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Executives

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

Mark Alles -

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

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

Ying Huang - Barclays Capital, Research Division

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

Charles C. Duncan - JMP Securities LLC, Research Division

Rachel L. McMinn - BofA Merrill Lynch, Research Division

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

Matthew Roden - UBS Investment Bank, Research Division

Eric Schmidt - Cowen and Company, LLC, Research Division

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

Yaron Werber - Citigroup Inc, Research Division

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

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

Thomas Wei - Jefferies & Company, Inc., Research Division

M. Ian Somaiya - Piper Jaffray Companies, Research Division

Gene Mack - Mizuho Securities USA Inc., Research Division

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

Celgene (CELG) Q4 2011 Earnings Call January 26, 2012 9:00 AM ET

Operator

Hello, and welcome to the Celgene Fourth Quarter and Full Year 2011 Earnings Call. [Operator Instructions] As a reminder, today's conference call is being recorded. Now I'll turn the call over to your host, Patrick Flanigan, VP of Investor Relations. Please go ahead.

Patrick E. Flanigan III

Thanks, Alli, and welcome, everyone, to Celgene Corporation's Fourth Quarter and Year End 2011 Earnings Conference Call. The press releases reporting our financial results and announcing the acquisition of Avila Therapeutics [in addition to the presentation for today's webcast can be accessed by going to the Investor Relations section of the corporate website at www.celgene.com.

Joining me in the room today are Bob Hugin, our Chairman and Chief Executive Officer; Jackie Fouse, our Chief Financial Officer and Mark Alles who is our Chief Commercial Officer. As a reminder, during today's call, we will be making forward-looking statements regarding our financial outlook, our regulatory and product development plan, and any acquisition. 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 filings with the SEC. These statements speak only as of today's date, and we undertake no duty to update or revise them. Finally, reconciliation of the non-GAAP financial measure to the most comparable GAAP measures are available as part of the earnings release. I would now like to turn the call over to Bob Hugin.

Robert J. Hugin

Thank you, Patrick, and thank you, everyone, for joining us this morning. 2011 was an exceptionally successful year for Celgene. We achieved or exceeded major corporate objectives across all areas of the company. The results delivered in 2011 are all the more impressive as they work accomplished while simultaneously advancing key strategic initiatives that position us for sustained near- and long-term growth. Jackie and Mark will review the results and achievements of 2011 and how they position us for 2012 in a few minutes.

The financial results were outstanding. 2011 revenue, earnings and cash flow all exceeded our expectations. Our commercial teams across the globe are maximizing the potential of our products. Our regulatory, clinical and research teams significantly progressed key development and research programs, positioning us for multiple high-potential milestones in 2012. In a moment, I'll outline some of these key inflection points. But first, I'd like to review with you the acquisition that we announced this morning. We were very pleased to announce our acquisition of Avila Therapeutics, a privately held biotechnology company located in the Boston area, a company with world-class talent, an innovative and productive drug discovery team with a promising drug candidate targeted in hematology, our core area of expertise. This acquisition is fully aligned with our strategic initiative of expanding and enhancing our hematology franchise and further strengthens our global leadership position. Avila's lead drug candidate, AVL-292, an Avilomics drug discovery platform, positions Celgene to play an increasingly important role in the treatment of B-cell diseases, areas of high unmet medical need. This transaction deepens our hematology and drug discovery pipelines and creates research and development synergies with existing Celgene programs. It's an exciting combination. We expect the transaction to be completed in this first quarter and plan to absorb the additional research and development expenditures within our existing budget with no impact on our 2012 guidance. AVL-292 is a highly selective BTK inhibitor currently in Phase I development, where it is showing early signs of clinical activity as a single agent in patients with refractory chronic lymphocytic leukemia and non-Hodgkin's lymphoma. We anticipate that Phase II trials will start in the second half of this year. Importantly, we'll develop AVL-292 in combination with REVLIMID and other agents to further advance the treatment of B-cell hematological malignancies with the intention of delivering a best-in-class therapy. We're also encouraged by efficacy signals in animal models for rheumatoid arthritis and multiple sclerosis. Avila has a very productive drug discovery team, which, through their Avilomics platform, has already generated 3 drug candidates in less than 5 years. Avila's unique approach to protein silencing offers great promise to accelerate our research initiatives in both cancer and immune-inflammatory diseases.

Let me now return to 2012. 2012 has the potential to be the most transformational year for Celgene since the launch of REVLIMID in 2006. We're now beginning to capitalize on the sustained research and development investments of the past decade. We have upcoming exciting milestones across our portfolio of products and programs this year. It's our job in 2012 to continue to maximize the full global potential of REVLIMID. There are multiple important commercial, clinical and regulatory milestones during the year, including label expansion in newly diagnosed and post-transplant maintenance indications in myeloma. Our programs outside of myeloma in lymphomas and leukemia are also progressing rapidly. 2012 will be a defining year for pomalidomide. Pomalidomide is our next-generation immunomodulatory agent for heavily pretreated multiple myeloma patients. We've received fast track designation from the FDA for the treatment of relapsed/refractory myeloma, and it's our intention to submit our NDA to the FDA this quarter and our marketing application in Europe in the second quarter. These are high-priority corporate objectives. Pomalidomide has the potential to have a meaningful impact on myeloma therapy globally. One year post-integration of Abraxis, we're pleased by the progress of our global solid tumor franchise and the market prospects for ABRAXANE in metastatic breast cancer. In 2012, we look forward to FDA action on our application in first line non-small cell lung cancer. Full enrollment of our Phase III pancreatic cancer trial and data from our fully-enrolled Phase III melanoma study.

Apremilast holds the promise of a novel oral agent with a unique profile in a new therapeutic franchise for Celgene. We completed enrollment of our 5 Phase III registration studies in psoriasis and psoriatic arthritis and expect pivotal data beginning in the middle of this year. We also will initiate our Phase III study in ankylosing spondylitis this quarter and look forward to Phase II data in rheumatoid arthritis this spring, all significant milestones in realizing the potential of apremilast.

As usual, we don't have much time to discuss our deep and diverse mid-stage pipeline, but there will be numerous important milestones in this year that will position a number of these programs center stage next year. We're excited about many of these events including proof of concept data from trials with the PDA-001, our proprietary cellular therapy.

2012 was a year of many important inflection points, regulatory approvals, multiple pivotal data presentations and numerous regulatory submissions. We'll share our progress against these key milestones with you throughout the year. We're making excellent progress on key strategic initiatives and enter the year with strong momentum. 2012 promises to be an exceptional year for Celgene with the potential for truly transformational milestones. Let me now turn the call over to Jackie to review our financial results.

Jacqualyn A. Fouse

Thank you, Bob. Good morning, everyone. I'm happy to go through our financial results with you for what was a great year for Celgene. Our year-over-year total revenues grew by 34% in 2011, and both operating profit and earnings per share grew faster at 36%. This growth was volume-driven, and we will look at its components, including product detail, in just a moment. We also added shareholder value from some financial drivers, including the deployment of just over $2.2 billion in capital to share repurchases over the course of 2011. We did all of this while investing in our own internal R&D and expansion of our collaboration agreements with partners as we enhance our commitment to the research and innovations that will sustain our strong growth trajectory well into the future. The deal with Avila that you saw was announced this morning shows you our ongoing commitment to investing in innovation. Mark will cover the details of our commercial performance, and I will just say here that our commercial team executed very well across all of their main metrics.

