in many countries. Certainly, France is no exception from that. And France has been a unique market. With what's happened with the Serbia issues, and a lot of the changes in the marketplace because of those issues. And it was the center of the discussion of where the Article 20 process began. So I think all of these are in place for overtime to continue to have that as a very attractive growth market for us.

Mark Alles

Yes, with ongoing research. I mean, the important part about the French market including the IFM, as Bob said, the center of much of the discussion and analyses. They continue to conduct trials globally, including the RVD's induction trial, where RVD is being compared as an induction then versus autologous stem cell transplant, and both arms of that trial will get REVLIMID maintenance. Now, there's still some debate about the true ending duration of maintenance, but that's a very, very positive example of how we continue to focus on research out of the French market.

Operator

Our next question comes from Maged Shenouda from Stifel, Nicolaus.

Maged S. Shenouda - Stifel, Nicolaus & Co., Inc., Research Division

Not to be knit picky, but previously, you indicated that you expected front-line REVLIMID approval by March of next year in Europe? And the press release states the first half. Is this change in your timeline or posture at all?

Robert J. Hugin

No. I mean, as I said in the -- during the call, Maged, that we were to get the 120 questions and the updated data submitted as soon as possible. And that we're optimistic that we'll have the review in the first 3 to 4 months of next year. So is it a month or 2? Is it sort of depends on how long the review takes? So we don't know the exact date. It could've been in the second quarter? Absolutely. Could it be at the end of the first quarter? Still possibly, but I think it is -- if we do get more clarity on it, we'll provide it. But we're getting the 120-day questions done as quickly as possible, and we'll go through the review expeditiously.

Mark Alles

But there's nothing meaningful or significantly change. I mean, it's the review or the timeline.

Operator

Our next question comes from Brian Abrahams from Wells Fargo.

Brian Abrahams - Wells Fargo Securities, LLC, Research Division

Question on U.S. REVLIMID sales. In recognizing that some of the slower quarter-over-quarter growth stems from purchasing patterns. But bigger picture, can you talk about what you see as the key drivers for continued U.S. growth? I'm just sort of wondering how much of the positive data in the induction and maintenance setting has already been digested and practice patterns adjusted accordingly? And then separately, are you seeing any changes in used patterns in Europe since the Article 20 was resolved and label updated?

Mark Alles

Yes. So as we've outlined, and I think we're as transparent as we can be, the U.S. market has broad access to cancer therapeutics like lenalidomide REVLIMID. As long as the value proposition presented by the data is very clear. And that's the case in the U.S. Now, with respect to opportunity, there's no question that continuing duration of therapy across patient segments is a critical driver. In addition, the use of maintenance, post transplant, as a way to treat myeloma is an area of high growth potential. The use of lenalidomide REVLIMID in that space is relatively strong. But the overall use of maintenance therapy remains very low on a relative basis. And then finally getting a newly diagnosed approval would allow us to commercialize directly the value proposition of REVLIMID as an induction therapy for all new patients, including high-risk smoldering patients and elderly, as well as young patients. We don't do that today because our label is limited to the relapse population. So from an induction, whether patients go to transplant or not, then maintenance therapy, as a way to treat patients post transplant induration overall, these are strong growth drivers for the future.

Robert J. Hugin

And obviously, those drivers are all embedded by a lot of the critical research we're doing. That Mark didn't mention, follicular lymphoma, non-GCB, NHL, the diffused large B-cell lymphoma, chronic lymphocytic leukemia, the male cell lymphoma. We just barely finished accruing the prostate Phase III trial. Now we don't have that in our forecast, but if that turns out to be positive in the next year or so, that's dramatic upsize that it is not in our model or in anybody else's model. So we've got good old signs from our existing business, and we've invested to fully capitalize on the potential of REVLIMID across indication across the globe.

Operator

Our next question comes from Howard Liang from Leerink Swann.

Howard Liang - Leerink Swann LLC, Research Division

A question for Jackie or Bob, the EPS guidance for this year, implied that 35% year-over-year growth, I think. Can you talk about whether if you have a philosophy of managing bottom-line growth within the range, over the long-term?

Jacqualyn A. Fouse

Yes, thanks for the question. No, I mean, I think what we want to do is appropriately invest in the business so that we maintain our long-term growth trajectory, and that's primarily going to be with respect to the right investments and the right R&D. Our projects as well as making sure that we invest appropriately in commercial infrastructure around the world that do all of that while running a very efficient business model. So with that in mind, I mean, the bottom lines were all, to some extent, is going to be when it's going to be. We're not trying to "manage" that growth to a particular level. We have a business model that is able to deliver the best growth in the industry, which I think, a very modest risk profile, and we're in the fortunate position of having multiple drivers of that growth that'll continuously, larger banks of business more diversification. But again, we will invest appropriately for the long term in R&D and commercial infrastructure. And if you look at this business model, the largest driver of growth is our revenue growth and then operating profit of growth. And I think that's a very, very healthy situation to be in. And I think, operator, I believe we have time for one more question, please.

Operator

Our last question comes from Ryan Martins from Lazard Capital.

Ryan Martins - Lazard Capital Markets LLC, Research Division

It looks like you had a very quarter the days of this 3Q. You said you don't expect the generic for the rest of the year. But what's your thinking around 2012 in terms of a generic coming in?

Robert J. Hugin

Yes. I mean, obviously, the longer there isn't a generic filing, the better it is for us. But we are not in possession of any information that is uniquely available to us on the issue. So we continue to monitor the market closely, but again, we don't have any information that's available to us and not available to others. But we're optimistic that VIDAZA will continue to be, for at least of certain period of time, an attractive part of the revenue model...

Mark Alles

And I think the important part is as time goes by, the international footprint for VIDAZA becomes bigger and bigger, that's a big message from the quarter. And in fact, we see this brand internationally with the time and investment we're still making in it. Being a meaningful contributor despite, or if there is a generic entrant at some point.

Jacqualyn A. Fouse

Yes, and if I can just remind everybody as well that the VIDAZA incremental contribution for the full-year 2011 from the lack of a generic entrant is probably something on the order of $0.07, $0.08, $0.09, depends a little bit of what you assume for the margin on that product and the tax rate. But the incremental dollars are taxed at a higher rate in the U.S. So and if you look at a full year, it's probably more like a $0.10 to $0.12 distributor.

And with that, if I can just, maybe close off the call. I know there's a couple of people who've maybe got back into the queue for a second question. If you don't mind, we'd rather follow up with you outside of the call. So we're going to wrap the call up now, and thank you very much for your attentiveness and participation with us this morning. And we'll see you soon.

Operator

Ladies and gentlemen, this does conclude today's conference. You may now disconnect and have a wonderful day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Celgene Management Discusses Q3 2011 Results - Earnings Call Transcript
This Transcript
All Transcripts