FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark one)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 30, 1998
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________to _____________
Commission File Number 0-16132
CELGENE CORPORATION
-------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 22-2711928
- ---------------------------------------- ----------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
7 Powder Horn Drive, Warren, NJ 07059
- ---------------------------------------- ----------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 732-271-1001.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes _x_ No ___
At July 31, 1998, 16,210,646 shares of Common Stock par value $.01 per share,
were outstanding.
<PAGE>
CELGENE CORPORATION
INDEX TO FORM 10-Q
Page No.
PART I FINANCIAL INFORMATION
Item I Unaudited Condensed Financial Statements
Condensed Balance Sheets as of
June 30, 1998 (unaudited)
and December 31, 1997 3
Condensed Statements of
Operations - Six-month Periods Ended
June 30, 1998 and 1997 (unaudited) 4
Condensed Statements of
Operations - Three-month Periods Ended
June 30, 1998 and 1997 (unaudited) 5
Condensed Statements of
Cash Flows - Six-month Periods Ended
June 30, 1998 and 1997 (unaudited) 6
Notes to Unaudited Condensed Financial
Statements 8
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
Item 3 Quantitative and Qualitative disclosures about 15
Market Risk
PART II OTHER INFORMATION 16
Signatures
<PAGE>
CELGENE CORPORATION
CONDENSED BALANCE SHEETS
PART I - FINANCIAL INFORMATION
Item 1 - Condensed Financial Statements
<TABLE>
<CAPTION>
ASSETS June 30,1998 Dec. 31, 1997
------------- -------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 5,470,458 $ 13,583,445
Marketable securities available for sale 4,638,813 --
Accounts receivable 2,500 1,430,384
Other current assets 557,668 353,266
Assets held for disposal -- 485,170
------------- -------------
Total current assets 10,669,439 15,852,265
Plant and equipment, net 2,193,779 2,286,024
Other assets 79,167 79,167
------------- -------------
Total assets $ 12,942,385 $ 18,217,456
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,573,787 $ 842,262
Accrued expenses 1,797,728 1,388,933
Capitalized lease obligations 138,637 210,499
------------- -------------
Total current liabilities 4,510,152 2,441,694
Capitalized lease obligation-net of
current portion 151,013 350,670
------------- -------------
Total liabilities 4,661,165 2,792,364
------------- -------------
Stockholders' equity:
Preferred stock, $.01 par value per share
5,000,000 shares authorized; Series A
convertible, redeemable, cumulative
preferred; none outstanding at June
30,1998 and 74 shares issued and
outstanding at December 31, 1997 , plus
$329,455 accretion premium -- 4,029,455
Common stock, $.01 par value per share
30,000,000 shares authorized at June
30,1998 and 20,000,000 shares
authorized at December 31,1997; issued
and outstanding 16,148,947 and
15,427,949 shares at June 30,1998 and
December 31,1997, respectively 161,489 154,279
Common stock in treasury, at cost - none
at June 30,1998 and 22,888 at December
31,1997. -- (76,535)
Additional paid-in capital 136,336,922 130,838,433
Accumulated deficit (128,217,191) (119,520,540)
------------- -------------
Total stockholders' equity 8,281,220 15,425,092
------------- -------------
Total liabilities and stockholders' equity $ 12,942,385 $ 18,217,456
============= =============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
CELGENE CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Six Month Period Ended June 30,
-------------------------------
1998 1997
------------- -------------
<S> <C> <C>
Revenues:
Research contracts $ 80,000 $ 523,082
============= =============
Expenses:
Research and development 8,730,570 8,520,606
Selling, general and administrative 7,331,158 3,367,138
------------- -------------
Total Expenses 16,061,728 11,887,744
Operating Loss (15,981,728) (11,364,662)
Interest income 360,838 342,781
Interest expense 6,106 94,489
------------- -------------
Loss from continuing operations (15,626,996) (11,116,370)
Discontinued Operations: (Note 4)
Loss from operations (59,837) (339,585)
Gain on sale of chiral assets 7,014,830 --
------------- -------------
Net income (loss) (8,672,003) (11,455,955)
Accretion of premium payable on preferred
stock 24,648 316,021
Deemed dividend on preferred shares -- 59,567
Net income (loss) applicable to common ------------- -------------
shareholders $ (8,696,651) $ (11,831,543)
============= =============
Per share basic and diluted :
Loss from continuing operations $ (0.98) $ (0.99)
Discontinued operations:
Loss from operations $ (0.00) $ (0.03)
Gain on sale of chiral assets $ 0.44 $ --
Net income (loss) applicable to common
shareholders per basic share of
common stock $ (0.55) $ (1.05)
============= =============
Weighted average number of shares of
common stock outstanding 15,891,000 11,284,000