When we look back at the past 3 years of our non-GAAP revenue performance, we see how favorably 2011 compares to the previous 2 years despite the generally challenging macro and industry environments and despite the significant issue REVLIMID faced as we navigated through and successfully concluded the Article 20 process in Europe.

Q4 year-over-year growth was very solid on an ever-increasing base and should be remembered in the context of the Abraxis acquisition in Q4 of 2010 and the early months of our launch in Japan in that quarter, both of which positively contributed to Q4 2010 growth. The lion's share of our Q4 year-over-year growth came from volume, with price and foreign exchange contributing very modestly. Obviously, the price impact in any given quarter is influenced by the timing of list price changes and price impacts are more appropriately viewed on an annual basis.

So looking at the components of our revenue growth on an annual basis, we can see that almost all of our 34% growth in 2011 was driven by volumes. The net global impact of price was negligible as declining prices in some jurisdictions, mostly across Europe, offset any positive price movements in other jurisdictions. In addition, the net impact of foreign exchange was also small as a result of our hedging strategy.

Turning to earnings per share. We grew EPS a bit faster than revenues at 36% for the year of 2011. Like revenue growth, this to compares favorably to the prior 2 years as does the strong year-over-year Q4 growth at 46%. Q4 2010 growth was below the like periods period in 2009 and 2011 as it was impacted by certain expense items associated with the Abraxis acquisition.

The quality of our earnings growth was high. Most of it came from operating income growth in the quarter, and the full year increase in EPS was entirely driven by operating income growth as the net impact of all items below operating income was negligible. The year-over-year contributions from our effective tax rate and from share count were positive and offset the negative impact of other income expense. As you will see when we discuss our 2012 guidance, we will continue to see our EPS growth driven mainly by operating profit growth. So we expect the financial drivers to remain modest, positive contributors to our P&L in the future.

Looking at the details of the sales of our products [ph], we saw very good performances from both REVLIMID and VIDAZA on a year-over-year basis for both the fourth quarter and the full year of 2011. During 2011, REVLIMID became the fifth largest global oncology product by revenues and VIDAZA grew extraordinarily well outside the U.S. We are quite pleased with the first full year performance of ABRAXANE and with the integration of Abraxis into Celgene, which is now complete. ABRAXANE ended 2011 at an annual run rate of about $420 million, and we feel good about its momentum going into 2012 and new indications to come. Mark will speak more about the details of our product results in a moment.

With respect to the split of product sales between the U.S. and international, we saw strong results around the world for our 3 major products with ABRAXANE's international rollout still in its early stages. We are very happy with the evolution of our portfolio from both a product and geographic perspective. We continue to see solid sequential total revenue growth in the fourth quarter fueled by REVLIMID and despite VIDAZA being flat globally, as was expected, given the strong buying we have from our partner in Japan in the third quarter, and despite ABRAXANE being down sequentially as the generic paclitaxel shortage was resolved, an issue we had previously highlighted as a modest benefit in Q3. Even with our larger base, our growth is strong. Now with a more diversified product and geographic portfolio, we start to see sequential growth rates, an entire range than in the past, while at the same time, our latest annual growth compares favorably with prior years. Though it is not easy to predict quarterly patterns for our revenues, we have typically seen our lowest sequential growth in the first quarter of each year, and we now have an essentially flat growth environment as we enter 2012 for VIDAZA in the U.S., given last May's loss of exclusivity. It is early in the year, but the first few weeks of 2012 are, so far, in line with our internal plan. On a sequential basis, REVLIMID performed well in the fourth quarter of 2011 and sequentially grew at a faster rate in total revenues with growth accelerating slightly from a Q3 that came in on the heels of a strong Q2 growth. With total REVLIMID sales now over $3.2 billion globally, we are both happy with its fast success and with its current momentum as we finished 2011 well and anticipate another good year in 2012 with our guidance REVLIMID growth at 19%.

Sequential growth in the latter half of 2010 was positively impacted by the launch of REVLIMID in Japan, and we completed a very successful full year of operations in that country during 2011. We're viewing the key line items in our P&L, and these are best looked at on a full year basis. We saw leverage in both our cost of goods, saw an improvement in gross margins and in SG&A expense with this ladder coming despite Abraxis' integration costs incurred during 2011. I'll talk a bit more about SG&A in a moment when we talk about our 2012 guidance.

R&D expense went up slightly as a percentage of revenue versus 2010 but was generally in line with our expectations. Q4 R&D expense included a $20 million payment to Agios, made to extend the term of our collaboration agreement with them. We drove non-GAAP operating profit margin improvement of 80 basis points in 2011 even with the integration of Abraxis and during the year, in which we had a number of milestone payments that flowed through R&D expense. Finally, at 18.4%, our effective tax rate improved by 60 basis points versus 2010.

Since 2008, the Celgene business model has produced the operating leverage we should see in our P&L, and our operating margin now exceeds 45%. I'll speak more about this trend when I cover our 2012 guidance, but we'll say that it is a trend we expect to continue in the future.

We generated strong cash from operations during 2011 exceeding $1.8 billion. During the year, we entered into new R&D collaborations and strengthened or expanded existing ones, and we used just under $400 million of our cash in the context of these agreements [ph]. In addition, we returned over $2.0 billion to shareholders via share repurchases as we dynamically manage our capital structure and seek to optimize our capital deployment over time. Our business is not highly capital insensitive, and we spent just about $130 million in capital expenditures during 2011, including the impact of Abraxis. As you have seen, we announced the acquisition of Avila this morning, and we are very excited about the strategic nature of this asset within the Celgene portfolio. With respect to the financial terms of the transaction, we expect to close during the first quarter of this year, and at that time, we will make a payment to Avila shareholders of $350 million. In the future, we may make additional payments to those shareholders contingent on a meeting of various development and regulatory milestones related both the lead compound in Avila's pipeline, AVL-292, and to future compounds that may come out of Avila's technology platform. Though bringing this early-stage asset into the overall Celgene R&D project portfolio does come with incremental expense, we plan to prioritize our spending and leverage our business model to deliver on the 2012 earnings guidance we announced back on January 9.

So having a look at that 2012 guidance, I'll reaffirm the high-level revenue guidance midpoint growth of 15% in a range of $5.4 billion to $5.6 billion, and the REVLIMID revenue guidance midpoint growth of 19% in a range of $3.75 billion to $3.85 billion. I'll also reaffirm our fully diluted earnings per share guidance midpoint growth of 25%, now including the Avila acquisition, in the range of $4.70 to $4.80 with a constant share count assumed from year end 2011 through 2012. Giving you more detail behind our high-level guidance, we expect R&D as a percentage of revenue to be about 25% with a growth rate in 2012 at about 10% slower than revenue growth. R&D expense in 2011 included a number of milestone payments that influenced 2011 growth and the comparison to 2012. We have many late stage clinical trials that will have their data readouts in 2012, and our R&D expense reflects that activity and our preparations for multiple regulatory filings. It also includes the addition of Avila to our R&D platform. We expect SG&A for the full year 2012 to be around 21% of revenue as we remain disciplined with expense growth and as we come out of 2011 having absorbed the integration of Abraxis.

