Analyst Conference Summary

Biogen Idec Corporation

conference date: February 6, 2009 @ 5:30 AM Pacific Time
for quarter ending: December 31, 2009 (4th quarter)

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

Overview: Rate of growth seems to be slowing due partly to negative effects of currency exchange rates, but pipeline is robust.

Basic data (GAAP):

Revenues were $1.069 billion, down 2% sequentially from $1.093 billion but up 20% from $893 million year-earlier.

Net income was $207 million, flat sequentially from $207 million and up 3% from $201 million year-earlier.

EPS (earnings per share) were $0.70, flat sequentialy and up 4% from $0.67 year-earlier.


Revenue growth year over year is expected to be in high single digits due to expected Rituxan non-U.S. revenue decline and stronger dollar. Operating expenses $2.0 to $2.1 billion, with R&D 26% to 28% of revenue, SG&A 19% to 20% of revenue. GAAP tax rate 32% to 34%, non-GAAP 28-30%.

Revenue growth would be in mid-teens if adjusted for dollar and Rituxan ex-US planned reductions.

GAAP EPS above $2.80; non-GAAP above $4.00. Capital expenditures between $210 and $250 million. Cash flow should grow faster than EPS.

Conference Highlights:

Revenues stabilized sequentially in quarter, partly because there was 1 less effective shipping week in quarter compared to the third quarter.

Carl Icahn has proposed a board slate for the upcoming elections.

Non-GAAP net income was $274 million, up 3% from year-earlier. Non-GAAP EPS was $0.93.

Revenues by therapy:

AVONEX [Multiple Sclerosis (MS)] $566 million, up 13% y/y. Sales were $225 million international, $341 million U.S. Over 135,000 patients world wide.

TYSABRI [Multiple Sclerosis (MS)] $156 million, up 74% y/y, but down sequentially.

RITUXAN [non-Hodgkin lymphomas (NHL)] $303 million, up 20% y/y

FUMADERM $11 million, down 17%.

Avonex is still the number one MS therapy worldwide, but has had a slight loss of market share. There was a slowdown in Germany because inventories had been increased prior to a price increase.

Sequential decline of Tysabri revenue attributed to decline in number of shipping weeks, currency exchange effects, and diffusions delayed during holidays. Tysabri is the most effective therapy on the market. Physicians are becoming more comfortable with diagnosing and treating PML adverse reactions. 92% of physicians recognize Tysabri as the most effecting MS therapy. It actually results in less disability for some patients. It is now approved in 41 countries, launced in 27, and has greater than 10% market share in 6. Number of patients continues to grow. Tysabri had about 36,600 patients globally; 20,000 in U.S. Since re-introduction 48,300 patients have been treated with Tysabri. Only one PML patient who had taken Tysabri has died since 2006. One new confirmed PML patient announced at conference. There are over 450,000 MS patients on therapy worldwide, and we expect them to gradually switch to Tysabri.

Royalty revenue was $29 million, down 12% y/y.

Cash, equivalents and marketable securities ended at about $2.3 billion. There was a charge for $31 million in impairments on investments and securities. Unwound interest rate swaps on 10 year notes, but cash proceeds of $54 million will be amortized over life of the notes. Stock buy backs of 3.8 million shares; in January bought 1.2 million more shares.

2010 goals include 100,000 Tysabri patients, maintenance of Avonex market share, 2 additional filings for Anti-CD20 indications, and achieving over 40% of revenue internationally (currently is 33%).

Two possible affectors of 2009 guidance will be the speed of Tysabri revenue growth and the R&D spend, which will be affected by Phase III trial schedules.


The 5 novel molecule registration programs is expected to grow to 8 by the end of 2009. There are 22 programs in Phase II or Phase III. In 2008 11 sets of results enabled decisions to continue development (5) or stop (4). Five programs started Phase I trials: Anti-IGF-1R for solid tumore, Anti-CRIPTO for solid tumors, Anti-TWEAK for rheumatoid arthritis, long acting Factor IX for hemophilia B, and Hsp90 inhibitor for solid tumors. Three proof of concept studies were initiated: Tysabri for multiple myeloma, BG-12 for rheumatoid arthritis, and Avonex for ulcerative colitis.

There are six major data readouts expected in 2009 or 2010, including two in Phase III: Rituxan for Lupus Nephritis and Ocrelizumab in rheumatotoid arthritis.

There are 8 Phase 3 trial sets planned or in enrollment.

Focus was on PEGylated Interferon B 1a for MS, which appears to be going straight to Phase III from Phase I partly because of prior record of PEG interferons. Advantage of the therapy is longer half-life.


Tysabri patients numbers grew, but revenue down? Biggest impact was foreign exchange. We had 13 weeks for shipping, as opposed to 14 in Q3, an $8 million impact. Infusions were delayed during holidays. We saw infusions pick up in January. We are in a generally stable period at this time.

PML patient? Is a European patient who is currently hospitalized.

Long acting Factor 9 program? Point is to have a longer half life. Recruiting patients into Phase 1/2 study for safety and to confirm longer half life; we should be able to do this rapidly. This could expand use in prophylactic setting.

PEGylated Avonex compared to Avonex? We are going to do the Phase III program with both once and twice monthly subcutaneously. Avonex is IM (intramuscular injection). PEGylated interferon for hepatitis C showed safety the same and efficacy was better; we hope that may extrapolate to the this MS therapy. We might do a head to head comparison trial at a later point.

Tysabri patient sources? Same as we have seen in the past. Most are switching from other therapies. We are adding physicians.

Tysabri/PML plasma reconstitution issues? If there is a possible PML diagnose we are advising physicians to discontinue Tysabri; plasma decision before PML confirmation could follow from that.

Tysabri trends outside of U.S.? Stabilization is both U.S. and international, but we have better visibility in the U.S.

Possible upside to EPS guidance? We don't think there is a wide range, but if we see some boyancy in product sales that should all pass through to EPS.

New data for new oral competitors for MS? Does not believe FDA has lowered the hurdles for new MS therapies; the PEGylated interferon is a special case. We don't have any non-public data on the potential therapies. There are questions about efficacy and safety, so some might question whether the convenience of an oral therapy makes them worthwhile. But we assume the MRI data will support the new therapies. They said considerably more about details of potential problems with the new drugs.

R&D expense? We made progress on reducing R&D expense in 2008, but do not want to hold back pipeline progression by forcing R&D expense down. In the long run it should decrease as a percentage of revenue.

JCV virus testing re PML? This might start in second half of 2009. So far we have been increasing vigilance and working on treatment outcomes.

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Copyright 2009 William P. Meyers