============= =============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
CELGENE CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Month Period Ended June 30,
---------------------------------
1998 1997
------------- -------------
<S> <C> <C>
Revenues:
Research contracts $ -- $ 273,083
============= =============
Expenses:
Research and development 4,790,343 4,544,851
Selling, general and administrative 4,105,243 2,080,177
------------- -------------
Total Expenses 8,895,586 6,625,028
Operating Loss (8,895,586) (6,351,945)
Interest income 110,977 134,546
Interest expense 4,742 26,110
------------- -------------
Loss from continuing operations (8,789,351) (6,243,509)
Discontinued Operations: (Note 4)
Loss from operations -- (257,081)
Gain on sale of chiral assets -- --
------------- -------------
Net income (loss) (8,789,351) (6,500,590)
Accretion of premium payable on preferred
stock -- 179,238
Deemed dividend on preferred shares -- 59,567
Net income (loss) applicable to common ------------- -------------
shareholders $ (8,789,351) $ (6,739,395)
============= =============
Per share basic and diluted :
Loss from continuing operations $ (0.55) $ (0.53)
Discontinued operations:
Loss from operations $ 0.00 $ (0.02)
Gain on sale of chiral assets $ 0.00 $ --
Net income (loss) applicable to common
shareholders per basic share of
common stock $ (0.55) $ (0.57)
============= =============
Weighted average number of shares of
common stock outstanding 16,105,000 11,766,000
============= =============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
CELGENE CORPORATION
CONDENSED STATEMENTS OF CASHFLOW
(Unaudited)
<TABLE>
<CAPTION>
Six Month Period Ended June 30,
-------------------------------
1998 1997
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Loss from continuing operations $ (15,626,996) $ (11,116,370)
Depreciation 381,508 391,243
Amortization of deferred compensation -- 1,133
Interest on convertible debentures -- 68,736
Issuance of stock award -- 55,625
Shares issued for employee benefit plans 463,606 --
Change in current assets & liabilities:
Increase in accounts payable
and accrued expenses 2,140,320 1,000,943
Decrease in accounts receivable 1,427,884 211,929
(Increase) in other assets (204,402) (45,900)
------------- -------------
Net cash used in continuing operations (11,418,080) (9,432,661)
Net cash used in discontinued operations (59,837) (1,134,282)
------------- -------------
Net cash used in operating activities (11,477,917) (10,566,943)
------------- -------------
Cash flows from investing activities:
Capital expenditures (289,263) (428,004)
Proceeds from sales and maturities of
marketable securities available for sale 4,429,673 32,036,330
Purchases of marketable securities
available for sale (9,068,486) (19,738,628)
Proceeds from sale of chiral assets 7,500,000 --
------------- -------------
Net cash provided by (used in)
investing activities 2,571,924 11,869,698
------------- -------------
Cash Flows from financing activities:
Costs related to secondary public offering (73,136) --
Net proceeds from exercise of common stock
options 1,137,661 12,695
Redemption of Series A preferred stock -- (721,292)
Net proceeds from sale of preferred stock -- 4,840,748
Capital lease buyout (271,519) --
------------- -------------
Net cash provided by financing activities 793,006 4,132,151
------------- -------------
Net (decrease) increase in cash and cash
equivalents (8,112,987) 5,434,906
Cash and cash equivalents at beginning
of period 13,583,445 922,961
------------- -------------
Cash and cash equivalents at end of period $ 5,470,458 $ 6,357,867
============= =============
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
CELGENE CORPORATION
CONDENSED STATEMENTS OF CASHFLOW (continued)
(Unaudited)
<TABLE>
<CAPTION>
Six Month Period Ended June 30,
-------------------------------
1998 1997
------------- -------------
<S> <C> <C>
Non - cash financing activities:
Issuance of common stock upon the conversion
of Series A convertible preferred stock and
accretion thereon, net $ 4,054,103 $ 7,066,057
============= =============
Accretion of premium payable on preferred
stock and warrants $ 24,648 $ 316,021
============= =============
Accretion of deemed dividend and warrants on
Series B preferred stock $ -- $ 59,567
============= =============
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
CELGENE CORPORATION
Notes to Unaudited Condensed Financial Statements
June 30, 1998
1. Basis of Presentation
The unaudited condensed financial statements have been prepared from the
books and records of Celgene Corporation (the "Company") in accordance
with generally accepted accounting principles for interim financial
information pursuant to Rule 10-01 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting only of normal
recurring accruals) considered necessary for a fair presentation have been
included. Interim results may not be indicative of the results that may be
expected for the year.