Finally, we expect a modest positive evolution of our effective tax rate down to a range of 17.5% to 18% versus the 18.4% of 2011. To summarize, the main drivers of our growth in 2011 were operational as revenues were driven by strong volume growth and earnings by operating income growth. This operational growth was complemented by added value from financial management. Celgene performed well in 2011 across all of our key operating and financial metrics, and we have strong momentum and a great business model as we move into 2012. And in addition, we have invested to build an industry-leading research and development capability that supports a robust pipeline of projects that will sustain our strong growth for many years to come. Thank you, and I will now turn the call over to Mark.

Mark Alles

Thank you, Jackie. Good morning, everyone. As Bob and Jackie outlined, our global teams combined to produce excellent fourth quarter and full year 2011 results. We are particularly pleased with the operating results driven by our global commercial team, and I'd like to offer our perspective on their success. Despite weak global economies and generally challenging market conditions, non-GAAP total net product sales grew 34% from a multibillion dollar base in 2010. Full year 2011 REVLIMID sales grew 30% to $3.2 billion, establishing the brand as the fifth largest global oncology product by dollar sales. The significant majority of REVLIMID sales are from -- and growth are from therapeutic use in global relapsed/refractory multiple myeloma markets, leaving tremendous untapped clinical and commercial potential in newly diagnosed myeloma, chronic lymphocytic leukemia, lymphomas and all risk classifications of myelodysplastic syndromes. Our strategic and tactical product acquisitions from the past several years produced significant results in 2011. Combined sales of VIDAZA, ABRAXANE and ISTODAX exceeded $1 billion. Of course, these products are components of our plan to establish multiple hematologic disease franchises in myeloma, NDS, CLL, lymphomas and a global solid tumor cancer franchise. We have always known that we have outstanding global teams capable of managing any challenge, but the early 2011 emergence of second primary malignancy as a business and regulatory priority demonstrated our ability to manage unexpected events and still deliver better-than-expected results. The affirmation by the final European Commission report on the positive overall benefit risk profile for REVLIMID in relapsed/refractory multiple myeloma is a strong measure of the clinical, statistical and regulatory data provided to more fully characterize the product profile. We exit 2011 and begin 2012 with an expanding base of physician experience treating patients and conducting innovative research with our in-line therapies. In meeting after meeting with physicians, top research groups and payers in all major markets, it is obvious that global customer confidence in our brands is very strong.

In 2011, this market confidence led to the treatment of approximately 175,000 patients with at least 1 Celgene product. The continuous flow of new clinical data and our strong commercial execution positions REVLIMID and VIDAZA as global leading brands in multiple myeloma and high-risk MDS, respectively. We are advancing ABRAXANE in metastatic breast cancer, preparing for U.S. launch in non-small cell lung cancer, evaluating the commercial potential in lung cancer across multiple international markets, and we expect near-term clinical results from Phase III studies in pancreatic cancer and metastatic melanoma. The ongoing U.S. commercial launch of ISTODAX for relapsed or refractory peripheral T-cell lymphoma is generating a meaningful Celgene presence in the global lymphoma market and provides excellent preparation for the first REVLIMID indication in lymphoma, mantle cell lymphoma. We expect results from our Special Protocol Assessment trial MCL-001 later this year and anticipate filing in the U.S. by the end of the year. Fourth quarter 2011 REVLIMID sales were $855 million, 4% quarter-over-quarter growth and 20% year-over-year growth. In the U.S. and Europe, fourth quarter overall and line 2 myeloma market shares remain consistent and strong. Total prescription volume from increased duration was an important growth component and will be a major clinical and commercial priority through 2012. We expected continued market share gains in the second line settings in all of our major markets and in newer markets by Japan and completely new markets such as Russia, Brazil, Korea and China. We realized excellent launch momentum for REVLIMID in Japan in the fourth quarter and have high expectations for growth this year. The marketing and eventual market access approvals in Europe for REVLIMID in newly diagnosed multiple myeloma and maintenance remains on-track and is a major driver of future growth. In the U.S., the major growth drivers in 2012 are continued increases in duration of therapy and increased market share. We are pleased to have received confirmation that the results of our pivotal registration trial, MM-015, have been accepted for publication in a future addition of the New England Journal of Medicine.

Fourth quarter 2011 VIDAZA sales were $189 million. Sequential quarterly sales were essentially flat, but year-over-year growth was 34%. Full year 2011 sales exceeded $700 million reflecting year-over-year growth of 32%. The lack of a generic entrant in the U.S. and our commercial launch momentum in new markets across Europe, in Canada, Japan, Australia and in Argentina combined to produce excellent results. As reported at ASH, multiple strategies for VIDAZA and REVLIMID are being advanced in a series of combination studies in high-risk MDS and acute myeloma leukemia. The development of oral azacitidine remains a very high priority program and is on track with the expected initiation of a Phase III trial in lower-risk MDS later this year.

Our clinical, commercial and regulatory strategies for ABRAXANE have never been clearer, selectively demonstrating improved efficacy in traditional taxane indications and developing compelling data in indications where taxanes historically have had very limited patient benefit. In breast cancer and lung cancer, this means generating evidence in specific subsets of patients defined by stage, histology and certain prognostic features like HER2 status. In pancreatic cancer melanoma, we expect results of Phase III trials later this year. With positive data, we will rapidly pursue global regulatory filings and expect significant commercial opportunities.

During the first half of 2011, we focused on integration activities and our commercial platform for ABRAXANE. Total sales during this period were $169 million. Total second half 2011 ABRAXANE sales improved to $218 million, a 29% growth rate over the first half. While we continue to optimize operating leverage across our teams, this year will be one of the most important and potentially transformative periods for our hematology and solid tumor franchises. We are in advanced stages of commercial planning for REVLIMID approvals in new markets like China and for an anticipated approval in newly diagnosed myeloma in Europe. Expanding global access to VIDAZA and REVLIMID in MDS will expand our leadership and drive international sales growth. And we are positioning ISTODAX for multiple market approvals for relapsed or refractory peripheral T-cell lymphoma. Commercializing ABRAXANE for metastatic breast cancer in existing and several new markets while we prepare for pancreatic and melanoma results make 2012 a critical year for this novel product. Plans for the potential introduction of pomalidomide for patients with heavily pretreated relapsed/refractory multiple myeloma are being accelerated into this quarter. We expect 2012 to be another very strong year for Celgene. Thank you very much, and I'd like to turn the call back to Bob Hugin.

