Analyst Conference Summary

Biogen Idec Corporation

conference date: July 16, 2009 @ 5:30 AM Pacific Time
for quarter ending: June 30, 2009 (2nd quarter)

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

Overview: Solid quarter. Results affected by $110 million collaboration payment to Acorda Therapeutics.

Basic data (GAAP):

Revenues were $1.09 billion, up 5% sequentially from $1.04 billion and up 10% from $993 million in the year-earlier quarter.

Net income was $143 million, down 42% sequentially from $247 million and down 31% from $208 million year-earlier.

EPS (earnings per share) were $0.49, down 42% sequentially from $0.84 and down 30% from $0.70 year earlier.


For the full year 2009 revenue growth expected in high single digits. R&D expense from 28% to 30% of total revenue; SG&A 19% to 20%. Tax rate near 30%. Non-GAAP EPS above $3.85. GAAP EPS above $2.75. This includes Acorda impact of $0.38. Capital expenditures between $180 and $200 million. Expects cash flow to exceed earnings.

Conference Highlights:

Non GAAP numbers, which include the Acorda payment, but not non-cash stock compensation, amortization, etc. were: net income $219 million, EPS $0.75.

GAAP and Non-GAAP results include a $110 million payment per the Acorda Therapeutics collaboration and license agreement for Fampridine. EPS impact was negative $0.32.

Revenue growth was attributed largely to Tysabri. There was a clear acceleration of Tysabri patient growth.

Product revenue was $791 million, up 16% y/y. Unconsolidated joint business revenue was $276 million. Royalties were $25 million. Corporate partner revenues were $1.7 million.

Revenue by product:

Avonex (interferon beta-1a) revenues were $591 million, up 12% y/y. About 135,000 patients. There was a price increase in March for U.S. patients. Global sales were negatively impacted about $30 million by exchange rates.

Tysabri (natalizumab) revenues were $188 million, up 27% y/y. $57 million was from Elan for sales in the U.S. $130 million was from sales ex-U.S. About 43,300 patients on the therapy at the end of the quarter. About 10,000 patients have received 24 months or more of treatment. 37% of Tybabri patients in one study are disease free or have had disability reduced. Aware of PML risks and continuing to do risk management; rate appears steady, with 10 confirmed cases and only one death.

Fumaderm and other product revenue was $12 million, up 20% from year-earlier.

Rituxan for NHL and RA (rheumadoid arthritis) produced $276 million in revenues, down 1%, which are from the joint business with Genentech. Ex-U.S. royalties are beginning to expire.

GAAP Cost of sales was $91 million. R&D expense $416 million. Selling, General and Administrative expense $221 million. Amortization of acquired intangible assets $93 million. Collaboration profit sharing cost $49 million. Total costs and expenses $870 million. Leaving income from operations of $223 million. Other income was $15 million. Income tax provision was $93 million. Tax rate was higher than normal.

CD-20 franchise dispute with Genetech was resolved in favor of Biogen.

Ended with about $2.7 billion balance of cash and securities.


PEGylated interferon Beta-1a (BIIB017) was granted fast track status by the FDA. The ADVANCE Phase III trial began enrollment.

The Accorda agreement is to develop Fampridine-SR for MS (multiple sclerosis) in markets outside U.S. "Fampridine improves patient mobility by increasing nerve function by decreasing potasium leakage from demyelinated axons.

Data from CHAMPIONS open-label follow up study of Avonex for the prevention of MS in high-risk patients showed that patients treated immediately after their first MS episode experienced significantly less second attacks than untreated patients.

Data showed that Tysabri "promoted regeneration and stabiliztion of damage done to the myelin sheath" by MS.

More than twenty products are in Phase II or Phase III.

However, Tonapofyllin for heart failure was shifted from planned Phase III to Phase II trials due to the failure of a similar competing product.


When will it be possible to draw conclusions about PML? When there is sufficient data; we just are not there yet. As larger numbers have been on the drug longer, our confidence on the overall rate gets better.

Tysabri trends post June PML cases? Continues to accelerate number of new patients, now about 200 per week.

Discussions with regulators about PML? We are in regular conversation with U.S., European, and other regulators. There are no significant discussions about changing the label.

U.S. v. ex-U.S. for Tysabri? Very consistent. Both accelerated. Ex-U.S. sales are now exceeding U.S. sales.

How do you communicate with doctors about PML and Tysabri? We have a medical science team that talks to doctors regularly.

Use of cash? We are very disciplined. Some assets are priced attractively right now. If we conclude we don't have great investment opportunities, we would return cash to shareholders, but right now that is premature.

Potential of Fampridine? It has broad applicability from minimal to near maximal disability. About 50% of MS patients start losing mobility within 10 years and 90% will eventually lose mobility. It may also help with fatigue and vision.

Will European agencies use same trial endpoints? Our understanding is the endpoints are getting broad acceptance in Europe.

Are Avonex price increases sustainable? We don't expect to be able to increase prices materially going forward.

PML management effects? When Tysabri was withdrawn, the belief was PML was nearly always fatal. Since reintroduction, only 1 of 10 PML patients died. So the situation seems to have improved, and we will work on further improvements. Early detection has been the main source of improvement.

Peripheral immuno suppression? We see no evidence of Tysabri causing peripheral immune suppression, in fact the opposite. But we continue to study this and related issues.

Why is guidance lower that current EPS run rate? We have a $20 million milestone payment coming, and a higher tax rate. We are putting out numbers that we feel highly confident we can hit.

Rituxan ex-U.S. going forward? There will be modest decline due to country by country rolloffs.

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Copyright 2009 William P. Meyers