The interim condensed financial statements should be read in conjunction
with the financial statements and notes thereto included in the Company's
latest annual report on Form 10K.
2. Series A. Convertible A Preferred Stock
The Series A Convertible Preferred Stock ("Preferred Stock"), plus
accretion at a rate of 4.9% per year, is convertible into common stock of
the Company at the option of the holders thereof at a conversion price per
share of common stock equal, generally, to the lesser of (i) $18.81 or
(ii) 90% of the average closing price per share of the common stock for
the seven trading days immediately prior to the date of conversion.
As of February 23, 1998, all 503 shares of the Series A Preferred Stock,
with their respective accretion, had been converted or redeemed into
3,342, 202 shares of common stock. Through February 23, 1998 the Company
had accrued $1,420,770 representing accretion of the premium on the
Preferred Stock.
3. Series B Convertible Preferred Stock
Under the terms of a private placement with Chancellor LGT Asset
Management, Inc. ("Chancellor") entered into on June 9, 1997, the Company
is obligated to issue warrants to Chancellor to acquire a number of shares
of Common Stock equal to (i) 1,500,000 divided by the Conversion Price
($6.50 at June 30, 1998) in effect on the issuance date (230,769 warrants
as of June 30, 1998) plus (ii) 37.5% of the conversion shares issuable on
such issuance date upon conversion of all shares of Series B Preferred
Stock issued through the issuance date (288,461 warrants as of June 30,
1998). All such warrants will have a term of four years from the issuance
date and an exercise price equal to 115% of the Conversion Price in effect
on the issuance date.
8
<PAGE>
4. Marketable Securities Available for Sale
Marketable securities available for sale at June 30, 1998 include debt
securities with maturities ranging from August, 1998 to March, 1999. A
summary of marketable securities at June 30, 1998 is as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Unrealized Unrealized Fair
Cost Gain Loss Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Commercial
Paper $3,634,513 $ -- $ -- $3,634,513
Corporate Bonds 1,004,300 -- -- 1,004,300
---------- ---------- ---------- ----------
Total $4,638,813 $ -- $ -- $4,638,813
========== ========== ========== ==========
</TABLE>
5. Discontinued Operations
On January 9, 1998, the Company sold its chiral intermediates business to
Cambrex Corporation for approximately $15.0 million. The terms of the
agreement provided for the sale of chiral assets of approximately $485,000
for proceeds of $7.5 million on the contract date plus future royalties
with a present value not exceeding $7.5 million, with certain minimum
royalty payments in the third through sixth year following the closing of
the transaction. Included in the transaction are the rights to the
Company's enzymatic technology for the production of chirally pure
intermediates for the pharmaceutical industry, including the current
pipeline of third party products and the equipment and personnel
associated with the business.
6. New Accounting Pronouncement
Effective January 1, 1998, the Company adopted Statement of Financial
Standards (SFAS) No. 130, "Reporting Comprehensive Income". This statement
establishes standards for reporting and display of comprehensive income,
which consists of all changes in equity from non-shareholder sources.
Prior year financial statements conform to the requirements of SFAS
No. 130
Comprehensive income includes net income and other comprehensive income
which refers to those revenues, expenses, gains and losses which are
excluded from net income. Other comprehensive income includes unrealized
gains and losses on marketable securities classified as
available-for-sale, which prior to adoption were reported separately in
shareholders' equity.
<TABLE>
<CAPTION>
Three Months ended
------------------------------
June 30, 1998 June 30, 1997
------------- -------------
<S> <C> <C>
Net Loss $ (8,789,351) $ (6,739,395)
Other Comprehensive Income -- 266
------------ ------------
Total Comprehensive Loss $ (8,789,351) $ (6,739,129)
============ ============
9
<PAGE>
Six Months ended
-----------------------------
June 30, 1998 June 30, 1997
------------- -------------
Net Loss $ (8,696,651) $(11,831,543)
Other Comprehensive Loss -- (5,670)
------------ ------------
Total Comprehensive Loss $ (8,696,651) $(11,837,213)
============ ============
</TABLE>
In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities", was issued and is effective for financial statements
beginning January 1, 2000. SFAS No. 133 requires derivative instruments to
be recognized as Assets and Liabilities and be recorded at Fair Value. The
Company is currently not party to any Derivative Instruments. Any future
transactions involving Derivative Instruments will be evaluated based on
SFAS No.133.