Robert J. Hugin

Thank you, Mark, and thank you, Jackie. 2011 was an exceptional year for Celgene, as we delivered excellent operating results and advanced the key programs that position Celgene for sustained growth. Superior performance does not happen by accident. I want to thank all of my colleagues at Celgene for their dedication and commitment in producing these outstanding 2011 results and for the results that we anticipate in 2012. Our 2012 catalysts for growth are the result of a decade of focused intensive investment in research and development. We have numerous value inflection points this year that have the potential to improve patients' lives across multiple therapeutic areas and to transform Celgene. This will be an incredibly exciting and pivotal year for Celgene. Let me close by welcoming the Avila team to Celgene. We're now an even stronger organization, a combined team committed to producing exceptional results and discovering and develop -- and delivering breakthrough therapies for patients in need. Thank you for joining us this morning, and we look forward to updating you as we progress throughout the year. Operator, now let's open the call to questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Jim Birchenough of BMO Capital.

Jim Birchenough - BMO Capital Markets U.S.

Question just on the U.S. dynamics for REVLIMID. We haven't got an update in terms of things like market share and duration of dosing. I'm just wondering if you could maybe characterize the sequential growth we saw year-over-year and how much of that was driven by category growth, duration growth and market share growth? And just as a follow-on, in the post-transplant setting, how far penetrated are we in that market segment in the U.S.?

Mark Alles

Sure. This is Mark Alles. So thanks for the question about U.S. dynamics. So market share overall has been consistent and strong. So we haven't seen a huge dynamic change in share, but that reflects the brand adoption across all segments of myeloma. The components of improvement really are led by duration of therapy gains, which have been strong, market share secondly, and then the expanding market base that REVLIMID is being used in, in myeloma. So things like expanding the use of maintenance therapy generally, those kind of things. And we see those continuing to 2012.

Operator

Our next question comes from Geoffrey Porges of Bernstein.

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

I just want to follow-up on understanding what's really going on in the myeloma market, Mark. You seem -- the penetration seems to -- trajectory seems to have flattened, and I'm wondering if you could give us a sense of how much incremental penetration you think that you could achieve, both in first line and penetration for maintenance, if you get the label in the U.S. because certainly there's been a lot of scrutiny of off-label promotion.

Mark Alles

No -- again, thanks for the question, I appreciate that. So at a macro level, of course, we have a lot of opportunity around the world for significant growth in the myeloma market. So I want to make that statement first. In the U.S. in particular, again, duration of therapy is a major component of the improved performance of the brand and there's no question that we still look for the approval in newly diagnosed multiple myeloma as an induction maintenance regimen because this is really how, on a share basis, an absolute share basis, the market will expand and REVLIMID's prospects in that expanding market in induction and in maintenance would be driven. So we really look for the label and a lot of the other elements of geographic expansion to drive the U.S. Remember, we have a product, and as Bob outlined, it launched in 2006. And yet from a dynamic point of view, we still have the untapped potential of a true commercial presentation to the market in newly diagnosed myeloma, and we think the data from 015, the 2 maintenance trials that all of you know so well, will be a compellingly way to expand the prospects for the product in upfront and other segments of newly diagnosed myeloma. So absolute points of share remain to be seen, but still very, very strong opportunity.

Jacqualyn A. Fouse

Pat [ph], one of the other things just to keep an eye on this, the great thing about where we are now with the geographic portfolio is you've got different trajectory for the different components that drive the growth, and so in markets where we're in the early stages of launches of REVLIMID, or any other product for that matter, you've got steeper trajectories on shares, and then you get the duration of treatment contribution taking up a relatively greater contribution later. And so now that portfolio and new indications coming along starting the whole process over again in the different geographies and making your way through that makes for quite a powerful future portfolio geographically for REVLIMID, and with its new indication.

Robert J. Hugin

I don't think we're higher than mid-single digits, really any place in the world in newly diagnosed myeloma outside the United States.

Mark Alles

That's exactly right, and that really refers to the traditional induction setting. When we think of maintenance as an add on to the population with newly diagnosed disease, that's another dynamic element that would establish a better growth profile than we even expect.

Operator

Our next question comes from Yaron Werber of Citi.

Yaron Werber - Citigroup Inc, Research Division

So the question's for Mark and Jackie, and just maybe be give us a little bit of sense, I guess it's a 2-part question, and I apologize for that. One, what are you seeing in France? I mean, the understanding is that you're seeing sort of $30 million to $50 million roughly headwind in France last year, and is that turning the corner already driven by the upcoming publication of the ISN study and the -- it seems like IFM is getting more comfortable as they added a second year of maintenance in the IFM study. And then second, in the guidance for REVLIMID, are you including Brazil, Russia and China, or is that upside?

Jacqualyn A. Fouse

Yaron, it's Jackie. So what we've said in France is that, given everything that went on in that market over the course of the year, it was the market that was probably most relatively affected by the second primary malignancy issue, and it certainly impacted the growth trajectory. And what we've said is that had that market grown in line with our original expectations, we would have been in a different place in terms of the trajectory today, and the impact of that could have been something more or less in the $30 million to $50 million range that you highlighted. The beauty again of the portfolio is that we had other things that, to some extent, made up for that. So you saw the very strong performance of REVLIMID on an annual basis globally over the course of 2011. And as we move into 2012, post the very positive data from ASH and other things that are going on, we feel like France actually is an opportunity given how we've come out of 2011 and that over time, France will make its way back to the trajectory that we were on that would lead us to where we think it can go in the future over a longer period of time. And I'll let Mark maybe take up the rest of the question.

Mark Alles

So the other -- there were 2 other parts, China, Russia and then the IFM being a fiber protocol. So let me start with the protocol. The 2 dynamic organizations, DFCI, IFM, continue to discuss absolute duration, and it's largely unresolved at this point. But we think that, that will be an ongoing discussion in this important trial. I do know that the dynamic in terms of confidence in the reality, the duration in and of itself, is linked to second primary malignancies, that, that has largely been resolved. The protocol, of course, being a secondary issue in terms of maintenance duration. In the markets, Brazil, China and Russia, of course, these are markets with, we think, tremendous potential, and their high corporate priorities for us to gain approval market access. In the case of Russia and China, China would be later this year for sure because even if it does happen, so I think the question I heard was is there upside? The upside would only come if we realized a sooner-than-expected FFDA [ph] approval in China. Russia is really linked to when reimbursement happens, which could be, again, some upside depending on the timing in the year, and that is built into our forecast. And then for Brazil, we continue to work with the regulatory authorities for full approval of REVLIMID and myeloma while we work on market access in the private payer market and seek to get public reimbursement. So Brazil could have some upside, depending on the dynamics there. I think all 3 markets in our outlook over the next 2 years are much more 2013 events versus 2012 events.

Operator

Our next question comes from Matt Roden of UBS.

Matthew Roden - UBS Investment Bank, Research Division

Congrats to everyone involved on the Avila transaction. Just a question along those lines. So can you talk, Bob, what was essential to your interest in Avila? What is more about gaining expertise in covalent chemistry or was it more about the specific product candidates? And related to that, what are your thoughts on differentiation of 292 vis-à-vis competition in the BTK space? And then lastly, more generally, can you comment on where you are in terms of your acquisitive appetite? You still have solid tumors and information platforms that you can leverage, and obviously, Avila doesn't constrain you from doing more in larger deals if you wanted to.

