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Biogen Idec Reports Third Quarter 2010 Results

October 26, 2010 News Release

Double Digit EPS Growth

Substantial Progress on TYSABRI® Risk Stratification


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.

Biogen Idec Inc.
September 30, 2010
Consolidated Statements of Income
(in thousands, except per share amounts)
    Three Months Ended     Nine Months Ended
    September 30,     September 30,
      2010       2009       2010       2009
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
BASIC EARNINGS PER SHARE     239,864       288,917       256,586       288,416
DILUTED EARNINGS PER SHARE     242,313       291,037       258,906       290,368
Biogen Idec Inc.
September 30, 2010
Condensed Consolidated Balance Sheets
(in thousands)

September 30,


December 31,

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
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
Biogen Idec Inc.
September 30, 2010
Condensed Consolidated Statements of Income - Non-GAAP
(in millions, except per share amounts)
    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  
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.

Biogen Idec Inc.
September 30, 2010
Product Revenues
(in thousands)
    Three Months Ended
    September 30,
      2010       2009
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
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




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



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