Biogen Idec Reports First Quarter 2008 Results
-- 32% Revenue Growth --
CAMBRIDGE, Mass.--(BUSINESS WIRE)--Biogen Idec Inc. (NASDAQ: BIIB), a global biotechnology leader in the discovery, development, manufacturing, and commercialization of innovative therapies, today reported its first quarter 2008 results.
First Quarter 2008 Highlights:
“Biogen Idec delivered record revenues and outstanding financial results in the first quarter, as we more than tripled TYSABRI sales compared to the same period last year and our core products AVONEX and RITUXAN continued to generate strong sales,” said James Mullen, Biogen Idec's Chief Executive Officer. “Given the strong momentum underway and the key data readouts expected this year, the prospects for the company have never been better."
On a reported basis, calculated in accordance with GAAP, Biogen Idec reported net income of $163 million (or diluted EPS of $0.54) in the first quarter of 2008.
On a non-GAAP basis, Biogen Idec reported net income of $250 million in the first quarter of 2008. Non-GAAP diluted EPS were $0.83 for the first quarter of 2008.
The reconciling items between GAAP net income and GAAP diluted EPS and non-GAAP net income and non-GAAP diluted EPS in the first quarter, as itemized in Table 3 within this press release, were primarily as follows:
Revenues from AVONEX, one of Biogen Idec’s therapies for patients with relapsing forms of multiple sclerosis (MS), increased 19% in the first quarter to $536 million. U.S. sales increased 14% to $308 million and international sales increased 27% to $228 million.
Revenues for the first quarter of 2008 included $247 million from Biogen Idec’s joint business arrangement related to RITUXAN, a treatment for certain B-cell non-Hodgkin’s lymphomas (NHL) and rheumatoid arthritis (RA) that Biogen Idec co-promotes in the U.S. with Genentech, Inc. All U.S. sales of RITUXAN are recognized by Genentech, and Biogen Idec records its share of the pretax co-promotion profits. As reported by Genentech, U.S. net sales of RITUXAN were $605 million in the first quarter, as compared to $535 million in the first quarter of 2007.
During the first quarter of 2008, Biogen Idec recognized revenue of $115 million related to TYSABRI. This amount is comprised of:
As of the end of March 2008, approximately 26,000 patients were on commercial and clinical TYSABRI therapy worldwide. According to data available as of the end of March 2008:
Cumulatively, in the combined clinical trial and post-marketing settings:
Revenues from other products in the first quarter of 2008 were $14 million (compared to Q1 2007: $6 million). Current revenues include sales of FUMADERM® (fumaric acid esters) and ZEVALIN® (ibritumomab tiuxetan), which was sold to Cell Therapeutics in the fourth quarter of 2007.
Table 4 provides individual product revenues.
Royalties were $24 million and $23 million in the first quarter 2008 and 2007, respectively.
Share Repurchase Program
Biogen Idec repurchased 4,028,196 shares in the first quarter of 2008 under the 20 million share repurchase program authorized by Biogen Idec's Board of Directors in October 2006.
Following its strong performance, Biogen Idec raised its 2008 financial guidance:
|-- Purchase accounting charges, including amortization of acquired intangible assets and IPR&D, are estimated to be $340 million pre-tax, or approximately $0.92 per diluted share after-tax, for already completed transactions;|
|-- Stock option expense due to SFAS 123R in 2008 is estimated to be approximately $20 million pre-tax (including approximately $4 million in R&D and approximately $16 million in SG&A), or approximately $0.05 per diluted share after-tax.|
Since the Company cannot predict with certainty the nature or the amount of non-operating or unusual charges for 2008, we have made no assumptions regarding other such charges in this GAAP guidance. The Company may incur charges or realize gains in 2008 that could cause actual results to vary from this guidance.
Use of Non-GAAP Financial Measures
Our “non-GAAP net income” and “non-GAAP diluted EPS” financial measures are defined as reported, or GAAP, net income and diluted EPS excluding, for the reasons discussed below, (1) purchase accounting and merger-related adjustments, (2) stock option expense and (3) other items. We believe it is important to share these non-GAAP financial measures with shareholders as they: better represent the ongoing economics of the business, reflect how we manage the business internally and set operational goals, and form the basis of our management incentive programs. Accordingly, we believe investors’ understanding of the Company’s financial performance is enhanced as a result of our disclosing these non-GAAP financial measures. Non-GAAP net income and diluted EPS should not be viewed in isolation or as a substitute for reported, or GAAP, net income and diluted EPS.