Robert J. Hugin

Thanks, Matt. The Avila transaction at its basis is multiple factors involved in us supporting this decision to really strengthen our hematology franchise. And I think 292 is an important consideration there. It is showing exciting early promise. It fits where we're going, and it has not yet been fully explored in a wide range of indications. So I think the synergies will get in terms of bringing our clinical expertise and our focus in hematology to fully making 292 the best-in-class BTK inhibitor in a wide range of combinations in different therapies is a very important driver, but it's only part of it. I think that the Avila platform in terms of its productivity in producing 3 product candidates here in a very, very short period of time is very encouraging about what we can do and how we can now have a Boston presence in the synergies with our existing program was also a very, very important consideration. So it fit right in the wheel house. We thought it was the right thing to do. The synergies with research, we can do it in a financial way that will have no impact on our bottom line guidance for the year. So we're very excited about the promise of it. We've got a lot of work to do to fully capitalize on its potential, but it was certainly important for 292, but it was not the only driver. It's a nice strategic fit for us. And high-quality people that we will really, we think, will help energize our organization.

Jacqualyn A. Fouse

And just with respect maybe to the appetite for future acquisitions. I think, Matt, one of the ways that we've talked about that for a while now is that we always want to be out there looking for potentially transformative technologies or assets. As Bob said, best-in-class top assets are what we would like to have that can be complementary to our internal capabilities and fit well within the portfolio, and it could very well be that those will be of a fairly modest size. So what you saw happen with the Avila transaction I think is very descriptive of that approach, and we'll continue to be looking out for great assets like that where we can find them.

Operator

Our next question comes from Sapna Srivastava of Goldman Sachs.

Sapna Srivastava - Goldman Sachs Group Inc., Research Division

And secondly, Jackie, just some questions and clarification of REVLIMID. The first question, I want to understand what Japan -- when did it really kick in, in terms of growth in 2011? And secondly, also just your current cuts on share buybacks as how you're thinking about the rate of share buybacks going forward, looking look at this year's trajectory, how should we think about it going forward?

Jacqualyn A. Fouse

Sapna, thanks for the question. So, yes, I mean, we saw continuous good momentum in Japan over the course of the first full year of operations in that country in 2011. I would say that it accelerated somewhat in the second half of the year, and particularly we were quite happy with the momentum that we saw in Japan in the fourth quarter, and we feel very good about where we're going with that in 2011. So we would characterize that as accelerating momentum over the course of last year. With respect to the philosophy on share repurchases, you've heard me say multiple times, and the company say, that we will manage our capital structure dynamically. We've got very strong cash flow generation. We're in the fortunate position to where we're starting to hit the sweet spot of our business model and really move into the early innings of what that business model can do. So we've got a great growth model with great profitability, strong cash flow generation. So we can do all of these strategic business development deals that we think are important for us to do to sustain our long-term growth trajectory and continue to optimize our capital structure over time with the right balance between return funds to shareholders and investing in our internal R&D portfolio and all the rest. So you will see us continue to do that.

Operator

Our next question comes from Chris Raymond of Robert Baird.

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

Just the question of pomalidomide. You're talking about the decision to file this quarter or so, coming up over the next couple of months, seemingly. Can you maybe describe or give a little bit of color on discussions with FDA? Is it your sense that they've decided that a panel is a prerequisite accelerated approval?

Robert J. Hugin

Chris, pomalidomide is a big, important objective for us in 2012. But I don't think we're comfortable discussing specific discussions with regulatory agencies in the public domain. But clearly, we wouldn't be moving forward if we didn't feel we had a reasonable chance for success. And I do think outside of pomalidomide, it is -- would not be unexpected to see advisory committee hearings when you do have accelerated-type of applications. So I think as a general rule, you're going to -- I would expect to see when you do have these Phase II applications, if companies are fortunate enough and products are fortunate enough to have their applications accepted that you would see the FDA seek guidance on it, but that's not a comment specifically on pomalidomide.

Operator

Our next question comes from Geoff Meacham of JPMorgan.

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

So assuming that you guys are approved for first line use of REVLIMID in Europe, you'll obviously have to go through reimbursement discussions. So my question is, one, what do you think the speed of these discussions will be given that you're already approved in relapsed/refractory? And two, you'll have a longer duration of therapy, clearly; would you anticipate initially or at some point having to make any price concessions with longer durations?

Robert J. Hugin

Geoff, and Mark will add-on in a minute, the reimbursement of REVLIMID has been one of the strongest aspects of the performance of the drug over these past number of years. The value proposition has been one that is extremely well-received by physicians, by patients and by payers, and therefore, has created the opportunity for us. And so the value proposition is extremely important, extremely valuable. So I think that -- and it's not something that is a one-shot deal. It is a conversation and a discussion with payers around the world and multiple, multiple payers within countries. So there isn't one negotiation that takes place. And it needs to be a very constructive, thoughtful, proactive discussion on multiple fronts again and across the world with different payers. And there will be different strategies. I don't think you will hear one strategy for REVLIMID as we expand the label to this indication, and hopefully, to smoldering eventually and to CLL and different lymphomas, et cetera, will force us to make sure that we maximize the value of proposition and can articulate that benefit to payers and patients alike. So again, I don't think you're going to see a simple answer to us being able to expand the value proposition as we expand the label. They're going to be intensive discussions and negotiations, going to end up with different solutions in different markets within the same country. And so I think it will take some time. But we're very excited about the opportunity it provides for us to really expand the patient access to REVLIMID.

Mark Alles

The only thing I could add to that, because that's exactly the right description of the environment, is, one, the timing of everything on an absolute basis is difficult to put together. So we look at this year and our outlook, and the potential for some early reimbursement lends to be rather modest. And then '13 going into even '14 upside from reimbursement success. I'll just finish my answer by telling you that, as a corporate priority, working even on the success space we have to build expertise across the company in markets and across the global platform for market access and reimbursement excellence is a high priority. And we've invested even now in more expertise, more opportunity to plan for success.

Operator

Our next question comes from Eric Schmidt of Cowen & Company.

Eric Schmidt - Cowen and Company, LLC, Research Division

In the past, you've been quite optimistic for, or actually even confident for, frontline approval and maintenance approval out of Europe. I'm just wondering what the response is now into the EMEA, whether that's still the case and whether we should still sort of think April is the right timeline to hear back?

Robert J. Hugin

Yes, Eric, it's Bob. There's absolutely no change in our outlook as to the importance of this data and the opportunity for it. So, I mean, obviously, we're not going to get into a specific discussion, but there is no change to our tone and our optimism in any way, shape or form. This is a very important therapy for patients, and we're progressing in a very constructive way in the discussions with the regulatory agencies. And I don't think the timeline has changed for us. We're looking forward to action in the second quarter of this year.

Operator

Our next question comes from Mark Schoenebaum of ISI.