7. Subsequent Events
On July 16, 1998 the Company received final approval from the U.S. food
and Drug Administration (FDA) to market and sell Thalomid (thalidomide)
for the treatment of erythema nodosum leprosum (ENL), a severe and
debilitating condition associated with leprosy. Thalomid is the Company's
first product approved for commercialization.
On July 2, 1998, the Company closed on a license and distribution
agreement with Biovail Corporation International granting Biovail
exclusive Canadian marketing rights for d-methylphenidate hydrochloride
(d-MPH) which is being developed by Celgene. The drug is a chirally pure
version of dl-MPH, also known as Ritalin(R). Under the terms of the
agreement, Biovail purchased $2.5 million of Celgene stock for $12.52 per
share, a 25% premium to the market price on that date. Celgene will also
receive licensing fees and royalties.
10
<PAGE>
Part 1 - Financial Information
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
- ---------------------
Six month period ended June 30, 1998 vs.
Six month period ended June 30,1997
- -----------------------------------
Total Revenues. The Company's total revenues for the six months ended June
30, 1998 decreased significantly to approximately $80,000 from approximately
$523,000 in the same period of 1997. Revenue for the period in both years was
entirely from research contracts. The decrease in revenue in 1998 was primarily
due to the completion of a research contract with BASF in December 1997.
Research and development expenses. Research and development expenses
increased slightly, to $8.7 million in 1998 from $8.5 million in the same period
in 1997. The increase was due to increased spending for university research
programs (approximately $636,000), primarily with The University of Glasgow and
Rockefeller University, offset by a decrease in Preclinical Toxicology
(approximately $436,000), as research projects involving Thalomid, SelCIDs, and
d-methylphenidate advanced from preclinical to clinical trial status.
Selling, general and administrative expenses. Selling, general and
administrative expenses for the six months ended June 30, 1998 increased by 118%
to approximately $7.3 million from $3.4 million in the same period of 1997. The
increase is attributable to $3.0 million of expenses for the formation of a
sales and marketing organization and related activities and $0.5 million of
expenses to establish a Medical Affairs and Drug Safety department, both in
anticipation of the commercial launch of Thalomid which was approved by the FDA
on July 16, 1998.
Interest income and expense. Interest income for the first six months of
1998 increased 5% to approximately $361,000 from $343,000 in the same period of
1997. The increase was due to higher average cash balances in 1998. Interest
expense decreased to approximately $6,000 from $94,000 in 1997. The decrease was
due to the conversion to equity of all of the 8% convertible debentures by mid
1997.
Net loss from continuing operations. The net loss from continuing
operations for the period ended June 30, 1998 increased by 40% to $15.6 million
from $11.1 million in the same period of
11
<PAGE>
1997. The increase was due primarily to the increased spending on the sales and
marketing organization and the Medical Affairs department as described above.
Discontinued operations. The net loss from discontinued operations
decreased significantly in the first six months of 1998 to approximately $60,000
from $340,000 in the same period of 1997. The decrease was due to the sale of
the Chiral Intermediates business on January 9, 1998. The $60,000 loss in 1998
represents expenses for the nine day period preceding the sale. The loss in 1997
represents revenues of approximately $872,000 offset by expenses of $1,212,000
for the discontinued operations.
Three month period ended June 30, 1998 vs.
Three month period ended June 30, 1997
- --------------------------------------
Total Revenues. The company received no revenues during the second quarter
1998. Revenues during the same period in 1997 totaled approximately $273,000.
The revenues were primarily from a research contract with BASF which was
completed in December 1997.
Research and development expenses. Research and development expenses for
the second quarter 1998 were up slightly to approximately $4.8 million from $4.5
million an increase of approximately 6%. The increase in spending was due to an
increase in consulting fees incurred in connection with Regulatory matters
(approximately $229,000), and an increase in university research programs
(approximately $314,000), primarily with the University of Glasgow, offset in
part by a decrease in preclinical toxicology (approximately $338,000), as
research projects involving Thalomid, SelCIDs, and d-methylphenidate advanced
from preclinical to clinical trial status. All other research and development
expenses increased by approximately $100,000.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased by 97% to approximately $4.1 million in the
second quarter 1998 versus $2.1 million during the same period in 1997. The
increase was primarily in sales and marketing ($1.5 million), as a full sales
staff was added and marketing activities were increased, and the Medical Affairs
and Drug Safety Department was expanded ($300,000), both in preparation for the
approval and commercial launch of Thalomid. All other selling, general and
administrative expenses increased approximately $200,000.
