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Biogen Idec Reports Second Quarter 2011 Results

July 26, 2011

TYSABRI® Global In-Market Revenue Trending over $1.5 Billion Annualized Run Rate; Second Quarter TYSABRI Revenues Increase 28%

 

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 second quarter 2011 results.

Second Quarter 2011 Highlights:

  • Second quarter revenues were $1.2 billion, flat compared to the second quarter of 2010. TYSABRI (natalizumab) revenues increased 28% year-over-year to $281 million while AVONEX® (interferon beta-1a) revenues increased 5% year-over-year to $659 million. RITUXAN® (rituximab) revenues from our unconsolidated joint business arrangement were $216 million for the quarter, down 29% versus prior year. Our share of RITUXAN revenues from our unconsolidated joint business was reduced by approximately $50 million during the second quarter of 2011 as a result of an accrual relating to an intermediate decision in Genentech, Inc.’s ongoing arbitration with Hoechst GmbH.
  • Global in-market sales of TYSABRI in the second quarter of 2011 were $389 million, an increase of 31% over the second quarter of 2010. The total was comprised of $183 million in U.S. sales and $206 million in sales to markets outside the U.S.
  • On a reported basis, calculated in accordance with accounting principles generally accepted in the U.S. (GAAP), second quarter 2011 GAAP diluted EPS were $1.18, an increase of 5% over the second quarter of 2010. GAAP net income attributable to Biogen Idec for the quarter was $288 million, a decrease of 2% from the second quarter of 2010.
  • Non-GAAP diluted EPS for the second quarter of 2011 were $1.36, an increase of 4% over the second quarter of 2010. Non-GAAP net income attributable to Biogen Idec for the second quarter of 2011 was $332 million, a decrease of approximately 3% from the second quarter of 2010. A reconciliation of our GAAP to non-GAAP results is included on Table 3 within this press release.

As of June 30, 2011, Biogen Idec had cash, cash equivalents and marketable securities of approximately $2.5 billion.

“We are pleased with our strong second quarter performance” said George A. Scangos, Ph.D., chief executive officer of Biogen Idec. “Our commercial and financial performance has been strong, and we have made great progress on our pipeline, which is now focused on high quality projects in areas of our expertise – neurology, immunology, and hemophilia. This quarter, we were excited by the European Commission’s approval of the inclusion of JCV antibody status as an additional PML risk factor in TYSABRI labeling, as well as the conditional approval for FAMPYRA. We continue to focus on execution to insure that we achieve our ambitious goals and continue our positive momentum into the second half of this year.”

Share Repurchases

During the second quarter of 2011, Biogen Idec repurchased 2.2 million shares of stock at a total cost of $191 million.

TYSABRI Patient Growth

Based upon data available to us through the TOUCH® prescribing program and other third-party sources, as of the end of June 2011, we estimate that approximately 61,500 patients were on commercial and clinical TYSABRI therapy worldwide, and that cumulatively approximately 88,100 patients have ever been treated with TYSABRI in the post-marketing setting.

Other Products and Royalties

Revenues from other products in the second quarter of 2011 were $16 million, an increase of 36% over the second quarter of 2010.

Table 4 provides individual product revenues.

Royalties were $29 million in the second quarter of 2011, a decrease of 5% compared to the second quarter of 2010.

Corporate partner revenues in the second quarter of 2011 were $7 million, compared to $17 million in the second quarter of 2010.

Revised Financial Guidance

Biogen Idec also revised its 2011 financial guidance. This guidance consists of the following components:

  • Revenue growth is expected to be in the low to mid-single digits versus 2010.
  • Cost of Sales is expected to be approximately 9% to 10% of total revenue.
  • R&D is expected to be approximately 22% to 24% of total revenue.
  • SG&A is expected to be approximately 20% to 21% of total revenue.
  • Tax rate is expected to be approximately 26% to 28% of pretax income.
  • GAAP diluted EPS is expected to be above $4.91.
  • Non-GAAP diluted EPS is expected to be above $5.70.
  • Capital expenditures are expected to be in the range of $200 to $220 million.

Biogen Idec may incur charges, realize gains or experience other events in 2011 that could cause actual results to vary from this guidance.

