Biogen Idec Reports Third Quarter 2010 Results

Double Digit EPS Growth

Substantial Progress on TYSABRI® Risk Stratification

Tuesday, October 26, 2010 7:30 am EDT

Dateline:

WESTON, Mass.

Public Company Information:

NASDAQ:
BIIB
US09062X1037
"We had another solid quarter driven primarily by increased AVONEX and TYSABRI revenues"

WESTON, Mass.--(BUSINESS WIRE)--Biogen Idec Inc. (NASDAQ: BIIB), a global biotechnology leader in the discovery, development, manufacturing, and commercialization of innovative therapies, today announced its third quarter 2010 results.

Third Quarter 2010 Highlights

  • Third quarter revenues were $1.2 billion, an increase of 5% over the third quarter of 2009, driven primarily by AVONEX® (interferon beta-1a) revenues, which increased 11% to $644 million and TYSABRI® (natalizumab) revenues, which increased 7% to $221 million. RITUXAN® (rituximab) revenues decreased 9% to $258 million.
  • Global in-market net sales of TYSABRI in the third quarter of 2010 were $307 million, an increase of 9% over the third quarter of 2009, of which $151 million were in the U.S. and $156 million were in rest of world markets.
  • Third quarter 2010 GAAP diluted EPS were $1.05, an increase of 11% over the third quarter of 2009. GAAP net income attributable to Biogen Idec for the quarter was $254 million, a decrease of 8% compared to the third quarter of 2009.
  • Third quarter 2010 non-GAAP diluted EPS were $1.35, an increase of 21% over the third quarter of 2009. Non-GAAP net income attributable to Biogen Idec for the quarter was $328 million, an increase of 1% over the third quarter of 2009. A reconciliation of Biogen Idec’s GAAP to non-GAAP results is included on Table 3 within this press release.
  • Year over year comparisons are impacted by an agreement with Knopp Neurosciences. The impact of this agreement on results for the third quarter of 2010 was $86 million and $26 million on a GAAP and non-GAAP basis respectively. Additional information on this agreement may be found in the slide presentation that accompanies our third quarter earnings conference call.

As of September 30, 2010, Biogen Idec had cash, cash equivalents and marketable securities of approximately $1.4 billion.

“We had another solid quarter driven primarily by increased AVONEX and TYSABRI revenues,” said George A. Scangos, Ph.D., Chief Executive Officer, Biogen Idec, “We also continued to demonstrate our leadership position in MS with our strong showing at this year’s ECTRIMS Congress, while expanding our neurology foothold with the licensing agreement for KNS-760704 (dexpramipexole) for the treatment of ALS.”

Progress on TYSABRI Risk Stratification

The company also announced that it and its partner, Elan Corporation, plc, have made substantial progress on TYSABRI risk stratification efforts. Data presented at the 26th Congress of the European Committee for Treatment and Research in Multiple Sclerosis (ECTRIMS) further supported the potential clinical utility of an investigational assay that detects anti-JC virus (JCV) antibodies in human plasma or serum. The detection of anti-JCV antibodies may provide a means to segment, or stratify, multiple sclerosis (MS) patients considering or receiving treatment with TYSABRI and assess their risk for developing progressive multifocal leukoencephalopathy (PML), a rare, but serious, brain infection. The companies have also completed preliminary discussions with regulators in the US and Europe about these data and plan to submit labeling changes to both agencies by the first quarter of 2011.

Other Products and Royalties

Revenues from other products in the third quarter of 2010 were $12 million compared to $15 million in the third quarter of 2009.

Table 4 provides individual product revenues.

Royalty revenues were $36 million in the third quarter of 2010, compared to $35 million in the third quarter of 2009.

Corporate partner revenues were $5 million in the third quarter of 2010, versus less than $1 million in the third quarter of 2009.

Share Repurchase Programs

In April 2010, the Board approved a $1.5 billion share repurchase program. During the third quarter of 2010, Biogen Idec completed the program by repurchasing and retiring 9 million shares at a total cost of $468 million. In total, since the beginning of the year, Biogen Idec has purchased 40.3 million shares for a total cost of approximately $2.1 billion. Biogen Idec’s fully-diluted weighted average shares outstanding were approximately 242 million for the third quarter.