Interest income and expense. Interest income decreased slightly in the
second quarter 1998 versus the same period in
12
<PAGE>
1997, to approximately $111,000 from $135,000, due to lower average cash
balances. Interest expense decreased to approximately $5,000 from $26,000 due to
the conversion to equity of all of the 8% convertible debentures by mid 1997.
Net loss from continuing operations. The net loss from continuing
operations for the second quarter 1998 increased 41% over the same period in
1997 to approximately $8.8 million from $6.2 million. The increased loss was due
primarily to the increase in sales and marketing and Medical Affairs as
described above.
Discontinued Operations. There was no discontinued operation activity in
the second quarter of 1998 as the chiral intermediate business was sold on
January 9, 1998. Discontinued operations in the second quarter 1997 of
approximately $257,000 consisted of revenues of $367,000 offset by expenses of
$624,000.
Liquidity and Capital Resources. Since inception, the Company has financed
its working capital requirements primarily through private and public sales of
its debt and equity securities, income earned on the investment of the proceeds
from the sale of such securities, and revenues from research contracts and
product sales from certain businesses which the company has since sold. The
Company has raised approximately $99.0 million in net proceeds from three public
and three private offerings, including its initial public offering in July 1987.
The Company's net working capital at June 30, 1998 was $6.2 million versus
$13.4 at December 31, 1997. The decrease was attributable to a decrease in cash
and marketable securities of $3.5 million, a decrease in accounts receivable of
$1.4 million and an increase in accounts payable of $1.7 million. Assets held
for disposal of $485,000 at December 31, 1997 represented the net assets of the
chiral intermediate business pending sale. Net working capital consisted
principally of cash, cash equivalents, and marketable securities, accounts
receivable and accounts payable.
The Company expects that its rate of spending will increase as the result
of increased clinical trial costs and expenses associated with the regulatory
approval process and commercialization of products now in development. In order
to assure funding for the Company's future operations, the Company will seek
additional capital resources. The Company is currently considering partnering
options and other financing sources. However, no assurances can be given that
the Company will be successful in raising additional capital on terms acceptable
to it. In June Celgene signed a license and distribution agreement
13
<PAGE>
with Biovail Laboratories granting exclusive distribution rights in Canada to
Biovail for d-methylphenidate. In early July, Biovail purchased $2.5 million of
Celgene's stock at a 25% premium to the market price. The agreement calls for
certain milestone payments, the first of which is expected to be received in the
fourth quarter of this year pending commencement of a pivotal clinical trial. On
July 16, 1998, Celgene received approval from the FDA to market Thalomid
(thalidomide). Revenues from the sale of Thalomid are anticipated in the fourth
quarter.
Year 2000 Computer Systems Compliance - Many older computer software
programs refer to years in terms of their final two digits only. Such programs
may interpret the year 2000 to mean the year 1900 instead. If not corrected,
those programs could cause date-related transaction failures.
During the first six months of 1998, the Company has replaced all personal
computers, with the exception of several computers connected to laboratory
analytic equipment, with Year 2000 compliant machines. All office applications
and the Adverse Event Reporting software are year 2000 Compliant. During the
quarter ended June 30, 1998, the Company purchased and installed a new Year 2000
compliant financial system software package, including general ledger and
accounts payable. Effective July 1, 1998, the Company has gone live with the new
system. The Company is confident that by year end 1998, all critical systems and
software will have been addressed. As to the date critical nature of the
laboratory computers, an assessment will be complete with a plan to replace
those machines if necessary by early 1999. Additional costs to correct Year 2000
problems are not expected to be material. Based on current plans and efforts to
date, the Company expects that there will be no material adverse effect on
operations. There is no guarantee, however, that all problems will be foreseen
and corrected, that Year 2000 problems at the Company's suppliers, customers,
and at governmental agencies will not adversely affect the Company, or that no
material disruption of the Company's business will occur as a result of Year
2000 problems.
Cautionary Statements for Forward Looking Information
- -----------------------------------------------------
The Management's Discussion and Analysis of Financial Condition and
results of Operations provided above contains certain forward-looking statements
which involve known and unknown risks, delays, uncertainties and other factors
not under the Company's control which may cause actual results, performance are
achievements of the Company to be materially different from the
14
<PAGE>
results, performance or other expectations implied by these forward looking
statements. These factors include results of current or pending clinical trials,
actions by the FDA and those factors detailed in the company's filings with the
Securities and Exchange Commission.