Recent Events

  • On July 26, 2011, Biogen Idec and Swedish Orphan Biovitrum presented data on the long-lasting recombinant factor VIII therapy at the International Society on Thrombosis and Haemostasis meeting. Results showed the potential to significantly reduce the burden of treatment for people with Hemophilia A.
  • On July 20, 2011, Biogen Idec received conditional approval in the European Union for FAMPYRA® (prolonged-release fampridine tablets) to improve walking in adults with multiple sclerosis. The novel oral therapy provides clinically meaningful improvement in daily function.
  • On July 3, 2011, Biogen Idec researchers identified a novel approach for promoting remyelination and inhibiting autoimmune activation as a potential therapeutic option for the treatment of multiple sclerosis.
  • On June 23, 2011, Biogen Idec announced that its share of RITUXAN revenues from the unconsolidated joint business will be reduced by approximately $50 million during the second quarter of 2011 as a result of an accrual relating to an intermediate decision in Genentech’s ongoing arbitration with Hoechst.
  • On June 22, 2011, the European Commission approved the inclusion of Anti-JC Virus Antibody Status as a PML risk factor in TYSABRI labeling. A five year marketing authorization for TYSABRI was also renewed in the EU.
  • On June 7, 2011, Biogen Idec received approval in the European Union for AVONEX(R) PEN(TM), the first single-use intramuscular autoinjector designed to improve convenience of once-weekly AVONEX administration.
  • On June 6, 2011, Biogen Idec announced positive data from the AVONEX Dose Titration Study at the 2011 Annual Meeting of the Consortium of Multiple Sclerosis Centers. The data showed that titrating AVONEX at the initiation of treatment reduced the severity of flu-like symptoms.
  • On May 20, 2011, the European Medicines Agency's (EMA) Committee for Medicinal Products for Human Use issued a positive opinion on the Marketing Authorisation Application for FAMPYRA.
  • On May 16, 2011, Biogen Idec received approval for FAMPYRA from The Australian Therapeutic Goods Administration to improve walking ability in adult patients with multiple sclerosis.
  • On May 9, 2011, Biogen Idec and Swedish Orphan Biovitrum received an opinion from the EMA agreeing to a pediatric investigational plan for the companies’ long-lasting Hemophilia B therapy.

Conference Call and Webcast

The company's earnings conference call for the second quarter will be broadcast via the internet at 8:30 a.m. ET on July 26, 2011, and will be accessible through the Investors section of Biogen Idec's homepage, 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 there subsequently through August 26, 2011.

About Biogen Idec

Biogen Idec uses cutting-edge science to discover, develop, manufacture and market therapies for the treatment of serious diseases with a focus on neurological disorders. Founded in 1978, Biogen Idec is the world's oldest independent biotechnology company. Patients worldwide benefit from its leading multiple sclerosis therapies, and the company generates more than $4 billion in annual revenues. For product labeling, press releases and additional information about the company, please visit www.biogenidec.com.

Safe Harbor

This press release contains forward-looking statements, including statements about the anticipated development of programs in our clinical pipeline and financial guidance. These forward-looking statements may be accompanied by such words as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “target,” “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, adverse market and economic conditions, our dependence on collaborations and other third parties 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, problems with our manufacturing processes and our reliance on third parties, fluctuations in our effective tax rate, our ability to attract and retain qualified personnel, the risks of doing business internationally, our ability to protect our intellectual property rights and the cost of doing so, 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, representation of activist shareholders on our board of directors, 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.

These statements are based on our current beliefs and expectations and speak only as of the date of this press release. We do not undertake any obligation to publicly update any forward-looking statements.

 
TABLE 1
Biogen Idec Inc.
June 30, 2011
Consolidated Statements of Income
(in thousands, except per share amounts)
(unaudited)
                           
          Three Months Ended       Six Months Ended
          June 30,       June 30,
            2011       2010         2011       2010  
REVENUES                          
                           
Product         $ 956,703     $ 859,235       $ 1,863,805     $ 1,683,455  
                           
Unconsolidated joint business           216,458       306,371         472,583       561,300  
                           
Royalties           28,649       30,098         54,227       56,120  
                           
Corporate partner           6,837       16,998         21,375       20,687  
                           
Total revenues           1,208,647       1,212,702         2,411,990       2,321,562  
                           
COST AND EXPENSES                          
                           
Cost of sales, excluding amortization of acquired intangible assets           100,503       106,985         203,616       204,040  
                           
Research and development           285,644       331,675         579,277       638,705  
                           
Selling, general and administrative           266,301       262,322         510,819       510,987  
                           
Collaboration profit sharing           88,050       62,692         162,844       126,249  
                           
Amortization of acquired intangible assets           55,136       53,148         108,352       102,037  
                           
Restructuring charges           -       -         16,587       -  
                           
Fair value adjustment of contingent consideration           2,200       -         3,400       -  
                           
Acquired in-process research and development           -       -         -       39,976  
                           
Total cost and expenses           797,834       816,822         1,584,895       1,621,994  
                           
Income from operations           410,813       395,880         827,095       699,568  
                           
Other income (expense), net           (11,728 )     1,012         (1,777 )     (7,373 )
                           
INCOME BEFORE INCOME TAX EXPENSE           399,085       396,892         825,318       692,195  
                           
Income tax expense           95,036       102,243         212,504       177,553  
                           
NET INCOME         $ 304,049     $ 294,649       $ 612,814     $ 514,642  
                           
Net income attributable to noncontrolling interest, net of tax           16,015       1,211         30,450       3,762  
                           
NET INCOME ATTRIBUTABLE TO BIOGEN IDEC INC.         $ 288,034     $ 293,438       $ 582,364     $ 510,880  
                           
                           
BASIC EARNINGS PER SHARE         $ 1.19     $ 1.13       $ 2.40     $ 1.92  
                           
DILUTED EARNINGS PER SHARE         $ 1.18     $ 1.12       $ 2.38     $ 1.91  
                           
                           
WEIGHTED-AVERAGE SHARES USED IN CALCULATING:                          
BASIC EARNINGS PER SHARE           242,375       259,938         241,932       265,018  
                           