Purchase accounting and merger-related adjustments – Non-GAAP net income and diluted EPS exclude certain purchase accounting impacts such as those related to our 2003 merger with Biogen, Inc. (the “Merger”), the acquisitions of Fumapharm AG, Conforma Therapeutics and Syntonix Pharmaceuticals, and the consolidation of Cardiokine and Neurimmune. These include charges for in-process research and development and the incremental charges related to the amortization of the acquired intangible assets. Excluding these charges allows management and investors an alternative view of our financial results “as if” the acquired intangible assets had been developed internally rather than acquired and, therefore, provides a supplemental measure of performance in which the Company’s acquired intellectual property is treated in a comparable manner to its internally developed intellectual property.
Stock option expense – Non-GAAP net income and diluted EPS exclude the impact of our stock option expense recorded in accordance with SFAS 123R. We believe that excluding the impact of expensing stock options better reflects the recurring economic characteristics of our business. We do include the P&L impact of restricted stock awards and cash incentives in our non-GAAP results.
Other items – Non-GAAP net income and diluted EPS exclude other unusual or non-recurring items that are evaluated on an individual basis. Our evaluation of whether to exclude an item for purposes of determining our non-GAAP financial measures considers both the quantitative and qualitative aspects of the item, including, among other things (i) its size and nature, (ii) whether or not it relates to our ongoing business operations, and (iii) whether or not we expect it to occur as part of our normal business on a regular basis.
The Company has reconciled the GAAP net income and diluted EPS for the three-month periods ended March 31, 2008 and 2007 to the non-GAAP measures of net income and diluted EPS in Table 3 of this press release.
Conference Call and Webcast
The Company's earnings conference call for the first quarter will be broadcast via the internet at 8:30 a.m. ET on April 23, 2008, and will be accessible through the investor relations section of Biogen Idec's homepage, http://www.biogenidec.com. Supplemental information in the form of a slide presentation will also be accessible at the same location on the internet at the time of the earnings conference call and will be available on our web site subsequently through May 31, 2008.
About Biogen Idec
Biogen Idec creates new standards of care in therapeutic areas with high unmet medical needs. Founded in 1978, Biogen Idec is a global leader in the discovery, development, manufacturing, and commercialization of innovative therapies. Patients in more than 90 countries benefit from Biogen Idec's significant products that address diseases such as lymphoma, multiple sclerosis, and rheumatoid arthritis. For product labeling, press releases and additional information about the company, please visit www.biogenidec.com.
This press release contains forward-looking statements, which appear under the heading “Financial Guidance” and “Recent Highlights” above and in the comments from James Mullen, our CEO. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from that which we expect. Important factors that could cause our actual results to differ include our continued dependence on our two principal products, AVONEX and RITUXAN, the uncertainty of success in commercializing other products including TYSABRI, the occurrence of adverse safety events with our products, the consequences of the nomination of directors for election to our Board by an activist shareholder, the failure to execute our growth strategy successfully or to compete effectively in our markets, our dependence on collaborations over which we may not always have full control, possible adverse impact of government regulation and changes in the availability of reimbursement for our products, problems with our manufacturing processes and our reliance on third parties, fluctuations in our operating results, our ability to protect our intellectual property rights and the cost of doing so, the risks of doing business internationally and the other risks and uncertainties that are described in Item 1.A. Risk Factors in our reports on Form 10-K and Form 10-Q and in other periodic and current reports we file with the SEC. These forward-looking statements speak only as of the date of this press release, and we do not undertake any obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise.
