Analyst Conference Summary

conference date: October 21, 2008 @ 5:30 AM Pacific Time
for quarter ending: September 30, 2008 (3rd quarter)

At least at the time this summary was written.
Forward-looking statements

Overview: A great quarter as Tysabri sales continued to build rapidly.

Basic data (GAAP):

Revenues were $1.093 billion, up 10% sequentially from $993 million and up 38% from $789 million year-earlier.

Net income was $207 million, flat sequentially from $207 million, but up 73% from $119 million year-earlier.

EPS (earnings per share) were $0.70, flat sequentially from $0.70 and up 71% from $0.41 year-earlier.

Guidance:

For the full year 2008 revenue growth will be in the mid-20% range over 2007 revenues. Aspiring to over $4 billion in full year revenues. Non-GAAP diluted EPS over $3.50; GAAP diluted EPS over $2.51. These figures include the potential for upfront and milestone payments of about $40 million in Q4.

Capital expenditures between $270 and $290 million. Non-GAAP tax rate 28-30%.

Conference Highlights:

This was the fourth consecutive quarter of greater than 25% year-over-year growth in revenue and EPS. Core business fundamentals are solid.

There are five novel compounds in late stage (Phase III) registrational trials (BG-12, Lumiliximab, Galiximab, Lixivaptan, Adentri). Believes Biogen has the best and broadest MS (multiple sclerosis) pipeline for future treatments.

Hope to have at least 100,000 patients on Tysabri by the end of 2010; currently 35,500 Tysabri patients. Goal of 40% of revenue from outside U.S. by 2010; currently 34%.

Avonex remains the most prescribed MS therapy.

Tysabri has now had about 18,000 patients using it at least a year, with two confirmed cases of PML so far; no new cases since July. Tysabri revenue growth did moderate in Q3 (to 18% sequentially), but it was difficult to tell why, although physicians treating patients appear to have had a reduction in referrals. New patients are mainly switching from Copaxone, but 20% are from Avonex and 29% are new to MS drug market. Tysabri discontinuation rate increased slightly, coming into line with other therapies. Tysabri has been approved in 39 countries and launched in 27 countries.

Revenues by therapy:

AVONEX [Multiple Sclerosis (MS)] $573 million, up 26% from year-earlier.
TYSABRI [Multiple Sclerosis (MS)] $173 million, up 172%.
RITUXAN [non-Hodgkin's lymphoma (NHL)] $299 million, up 27%.
FUMADERM $14 million, up 17%.

Non-GAAP numbers: net income $288 million (up 69% y/y); EPS $0.98 (up 69%). The primary difference between GAAP and non-GAAP was $94 million for amortization of acquired intangibles with a consequent $24 million tax benefit.

Ended with over $2 billion in cash and marketable securities. Strong cash flow. There were losses on securities; we are continuing to reduce the risk in our portfolio. No shares repurchased in quarter.

Cost of sales was $107.5 million. R&D expense $269 million, selling, general and administrative expense was $233 million, amortization $94.5 million, collaboration profit sharing expense $43.5 million. Total costs and expenses were $747.1 million. Leaving income from operations were $346 million, other income was negative $24.7 million. Income taxes $114 million.

Q&A:

Color Tysabri patient add trends? August and September had about 215 net adds per week. Doctors are evaluating risks and benefits.

Drug holidays for Tysabri? We anecdotal reports of pauses, no other data. We learned a lot during the suspension of Tysabri and hope to make more data from that available to doctors and patients.

Biogen and Elan relationship? Both companies have worked closely on Tysabri communications. We are largely executing in the MS world and they are executing on Crohn's.

Crohn's sales? About 200 patients so far, added 60 in quarter, just beginning to roll out.

PML patient updates? No major change since last reports. First patient has been in rehabilitation and is improving. Second patient was seriously ill and remains hospitalized.

Is it possible that Avonex sales could be down in Q4? Because of the distributor situation and some benefits in Q3 there is a chance for a down quarter, especially if foreign exchange rates have a negative impact. But we think there will be year-over-year growth.

Hedging of currency? We hedge our operating plan. We are heading towards our time to re-hedge for 2009. We try to hedge the cash flow stream.

No comment on suspected PML cases. Our plan requires doctors to be vigilant and stop Tysabri if they cannot rule out PML. IRIS (immune reconstitution inflammatory syndrome) is a known possibility for serum flushes to eliminate Tysabri in possible PML cases.

Capital structure? We are looking at strategic alternatives. Our cash flow is very strong due to the high margins for our therapies. But nothing is imminent.

Q3 2008 Biogen Idec Slide Show

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