TYSABRI Patient Growth

Based upon data available to Biogen Idec through the TOUCH® prescribing program and other third-party sources, Biogen Idec estimates that as of the end of September 2010 approximately 55,100 patients were on commercial and clinical TYSABRI therapy worldwide, and that cumulatively approximately 75,500 patients have ever been treated with TYSABRI in the post-marketing setting.

Recent Events

  • On October 21, 2010, Biogen Idec and Genentech, Inc., a wholly owned member of the Roche Group, announced that they had agreed to amend their collaboration on antibodies targeting CD20. The companies agreed that Genentech will have responsibility for the further development of ocrelizumab in multiple sclerosis. Genentech will fund 100% of the costs going forward and will be responsible for development and commercialization. Biogen Idec will receive tiered, double-digit royalties on US sales of ocrelizumab that will approximate its current 30% interest in the compound. Further, the companies agreed that the commercialization of ocrelizumab will not impact the current profit share of RITUXAN. In addition, Biogen Idec and Genentech have agreed that Biogen Idec will increase its share of the losses and profits related to the development and commercialization of GA101 in the US to 35% from 30%.
  • On October 6, 2010, Biogen Idec announced that more than 45 company- and partner-sponsored platform and poster presentations were to be presented during the 26th ECTRIMS in Gothenburg, Sweden, October 13 - 16, 2010. ECTRIMS is the world's largest medical meeting dedicated to research and advances in multiple sclerosis. Data presented included Biogen Idec's currently marketed products, TYSABRI and AVONEX, as well as four late-stage programs: prolonged-release fampridine tablets, the oral compound BG-12 (dimethyl fumarate), PEGylated interferon beta-1a and daclizumab.
  • On August 24, 2010, Biogen Idec and Elan Corporation, plc announced data had been published in the Annals of Neurology on an investigational, two-step assay to detect anti-JCV antibodies in human serum and plasma. This assay is currently being evaluated in clinical studies as a potential tool for risk stratification in TYSABRI-treated patients. Data from this preliminary analysis have been released online and were published in the journal's September issue.
  • On August 18, 2010, Biogen Idec and Knopp Neurosciences announced they had entered into an exclusive, worldwide license agreement under which Biogen Idec will develop and commercialize KNS-760704 (dexpramipexole) for the treatment of amyotrophic lateral sclerosis (ALS), also known as Lou Gehrig's disease, and potentially other indications.

Conference Call and Webcast

Biogen Idec’s earnings conference call for the third quarter will be broadcast via the Internet at 8:30 a.m. ET on October 26, 2010, and will be accessible through the Investors section of 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 through November 30, 2010.

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 worldwide 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.

Safe Harbor

In addition to historical information, this press release contains forward-looking statements that are based on our current beliefs and expectations. These forward-looking statements may be accompanied by such words as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “will” and other words and terms of similar meaning. You should not place undue reliance on these statements. These statements involve risks and uncertainties that could cause actual results to differ materially from those reflected in such statements, including our dependence on our three principal products, AVONEX, RITUXAN and TYSABRI, the importance of TYSABRI’s sales growth, product competition, uncertainty of success in commercializing other products, the occurrence of adverse safety events with our products, changes in the availability of reimbursement for our products, problems with manufacturing processes and our reliance on third parties, our dependence on collaborations over which we may not always have full control, failure to execute our growth initiatives, failure to comply with government regulation and possible adverse impact of changes in such regulation, charges and other costs relating to our properties, fluctuations in our effective tax rate, our ability to attract and retain qualified personnel, market and economic conditions, the risks of doing business internationally, our ability to protect our intellectual property rights and the cost of doing so, proxy contests and representation of activist shareholders on our board of directors, product liability claims, fluctuations in our operating results, the market, interest and credit risks associated with our portfolio of marketable securities, our level of indebtedness, environmental risks, aspects of our corporate governance and collaborations and the other risks and uncertainties that are described in the Risk Factors section of our most recent annual or quarterly report and in other reports we have filed with the SEC. Forward-looking statements, like all statements in this press release, speak only as of the date of this press release (unless another date is indicated). Unless required by law, we do not undertake any obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise.

