conference date: July 22, 2008 @ 5:30 AM Pacific
for quarter ending: June 30, 2008 (2nd quarter)
At least at the time this summary was written.
Overview: Great quarter. 68% GAAP EPS increase from Q1 2008.
Basic data (GAAP):
Revenues were $993 million, up 5% sequentially from $942 million and up 28% from $773 million year-earlier.
Net income was $207 million, up 27% sequentially from $163 million and up 11% from $186 million year-earlier.
EPS (earnings per share) were $0.70, up 30% sequentially from $0.54 and up 30% from $0.54 year-earlier.
Year-over-year 2008 revenues will be about 20% above 2007. Operating margins steady. GAAP tax rate 31% to 33%. GAAP EPS $2.51, non-GAAP "at or above $3.50" for full 2008.
Record revenues and profits. "Given the strong momentum underway, we are raising our full-year guidance and setting an aspirational goal of generating a record $4 billion in revenues this year."
Non-GAAP numbers: EPS $0.91, net income $269 million.
Cash and equivalents ended at $1.58 billion. Carries a liability of notes payable $1.0 billion. 5 million shares were repurchased in quarter.
Revenues by therapy:
AVONEX $527 million, up 14% y/y. [Multiple Sclerosis (MS)]
TYSABRI $147 million, up 210%. [Multiple Sclerosis (MS)]
RITUXAN $279 million, up 21%. [non-Hodgkin's lymphoma (NHL)]
FUMADERM & ZEVALIN $10 million, up 6% y/y. (Zevalin dropped to less than $1 million in sales, with Fumaderm nearly doubling to the $10 million figure.
Royalty revenues were $28 million, up 12% from $23 million year-earlier.
Tysabri revenue consisted of $46 million from Elan for U.S. sales (which were $99 million) and $101 million sold outside the U.S. directly by Biogen Idec. There were 17,800 patients in the U.S. and 13,400 outside the U.S. Avonex y/y growth benefited from price increases, with unit sales about flat.
Global MS franchise market share continues to grow. Tysabri is the most effective product and is the most switched-to therapy, while Avonex is the first line treatment and is the only once-weekly product on market.
Cost of sales was $92 million. Research and development $252 million. Selling, general and administrative expense $246 million. Amortization of intangibles $73 million. Collaboration profit sharing $33 million. Total cost and operating expenses $697 million, leaving $296.8 income from operations. Income taxes $85 million.
Robust pipeline has a half-dozen novel molecules in late stage trials, including new MS products. BG-12 for multiple sclerosis, lumiliximab for Chronic Lymphocytic Leukemia, Daclizumab for MS, and Lixivaptan for hyponatremia trials in enrollment stage. Phase 1 trials also underway, and Lingo for repairing MS is ready for Phase 1 trials. This R&D does result in increasing expenses.
Late stage program enrollment and completion goals? Trials are enrolling well, but we don't give completion dates.
Share buyback program? Was for 20 million share, has used 9 million so far. Objective is to use balance for share stabilization, but believe we are set for that for rest of year.
Tysabri U.S. patients? We are seeing more switching. In time patients will be in need of more efficacy. We expect trend to switching to continue into the future.
Crohn's market? Focus in first 6 months is to make sure everything in system works and educating physicians. As year progresses will look more at sources of patients. Elan may be able to report in more detail.
Any other problems with infections with Tysabri? We have a comprehensive risk management program. We have seen no reason to update our label so far.
How do you decide which MS drug to progress? There are 4 basic types of MS, plus the difference between early and late MS, so we believe patients will respond differently to each drug and having a variety of therapies available will be beneficial.
Appropriate level of R&D spending? Good question. It is circumstantial to the company. We are trying to bring R&D percentage down to the 20% range; we had high R&D expense after the merger.
If Roche acquires Genentech, effect on Rituxan? The change of control is unilateral; Genentech already owns a controlling interest. It would reduce decision making for Rituxan from 3 players to 2. Our contract would still be good and in force.
Any difficulty in enrolling patients in placebo-controlled trials? BG-12 trial appears to be adequately powered; we have a contingency plan if it is not. Our trial matches conditions for ethical placebo-controlled trails. We could also do superiority trials over other therapies.
Suspected PML case reporting? Adjudication is done by the neurologists of the patients. We have had suspected PML that was worked up appropriately, but resulting in no confirmed cases. We follow the international standard for PML diagnosis.
Pricing power remaining in market? We have benefited from Avonex price increases in U.S., but our plan is not to rely on this going forward. We are emphasizing growth in global market and in pipeline. Avonex is the mid-priced interferon. Elan sets the price in the U.S. for Tysabri.
Genentech arbitration? Hearing is scheduled to occur in Q3 or 4, but no changes going into it so far.
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