Part I - Financial Information
Item 3 - Quantitative and qualitative disclosures about Market Risk
The Company currently does not use derivative financial instruments. The
warrants associated with the issuance of the Company's Series B Preferred Stock
currently have a conversion price of $7.48 which is based on 115% of a defined
conversion price which is currently $6.50. The conversion price can be reset if
the stock price were to fall below $6.50. Once the warrants are issued, the
conversion price can no longer be reset.
15
<PAGE>
PART II - OTHER INFORMATION
Item 1. - None
Item 2. - None
Item 3. - None
Item 4.- Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Stockholders on June 23, 1998. At this
meeting stockholders of the Company were asked to vote for the election of
directors, and act upon the proposals, (1) to approve an amendment to the
Company's Certificate of Incorporation to increase the number of shares of the
Company's authorized Common Stock, $.01 par value per share, from 20,000,000
shares to 30,000,000 million shares; (2) to approve the Celgene Corporation 1998
Long Term Incentive Plan, which authorizes 1,500,000 shares available for stock
options; and (3) to consider and act upon a proposal to confirm the appointment
of KPMG Peat Marwick LLP as the independent certified public accountants of the
Company for the current fiscal year. All nominated directors were elected, the
proposal to increase the authorized shares was approved and the proposal
regarding the appointment of auditors was approved. The vote on the proposal to
approve the 1998 Long Term Incentive Plan was adjourned to July 23, 1998 and was
approved at the reconvened meeting. The election of directors and the various
proposals were approved by the following votes:
A. Election of Directors:
Name Number of Shares
---- -----------------------------------------
For Withheld Abstained
---------- -------- ---------
John W. Jackson 14,134,097 78,414 --
Sol J. Barer 14,133,736 78,775 --
Frank T. Cary 14,135,497 77,014 --
Richard C. E. Morgan 14,136,497 76,014 --
Walter L. Robb 14,136,497 76,014 --
Lee J. Schroeder 14,134,097 78,414 --
Arthur Hull Hayes, Jr 14,134,097 78,414 --
Gila Kaplan 14,136,497 76,014 --
Jack L. Bowman 14,136,497 76,014 --
B. Adoption of amendment to increase authorized shares:
Name Number of Shares
---- -----------------------------------------
For Withheld Abstained
---------- -------- ---------
13,564,376 554,883 93,252
16
<PAGE>
C. Approval of 1998 Long Term Incentive Plan:
(July 23, 1998)
Name Number of Shares
---- -----------------------------------------
For Withheld Abstained
---------- -------- ---------
8,410,405 1,753,828 171,879
D. Appointment of Auditors:
Name Number of Shares
---- -----------------------------------------
For Withheld Abstained
---------- -------- ---------
14,119,617 41,795 51,099
Item 5.-- Other Information:
a) On July 16, 1998 the Company received final approval from the U.S. Food
and Drug Administration (FDA) to market and sell Thalomid (thalidomide)
for the treatment of erythema nodosum leprosum (ENL), a severe and
debilitating condition associated with leprosy. Thalomid is the Company's
first product approved for commercialization.
b) On July 2, 1998, the Company entered into on a license and distribution
agreement with Biovail Corporation International granting Biovail
exclusive Canadian marketing rights for d-methylphenidate hydrochloride
(d-MPH) which is being developed by Celgene. The drug is a chirally pure
version of dl-MPH, also known as Ritalin(R). Under the terms of the
agreement, Biovail purchased $2.5 million of Celgene stock for $12.52 per
share, a 25% premium to the market price on that date. Celgene will also
receive licensing fees and royalties.
Item 6. Exhibits
A. 27 Financial Data Schedule - Article 5 for second quarter Form 10-Q.
B. Current report on Form 8K filed on July 22, 1998 with respect to Item 5(a).
C. Current report on Form 8K filed on July 17, 1998 with respect to Item 5(b).
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CELGENE CORPORATION
DATE August 14, 1998 BY /S/John W. Jackson
---------------------------- --------------------------------
John W. Jackson
Chairman of the Board
Chief Executive Officer
DATE August 14, 1998 BY /s/James R. Swenson
---------------------------- --------------------------------
James R. Swenson
Controller
(Chief Accounting Officer)
18
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