DILUTED EARNINGS PER SHARE           244,966       261,658         244,899       267,272  
                                         
                                         
TABLE 2
Biogen Idec Inc.
June 30, 2011
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
         
         
   

June 30,
2011

 

December 31,
2010

ASSETS        
         
Cash, cash equivalents and marketable securities   $ 1,326,744   $ 1,207,744
         
Accounts receivable, net     666,960     605,329
         
Inventory     308,254     289,066
         
Other current assets     386,665     438,281
         
Total current assets     2,688,623     2,540,420
         
Marketable securities     1,183,559     743,101
         
Property, plant and equipment, net     1,712,869     1,641,634
         
Intangible assets, net     1,678,867     1,772,826
         
Goodwill     1,146,314     1,146,314
         
Investments and other assets     211,747     248,198
         
TOTAL ASSETS   $ 8,621,979   $ 8,092,493
         
         
LIABILITIES AND SHAREHOLDERS' EQUITY        
         
         
Current portion of notes payable and other financing arrangements   $ 131,981   $ 137,153
         
Other current liabilities     822,349     912,969
         
Long-term deferred tax liability     196,784     200,950
         
Notes payable and line of credit     1,062,986     1,066,379
         
Other long-term liabilities     351,685     325,599
         
Shareholders' equity     6,056,194     5,449,443
         
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 8,621,979   $ 8,092,493
             
             
TABLE 3
Biogen Idec Inc.
June 30, 2011
Condensed Consolidated Statements of Income - Non-GAAP
(in millions, except per share amounts)
(unaudited)
                             
            Three Months Ended       Six Months Ended
            June 30,       June 30,
EARNINGS PER SHARE             2011       2010           2011       2010  
                             
GAAP earnings per share - Diluted           $ 1.18     $ 1.12         $ 2.38     $ 1.91  
Adjustments to net income attributable to Biogen Idec Inc. (as detailed below)             0.18       0.19           0.40       0.48  
Non-GAAP earnings per share - Diluted           $ 1.36     $ 1.31         $ 2.78     $ 2.39  
                             
                             

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.           $ 288.0     $ 293.4         $ 582.4     $ 510.9  
Adjustments:                            
R&D: Restructuring and severance             -       0.6           -       1.3  
R&D: Stock option expense             0.5       0.8           1.7       2.4  
R&D: Expenses paid by Cardiokine             -       1.9           -       3.8  
SG&A: Restructuring and severance             -       1.5           -       5.8  
SG&A: Stock option expense             1.2       8.8           2.5       19.5  
Amortization of acquired intangible assets             55.1       53.2           108.4       102.0  
Restructuring charges             -       -           16.6       -  
Fair value adjustment of contingent consideration associated with the 2010 Panima acquisition             2.2       -           3.4       -  

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

            -       -           -       40.0  
Income tax expense: Income tax effect related to reconciling items             (14.8 )     (15.1 )         (33.5 )     (42.3 )
Noncontrolling interest: Expenses paid by Cardiokine             -       (1.9 )         -       (3.8 )
Non-GAAP net income attributable to Biogen Idec Inc.           $ 332.2     $ 343.2         $ 681.5     $ 639.6  
                             
                             
2011 Full Year Guidance GAAP to non-GAAP adjustments

An itemized reconciliation between projected EPS on a GAAP basis and on a non-GAAP basis is as follows:

               

 

           
       

$ Millions

  Shares  

Diluted EPS

           
Projected GAAP net income attributable to Biogen Idec Inc.       $ 1,203.0       245     $ 4.91              
Adjustments:                            
Stock option expense         12.4                      
Amortization of acquired intangible assets         220.7                      
Restructuring charges         23.1                      
Contingent consideration         5.5                      
Income taxes         (68.2 )                    
Projected Non-GAAP net income attributable to Biogen Idec Inc.       $ 1,396.5       245     $ 5.70              
                                         

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, Syntonix Pharmaceuticals, and Panima Pharmaceuticals AG and the consolidation of Knopp and Cardiokine. These include charges for in-process research and development and 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 impact of all other share-based awards and cash incentives in our non-GAAP results.

3. Other 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.
June 30, 2011
Product Revenues
(in thousands)
(unaudited)
           
    Three Months Ended
    June 30,
      2011       2010
PRODUCT REVENUES          
           
Avonex®   $ 659,233     $ 628,134
           
Tysabri®     281,383       219,238
           
Fumaderm®     15,064       11,841
           
Other     1,023       22
           
Total product revenues   $ 956,703     $ 859,235
           
           
    Six Months Ended
    June 30,
      2011       2010
PRODUCT REVENUES          
           
Avonex®   $ 1,301,711     $ 1,220,661
           
Tysabri®     532,776       437,882
           
Fumaderm®     27,570       24,890
           
Other     1,748       22
           
Total product revenues   $ 1,863,805     $ 1,683,455

 

Contact:

 

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

 

 

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