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

Maybe a question for Mark. I was just wondering what your perspective on the recent blood article was authored by some of the International Myeloma Working Group members was. And then also could you help us quantify just in general terms the commercial opportunity in Europe in the first-line setting, in the transplant eligible setting and then in the transplant non-eligible setting? Maybe to break down, is it 60-40, 70-30, something like that to guide us? And then just quickly, any updates on the timing of the next 020 interim?

Mark Alles

Mark, the first part of your question was a perspective on the IMWG consensus paper, and broadly speaking, we understand and are aligned with a lot of what is in that paper. We have, through our medical affairs team, through our clinical research group, have been working with the IMWG membership on a number of platforms in the current environment, future research platforms, and Celgene, for the last decade, has been aligned with the myeloma thought leaders. So broadly speaking, there's nothing in that statement that we think of as dynamically changing the way the myeloma algorithm for treatment existed or exists following that statement. I think there are some substantial debates in myeloma today about -- because of the chronic nature of the disease now, you see such prolonged periods of progression-free survival. The question scientifically, clinically, of overall survival is a very, very large debate amongst thought leaders who have to build guidelines and clinical trial platforms. So I think my commentary would be, that is probably the inflection point for a lot of academic discussion going forward. Do we do studies of novel agents in combination in the upfront setting, in the relapse setting, where PSS or OS would be the primary outcome we're looking for. So I think would be my commentary on top of what's happening. I think with respect to the market opportunity of transplant eligible, non-transplant eligible, and we can put it into the categories of young and old patients, we've thought of Europe as being a marketplace where it's less likely that elderly patients who are good fit patients would go to transplant, so we've split the market into about a kind of a 40%, transplant eligible; 60%, non-eligible, where the U.S. is much more of a kind of 50-50 market for eligible young patients. But in terms of the opportunity, the most important thing is to understand that REVLIMID is being built for all segments. We have the MM-020 trial, which, of course, is continuing to mature. And the readout for Rev/Dex in that study would position it in young and old patients. The study is predominantly a non-transplant eligible population, but of course, Rev/Dex is not stem cell toxic. So if we win in that trial, this becomes the standard of care in multiple segments. Of course, MM-015 is an elderly non-transplant eligible induction regimen. But what we like about the study is the follow-on after-best [ph] response of single agent REVLIMID maintenance. So again, in induction, whether we're talking about young or old patients and then maintaining best response, we have data that supports the use of REVLIMID in multiple combinations irrespective of the stage, the setting, the intent to transplant or not. I think that's an important thing to understand. We're building a data evidence package that takes some of these questions about treatment algorithms off the table.

Operator

Our next question comes from Brian Abrahams of Wells Fargo Securities.

Brian Abrahams - Wells Fargo Securities, LLC, Research Division

We noticed that ABRAXANE sales looks pretty flat in the U.S. quarter-over-quarter. I'm just wondering if you're seeing any impact on prescribing patterns from the CALGB breast cancer study that was stopped, recognizing that, that trial obviously didn't completely overlap with the current indication. And then separately, what -- when does your guidance assume a generic VIDAZA entrance this year?

Jacqualyn A. Fouse

Brian, first, and I'll let Mark elaborate, but we haven't seen any impact from that CALGB study, which was not our study. I'll let Mark elaborate a little bit more on that. The biggest thing that you see is in the difference between Q3 and Q4 for ABRAXANE in the U.S., and I believe that we talked about this in the Q3 call as well, was the -- we know that we benefited somewhat. It's hard to calculate exactly how much that is, but maybe something on the order of $8 million to $10 million from the generic paclitaxel shortage back in Q3. I think we had said that we thought it was in the mid- to high-single digits. In fact, when we look back on that, that's what we think. And we saw that shortage essentially resolved in Q4 in the U.S. So that's the single biggest difference. And then maybe I'll let Mark talk about the CALGB study specifically.

Mark Alles

Brian, it's Mark. The CALGB study, of course, everyone knows, was really testing Avastin across 3 combination strategies with paclitaxel Avastin as the base combination of control. The hope was that Avastin would make a meaningful difference in the treatment of metastatic breast cancer. Of course, we understand the dynamic of multiple data sets with Avastin leading to the replication of the label by FDA. Where I think this is going is it really puts the overall paradigm for treating metastatic breast cancer back to the basics. That is single-agent palliative therapy with drugs like ABRAXANE for HER2 negative patients has been a standard, and I would see this continuing into the future. We need to be a little bit patient here to see if there's any, let's say, market impact. But so far, it's been more of an academic clinical research, what do we do next discussion versus it translating into those segments of the market that truly use ABRAXANE as a strong palliative drug for women with this disease. So it remains to be seen a little bit. But my view, our view, is that it's more of an academic discussion than it is a market discussion right now.

Jacqualyn A. Fouse

Maybe 30 seconds on global revenues, just because you will notice now that we're giving you the international U.S. breakdown of ABRAXANE that the international revenues are going to be not in an orderly pattern yet. Because we're in the early stages of launches of that product in various jurisdictions around the world, so you'll see choppiness there. And I think that, that from a future standpoint is an area of great opportunity for us as we get the product continued to rollout internationally, and we'll eventually see a little bit more stable trajectory in total for the international revenues. But you'll see it choppy for the time being.

Robert J. Hugin

And, Bryan, the only thing we've said about VIDAZA is that if we were to see a generic entrant in the U.S. in the second half of the year, we would be able to absorb that in our earnings outlook and guidance for the year.

Operator

Our next question comes from Rachel McMinn of Bank of America.

Rachel L. McMinn - BofA Merrill Lynch, Research Division

Just a quick question on MM-020. You've given a sense of timing, but because we're talking about an interim analysis, can you give us a sense on how you're thinking about filing? Assuming that data is positive, do you need to wait for that trial to mature more extensively before it could be part of a label expansion strategy? And then a quick question [indiscernible] assuming you're Phase II program is successful, how would your commercial investment there impact future operating margins? Is that going to be consistent with your hemog [ph] model?

Mark Alles

Rachel, it's Mark. Of course Bob and/or Jackie could address those questions as well, but I'll speak little bit to MM-020. Of course, the trial fully accrued a little bit more than 1 year ago. And so from an event-driven basis, one could expect in this year that there would be at least one planned interim analysis. So I think the timing is something in 2012. So exactly what that timing is remains to be seen because it is event-driven. There is a very, very robust, defined statistical analyst plan -- analysis plan. So then the follow-on to that is the need for the potential label expansion that comes from Rev/Dex. And in fact, your question is actually a statement of fact. We would absolutely look to expand the global label for REVLIMID following the global approval of what we expect would be MPR-R from the 015 trial and then the maintenance from the 2 CALGB and IFM studies that everyone is familiar with. So it is a gated regulatory approach on the back of what we expect as positive data from 020. So we would see a '12, '13 window for regulatory approvals on the current data set followed immediately by what we would expect to be label expansion with Rev/Dex. And I don't think that these are conflicting strategies. As I said, Rev/Dex could become induction for a more elderly population or a frail population where an MTR induction in that elderly group, 65 to 75, that may be a preferred subset coming out of the label. So I think it's multiple strategies all built on a comprehensive regulatory clinical program, which would then ultimately position REVLIMID, irrespective of novel therapy or existing treatment trends, to be the backbone of newly diagnosed myeloma.