Biogen Idec and its directors, executive officers and other members of its management and employees may be deemed to be participants in the solicitation of proxies from the stockholders of Biogen Idec in connection with the Company’s 2008 annual meeting of stockholders. On April 18, 2008, Biogen Idec filed a preliminary proxy statement with the Securities and Exchange Commission (the “SEC”) and will file a definitive proxy statement and other materials concerning the proposals to be presented at the Company’s 2008 annual meeting. Information concerning the interests of participants in the solicitation of proxies is included in the proxy statement. THE PROXY STATEMENT CONTAINS IMPORTANT INFORMATION ABOUT BIOGEN IDEC AND THE 2008 ANNUAL MEETING OF STOCKHOLDERS. Biogen Idec’s stockholders are advised to read carefully the proxy statement, and any amendments or supplements thereto, and other materials filed by Biogen Idec in connection with the Company’s 2008 annual meeting of stockholders, when available, before making any voting or investment decision. The Company’s proxy statement and other materials, as well as the annual, quarterly and special reports filed with the SEC, when available, can be obtained free of charge at the SEC’s web site at www.sec.gov or from Biogen Idec at www.biogenidec.com. The Company’s definitive proxy statement and other materials will also be available for free by writing to Biogen Idec Inc., 14 Cambridge Center, Cambridge, MA 02142 or by contacting our proxy solicitor, Innisfree M&A Incorporated, by toll-free telephone at (877) 750-5836 or by e-mail at firstname.lastname@example.org.
Biogen Idec Inc.
|March 31, 2008|
|Consolidated Statements of Income|
|(in thousands, except per share amounts)|
|Three Months Ended|
|Unconsolidated joint business||247,223||207,164|
|COST AND EXPENSES|
|Cost of sales||100,934||81,950|
|Research and development||258,232||191,449|
|Selling, general and administrative||215,829||188,061|
|Amortization of acquired intangible assets||74,781||59,920|
|Collaboration profit (loss) sharing||21,406||(5,567||)|
|Acquired in-process research and development||25,000||18,405|
|Total cost and expenses||696,182||534,218|
|Income from operations||246,004||181,692|
|Other income, net||370||21,702|
|INCOME BEFORE INCOME TAXES||246,374||203,394|
|BASIC EARNINGS PER SHARE||$||0.55||$||0.39|
|DILUTED EARNINGS PER SHARE||$||0.54||$||0.38|
|SHARES USED IN CALCULATING:|
|BASIC EARNINGS PER SHARE||296,171||340,310|
|DILUTED EARNINGS PER SHARE||299,500||344,058|
|Biogen Idec Inc.|
|March 31, 2008|
|Condensed Consolidated Balance Sheets|
|Cash, cash equivalents and marketable securities||$||845,418||$||979,070|
|Cash collateral received for loaned securities||124,693||208,209|
|Accounts receivable, net||451,480||392,646|
|Other current assets||340,731||350,062|
|Total current assets||2,140,475||2,368,407|
|Property and equipment, net||1,581,664||1,497,383|
|Intangible assets, net||2,421,255||2,492,354|
|Investments and other assets||212,540||201,028|
|LIABILITIES AND SHAREHOLDERS' EQUITY|
|Collateral payable on loaned securities||$||124,693||$||208,209|
|Other current liabilities||569,638||469,831|
|Long-term deferred tax liability||523,392||521,525|
|Other long-term liabilities||346,933||331,977|
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY||$||8,170,653||$||8,628,815|
|Biogen Idec Inc.|
|March 31, 2008|
|Condensed Consolidated Statements of Income - Non-GAAP|
|(in millions, except per share amounts)|
|Three Months Ended|
|EARNINGS PER SHARE||2008||2007|
|GAAP earnings per share - Diluted||$||0.54||$||0.38|
|Adjustment to net income (as detailed below)||0.29||0.21|
|Non-GAAP earnings per share - Diluted||$||0.83||$||0.59|
|An itemized reconciliation between net income on a GAAP basis and net income on a non-GAAP basis is as follows:|
|GAAP net income||$||163.1||$||131.5|
|R&D: Stock option expense||2.7||3.0|
|R&D: FIN 46 consolidations of Cardiokine and Neurimmune||0.8||-|
|SG&A: Stock option expense||3.1||6.1|
|Amortization of acquired intangible assets||74.8||59.9|
In-process research and development related to the contingent consideration payment in 2008 associated with Conforma acquisition and the acquisition of Syntonix in 2007
|Other income, net: FIN 46 consolidations of Cardiokine and Neurimmune||(0.8||)||-|
|Income taxes: Income tax effect of reconciling items||(18.4||)||(16.6||)|
|Non-GAAP net income||$||250.3||$||202.4|
|Biogen Idec Inc.|
|March 31, 2008|
|Three Months Ended|
|Total product revenues||$||665,070||$||484,388|