 
TABLE 1
Biogen Idec Inc.
September 30, 2010
Consolidated Statements of Income
(in thousands, except per share amounts)
(unaudited)
         
Three Months Ended Nine Months Ended
September 30, September 30,
  2010     2009   2010     2009
REVENUES
 
Product $ 876,850 $ 801,689 $ 2,560,305 $ 2,326,067
 
Unconsolidated joint business 257,981 283,919 819,281 838,307
 
Royalties 35,952 34,538 92,072 83,631
 
Corporate partner   5,006     372   25,693     2,287
 
Total revenues   1,175,789     1,120,518   3,497,351     3,250,292
 
COSTS AND EXPENSES
 
Cost of sales, excluding amortization of acquired intangible assets 95,918 93,486 299,958 282,404
 
Research and development 319,054 304,055 957,759 999,986
 
Selling, general and administrative 244,160 226,755 755,147 669,415
 
Collaboration profit sharing 63,991 60,697 190,240 152,608
 
Amortization of acquired intangible assets 53,531 51,347 155,568 233,830
 
Acquired in-process research and development   205,000     -   244,976     -
 
Total costs and expenses   981,654     736,340   2,603,648     2,338,243
 
Income from operations 194,135 384,178 893,703 912,049
 
Other income (expense), net   (6,945 )   9,360   (14,318 )   30,886
 
INCOME BEFORE INCOME TAX EXPENSE 187,190 393,538 879,385 942,935
 
Income tax expense   75,011     113,936   252,564     271,869
 
NET INCOME $ 112,179   $ 279,602 $ 626,821   $ 671,066
 
Net income (loss) attributable to noncontrolling interest, net of tax   (141,936 )   1,939   (138,174 )   6,571
 
NET INCOME ATTRIBUTABLE TO BIOGEN IDEC INC. $ 254,115   $ 277,663 $ 764,995   $ 664,495
 
 
BASIC EARNINGS PER SHARE $ 1.06   $ 0.96 $ 2.98   $ 2.30
 
DILUTED EARNINGS PER SHARE $ 1.05   $ 0.95 $ 2.95   $ 2.28
 
 
WEIGHTED-AVERAGE SHARES USED IN CALCULATING:
BASIC EARNINGS PER SHARE   239,864     288,917   256,586     288,416
 
DILUTED EARNINGS PER SHARE   242,313     291,037   258,906     290,368
 
 
TABLE 2
Biogen Idec Inc.
September 30, 2010
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
     
 

September 30,
2010

December 31,
2009

ASSETS
 
Cash, cash equivalents and marketable securities $ 824,592 $ 1,263,724
 
Accounts receivable, net 616,697 551,208
 
Inventory 269,313 293,950
 
Other current assets   420,529   371,713
 
Total current assets   2,131,131   2,480,595
 
Marketable securities 560,006 1,194,080
 
Property, plant and equipment, net 1,641,791 1,637,083
 
Intangible assets, net 1,715,342 1,871,078
 
Goodwill 1,138,621 1,138,621
 
Investments and other assets   207,256   230,397
 
TOTAL ASSETS $ 7,394,147 $ 8,551,854
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
Current portion of notes payable and line of credit $ 11,296 $ 19,762
 
Other current liabilities 813,184 695,180
 
Long-term deferred tax liability 174,615 240,618
 
Notes payable and line of credit 1,068,776 1,080,207
 
Other long-term liabilities 256,075 254,205
 
Shareholders' equity   5,070,201   6,261,882
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 7,394,147 $ 8,551,854
 
 
TABLE 3
Biogen Idec Inc.
September 30, 2010
Condensed Consolidated Statements of Income - Non-GAAP
(in millions, except per share amounts)
(unaudited)
         