Jacqualyn A. Fouse

And I think just from a timing standpoint, the company has always said that we would expect that data readout at a high level could be maybe in the second half of the year, possibly midyear. And we'll just see how it goes with respect to the occurrence of events and then the maturing of the data.

Robert J. Hugin

And then related to apremilast. The team here has done a great job in preparing for the data and the potential commercial implications of the data. So multiple scenarios are being planned, and with different strategies for different geographies and different indications. I think it's fair to say a couple of things. First, that we have to see the data, and the data will be very determinative into what our strategies are. We're obviously optimistic that we'll see positive results. But it's near-term now, and we're very excited about 2012 in terms of what this data could do for patients and for Celgene with apremilast. I think the philosophy that we take to is that as a company, it has to fit our philosophy and strategy as we go forward. And I think the indications that are treated by specialist, and we can go out and access without extensive general practice-type sales forces are the indications and geographies that we would look to retain ourselves. Again, depending on the data. And if we are successful in broader indications that require broader sales forces, et cetera, beyond specialty forces, we'd likely look for partners. And there potentially will be geographies, even with very strong data, that we may decide that based on the dynamics of certain markets, we may look for partners there also. So I think the clear guidance we have is, it's the data that will determine our strategy. We're well-prepared would multiple scenarios, how we'll go forward, and we do think the specialty areas will be great areas for us to -- as a company, to expand into the right geographies.

Jacqualyn A. Fouse

And just when you think about our 2012 guidance and the outlook that we've given for 2015, we have made some provision in those forecast for our best guess of commercial investments that we might need to make along the way. So there's something already baked in there for that.

Operator

Our next question comes from Thomas Wei of Jefferies.

Thomas Wei - Jefferies & Company, Inc., Research Division

I just wanted to go back to this question of REVLIMID overall market penetration in the U.S. It seems like one of the easiest ways to grow share beyond 52% would be to leverage the whole concept of REVLIMID with a protease inhibitor [indiscernible] and show that REV something over and above veldox alone [ph]. But I guess I'm curious, it doesn't seem to be a very high priority in your list of studies or even among cooperatives. I was just wondering if you could help me understand a little bit more why. Is that because you think the Phase II data are strong enough or IFM DFCI is good enough, even though the competitor there isn't [indiscernible] or is it that you're waiting for the protease inhibitors to shake out and see which one ends up being the market leader? Any sort of context there would be helpful.

Mark Alles

Tom, this is Mark. Thanks for the question. I think you raised a couple of really important concepts or themes starting with how does the overall market for myeloma patients grow, the treatable population, et cetera? So let me just take 1 minute and walk through a couple of things that, I think, would give you more confidence that we're not leaving any stone unturned to get to optimal REVLIMID performance. First, remember the patina [ph] group has had a readout multiple times now with survival in a smoldering population. The NCCN guidelines now have adopted REVLIMID in that setting and actually called up high-risk patients with smoldering disease who would be candidates for Rev/Dex. It's not part of any label, but this is the earliest possible stage for an expansion of treatable patients around the world. The second thing is, I really like you're positioning of REV as the backbone, but I want to be sure that we go through a couple of things. First of all, the U.S. cooperative groups, as well as Dana-Farber IFM have advanced the strategy quite far with REV, Velcade, dex. So it will be in the [ph] proteasome inhibitor with a steroid. SWOG 777 is a trial of RVD versus RD. That's been on ongoing for, I want to say around 2 years. I couldn't give you the exact accrual today, but that study will ultimately have a readout of RVD versus RD. The other study, of course, we talked about already on this call is the Dana-Farber IFM RVD where then the patients get randomized to continue with RVD or go to transplant, and both arms get maintenance. So that's an important study. Let's take it one step further. MM-020 in its core is testing RD against a melphalan-based regimen, MPT. So there are 3 or 4 examples. The other example I need to offer is that the marketplace is following your advice. If one looks at the oral proteasome inhibitor from Millennium that's in development, and many, many academics are excited about it, it's development is with REVLIMID. So we have partnered with Millennium to be able to develop their next-generation oral. You know that carfilzomib's development program for confirmatory studies in the U.S. and in Europe are with REVLIMID. So the CRD or RCD regimen is very far along and is the basis for confirming the regulatory approval of that proteasome inhibitor. And the last example is elotuzumab, the antibody that is highly active in combination with Rev/Dex, and the Bristol-Myers Squibb platform is once again a Rev/Dex plus/minus elotuzumab backbone. So I think the market will grow, and I think irrespective of any novel agent and how that would change some of the interim dynamics, it would be on the REV backbone.

Operator

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

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

In regards to the Avila transaction, maybe you could spread [ph] very quickly some high-level points about how it differentiates from competition? And also a comment maybe on the IP landscape there?

Robert J. Hugin

Yes, thanks. Obviously, we have signed the deal. We have not yet closed. We've done extensive diligence. We feel very comfortable of the IP position with it. In terms of competition, clearly accelerating the clinical development is a high priority for us both as a single agent where it started today but also in combination with REV and other therapies. So -- and different geographies and different indications. So speed to market is very important to us, but most importantly, find the right combination, find the right indications and produce the best data both from a safety and efficacy point of view. And we're confident that over time, that this drug will be the best-in-class BTK inhibitor. But it's worked -- but it takes time for us to do that, and as we make -- as we progress both with the clinical plan in any parts of the development, we'll keep you informed throughout the calls incurred [ph].

Operator

Our next question comes from Gene Mack of Mizuho.

Gene Mack - Mizuho Securities USA Inc., Research Division

Two quick ones really. Just in terms of REVLIMID and kind of overall guidance, one of the things I found helpful in the past was that you used to speak about the split of revenues between U.S. and Europe as being -- currently, it's still in the sort of 40% to 60% breakdown. And then over time, I think it was by 2015, maybe that's a little bit pushed out now because there's was a stall out last year on the SPM issued with that. That number was supposed to sort of flip flop around. And I'm just wondering how, Mark and Jackie, if can comment on how you're thinking about longer term, if that sort of 40% to 60% Europe to U.S. split is going to still continue to kind of come closer together and then obviously flip flop around. And then also just, Mark, if you could just give us a clear definition of the second line setting that you described early on in the prepared remarks in terms of greater penetration exactly how you're defining second line.

Jacqualyn A. Fouse

Gene, thanks for the question. So with respect to the U.S. international split, we continue to see that trend moving in the direction that we have all along. So we would expect international sales fueled by all geographies including some of the new ones that are going to come into the mix and be greater contributors many years out, than they are now. The growth rates there should be quite strong. So we continue to see that mix between U.S. and international from a percentage of the total standpoint shift over the future in favor of international. When we actually get to the point where we have the flip and things like that, I don't know. But I would expect 3 to 5 years from now, we could very well have the international fees flipping. It will depend on the timing of new indications and different things, but it's all quite positive in terms of the trajectory for all of international and the emerging markets and then in the U.S., with continued contribution from duration of treatment and new indications in the future. And I'll hand it over to Mark, maybe, for the other part of your question.