Three Months Ended Nine Months Ended
September 30, September 30,
EARNINGS PER SHARE   2010     2009     2010     2009  
 
GAAP earnings per share - Diluted $ 1.05 $ 0.95 $ 2.95 $ 2.28
Adjustments to net income attributable to Biogen Idec Inc. (as detailed below)   0.30     0.17     0.78     0.64  
Non-GAAP earnings per share - Diluted $ 1.35   $ 1.12   $ 3.73   $ 2.92  
 
 
An itemized reconciliation between net income attributable to Biogen Idec Inc. on a GAAP basis and net income attributable to Biogen Idec Inc. on a non-GAAP basis is as follows:
 
GAAP net income attributable to Biogen Idec Inc. $ 254.1 $ 277.7 $ 765.0 $ 664.5
Adjustments:
R&D: Restructuring and severance - 0.7 1.2 2.5
R&D: Stock option expense 2.4 2.6 4.9 6.2
R&D: Expenses paid by Cardiokine 1.1 2.2 4.9 6.0
SG&A: Restructuring and severance - 0.1 5.7 0.4
SG&A: Stock option expense 3.5 5.8 23.0 15.3
Amortization of acquired intangible assets 53.5 51.4 155.6 233.8

Acquired in-process research and development related to the consolidation of Knopp and the contingent consideration payment made associated with the 2007 Syntonix acquisition

205.0 - 245.0 -
Income tax expense: Income tax effect related to reconciling items (45.4 ) (12.5 ) (87.7 ) (72.8 )
Noncontrolling interest: Consolidation of Knopp and expenses paid by Cardiokine   (146.1 )   (2.2 )   (149.9 )   (6.0 )
Non-GAAP net income attributable to Biogen Idec Inc. $ 328.1   $ 325.8   $ 967.7   $ 849.9  
 

Use of Non-GAAP Financial Measures

Our “non-GAAP net income attributable to Biogen Idec Inc.” and “non-GAAP diluted EPS” financial measures exclude the following items from GAAP net income attributable to Biogen Idec Inc. and diluted EPS:

1. Purchase accounting and merger-related adjustments.

We exclude certain purchase accounting impacts, such as those related to the 2003 merger between Biogen, Inc. and Idec Pharmaceuticals, Inc., the acquisitions of Fumapharm AG, Conforma Therapeutics and Syntonix Pharmaceuticals, and the consolidation of Knopp, 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 provides management and investors with 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.

2. Stock option expense recorded in accordance with the accounting standard for share-based payments.

We believe that excluding the impact of expensing stock options better reflects the recurring economic characteristics of our business. We exclude stock option expense from our non-GAAP R&D expenses and SG&A expenses, but include the P&L impact of restricted stock grants and cash incentives in our non-GAAP results.

3. Unusual or non-recurring items.

We evaluate these on an individual basis, and consider both the quantitative and qualitative aspects of the item, including (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.

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. Non-GAAP net income attributable to Biogen Idec Inc. and diluted EPS should not be viewed in isolation or as a substitute for reported, or GAAP, net income attributable to Biogen Idec Inc. and diluted EPS.

 
TABLE 4
Biogen Idec Inc.
September 30, 2010
Product Revenues
(in thousands)
(unaudited)
     
Three Months Ended
September 30,
  2010   2009
PRODUCT REVENUES
 
Avonex® $ 643,623 $ 579,979
 
Tysabri® 220,739 207,013
 
Fumaderm® 12,365 12,634
 
Other 123 2,063
   
Total product revenues $ 876,850 $ 801,689
 
 
Nine Months Ended
September 30,
  2010   2009
PRODUCT REVENUES
 
Avonex® $ 1,864,284 $ 1,726,428
 
Tysabri® 658,621 559,842
 
Fumaderm® 37,255 35,403
 
Other 145 4,394
   
Total product revenues $ 2,560,305 $ 2,326,067

Contact:

Media Contact:
Biogen Idec
Christina Chan, 781-464-3260
Senior Manager, Public Affairs
or
Investment Community Contact:
Biogen Idec
John Applegate, 781-464-2442
Associate Director, Investor Relations