Mark Alles

Gene, the question about defining second line. Generally speaking, we look at the second line market through our internal data and market research and then a lot of the external source data that is available to the broader audience. It's after induction with or without the use of autologous stem cell transportation. So that's how we look at the marketplace, and we specifically carve out maintenance as a different segment.

Jacqualyn A. Fouse

If I just may quickly say, we know there are quite a few people still in the queue for questions; we're starting to run a little bit short of time. So we're going to take just a few more questions. We may not get to everybody in the queue. So if we could, maybe keep it concise on the questions and move ahead through. We're just going to take a few more, but we may not get to you all. We'll follow up with you after this individually.

Operator

Our next question comes from Mike King of Rodman & Renshaw.

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

Can you just talk about -- I hate to start thinking about limits to growth, but the margins have been so spectacular, both above the line and on the operating line that where can they ultimately go to? I would think that there's maybe a number in your guys mind that where you get to, you're not going to be able to squeeze much more juice out of that lemon. I'm just wondering what you're thinking about margins in that effect.

Jacqualyn A. Fouse

No end in sight for the moment to margin improvement. So I think we talked about the 2012 guidance and included that we expect the operating margin to move up to the 47% to 48% range. We finished 2011 just a little bit over 45%. I think if you triangulate back to some of the details that we gave you behind the 2012 guidance, you see how we get there. And then when you go back to the 2015 high-level guidance that we've given and maybe take your models out from where we were in '11 and we we'll be in 2012 and go beyond that, you get to operating margins that are somewhere in the 52%, 53%, 54% range, and there's a lot of different assumptions that can get you to some different margins that might even be a bit better than that. So a lot of this is also going to depend on the timing of future approvals and different things. We're on a faster, better trajectory than we thought we would be, and beyond 2016 is, we don't know how that's going to look yet because there's a lot of things going on. It could be -- continue to be a very exciting margin enhancement story, but let's see when we get there. Between now and 2015, I have no doubt that we'll see continuously improving operating profit margins.

Operator

Our next question comes from Charles Duncan of JMP Securities.

Charles C. Duncan - JMP Securities LLC, Research Division

With regard to Japanese dynamics, I'm wondering if you can give us a little bit more color on REVLIMID revenue there and growth in 2012 that you'd anticipate?

Mark Alles

Thanks, Charles, for the question. It's Mark, and again, my colleagues will jump in here. Japan is a strategically and operationally critical market for us. So as a priority of opportunity, our teams are very, very focused on it. There are number of dynamics that I think maybe we don't talk enough about. We do some very elegant research that's unique to the Japanese market. So for example, there is an epidemiologic difference in lymphomas and leukemias where in Japan, APL is a type of disease where we're doing pivotal study in a Japanese population with that form of cancer. That's moving along nicely. Japan is participating in many of our global studies so that we can limit the burden of all the bridging studies that traditionally have to be done in unique Japanese population. So pomalidomide and mielofibrosis, pomalidomide in relapse refractory myeloma. These are things that we try to add on and make sure that Japan is dynamically involved. From a core operating perspective, there are number of things about the Japanese market that are more behind us, giving us a lot of optimism for the future. I think everyone knows the safety obsession, and I think it's quite important in the Japanese market, where the risk management environment for our brands is a, believe it or not, a notch more intense. And we've just finished a very important pharmacovigilance safety approach that happens during the launch phase of all oncolytic drugs. So we are now in a position where, for example, a prescription can be written for the full 21-day out of 28-day course of therapy, when in the past, there was a limitation on the absolute number of days per prescription. So these are the kinds of underlying dynamics between thought leader management research, market execution and then the way the regulatory environment post-marketing is helping us that gives us a lot of confidence going into '12. There are some of the normal procedures that happen on our reimbursement, and we'll navigate through that this year with Japanese regulators. But I think coming out of Q4, we're very bullish on what we think will happen in Japan overall in 2012 and for multiple years to come.

Operator

Our next question comes from Ian Somaiya of Piper Jaffray.

M. Ian Somaiya - Piper Jaffray Companies, Research Division

Just a question for Mark. I was just hoping to get your thoughts on the approval of sub-Q Velcade, what impact that might have on the marketplace? And if you could share with us what the current usage is of the combination in first line, second line?

Mark Alles

To clarify the second part of the question, the combination, meaning RVD?

M. Ian Somaiya - Piper Jaffray Companies, Research Division

REV, Velcade and whether it would be dex or something else?

Mark Alles

Right. REV, Velcade [indiscernible] So the sub-Q approval for Velcade is following a long development cycle that looked to reduce the neurotoxicity of this agent in the market. One of the steps that came before sub-Q is a fairly broad use of weekly Velcade that was able to reduce the dose intensity, which kept responses pretty good but reduced neurotoxicity. So I think this progression to a sub-Q formulation has been important for the brand. We don't see that as a major difference in the overall product profile, although, remember, Velcade is approved in first line or newly diagnosed myeloma. And so I think incrementally, this probably improves the profile a bit. But this is why on a comparative basis, we are expanding our program to be more looking towards improved outcome and progression-free survival, multiple combinations. And in the bigger picture, we need an approval of newly diagnosed myeloma to really take this on as a direct commercial comparison, and we'll get there. I think with respect to RVD, we have seen some flattening of the growth rate of RVD overall. Some of you may remember that historically, last year or so, we've seen that as a regimen that was gaining a lot of favor, and it was very, very fast-growing. So I think right now, we're seeing somewhere in the mid-teens in terms of overall use of RVD, and when it is used, it is exclusively used as induction.

Operator

Our final question comes from Ying Huang of Barclays Capital.

Ying Huang - Barclays Capital, Research Division

Can you share a few thoughts on the potential EMEA division on the label? Do you think they'll have some age restriction language based on the survival data we saw at ASH last December?

Robert J. Hugin

Yes, obviously as we mentioned earlier, we're in the middle of those discussions in that review process. So we'll see what happens. But certainly, it's our expectation that we've talked about all along since the data was made available that our expectation is that the benefit of the label and what's in there will be a result of the data in the package, and clearly, there are certain patient categories that have the most benefit, and those are the ones that we would expect that would be highlighted in the overall -- how we would actually present the product to the marketplace. So I do think the label and the whole package will reflect the data that's in there, and I think that's pretty clearly well understood. And I do think, as Mark pointed out earlier, the New England Journal of Medicine article on MM-015 will really highlight the importance of this therapy to the myeloma regimen of practice in treating myeloma patients. So we're very encouraged, and we're very excited about that.

Jacqualyn A. Fouse

And just a few -- if we go back and take what Mark presented in our event at ASH in terms of the segmentation of the market, if you want to do that kind of analysis and match it up with the data that is in the regulatory package, you can then get your own idea about what you think the commercial opportunities are in the different segments. And I think you're going to find them to be very attractive supported by the data in the package. And with that, I think that was our last question. Again, apologies for anybody we didn't through in the queue. We will follow up with you afterwards. We're trying to cover everybody in the long list of questions that we get. Thank you very much for spending this much time with us today, and we will speak with you soon.

Operator

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

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