Analyst Conference Call Summary

Biogen Idec Corporation

conference date: October 26, 2010 @ 5:30 AM Pacific Time
for quarter ending: September 30, 2010 (third quarter)

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

Overview: Revenue and EPS rose y/y, but net income fell sequentially. Hit was mainly from acquired R&D expense.

Basic data (GAAP):

Revenues were $1.176 billion, down 3% sequentially from $1.21 billion but up 5% from $1.121 billion in the year-earlier quarter.

Net income was $254.1 million, down 13% sequentially from $293.4 million and also down 9% from $279.6 million year-earlier.

EPS (earnings per share) were $1.05, down 6% sequentially from $1.12, but up 10.5% from $0.95 year earlier.


None, but on track for single digit growth for 2010. Will update later in year.

Conference Highlights:

More optimistic than ever about Biogen Idec's long term future.

Non-GAAP net income was $328 million, up 1% y/y. Non-GAAP EPS $1.35. Non-GAAP numbers exclude $205 million for in-process Knopp R&D expense acquisition, $53.5 million amortization of intangibles, and $5.9 million in stock based compensation; also excludes credits fro $45.4 million tax impact and $146 million for non-controlling interest.

Avonex (interferon beta-1a) for multiple sclerosis revenues were $644 million, up 11% y/y. Sales increased sequentially for the second consecutive quarter with solid demand growth overseas.

Tysabri (natalizumab) revenues were $221 million, up 7% y/y. About 55,100 patients were on commercial of clinical Tysabri worldwide in the quarter. Just launching in India, Brazil, and Argentina; launches ahead in China and Japan.

Fumaderm revenues were $12.3 million, down 2% y/y.

Rituxan for NHL and RA (rheumatoid arthritis) produced $258 million, down 9% y/y (listed as unconsolidated joint business revenues on income statement). Royalty terms outside U.S. are expiring on a nation by nation basis.

Royalty revenues were $36 million, up 4% y/y. Corporate partner revenues were $5 million.

Cash and marketable securities ended at $1.4 billion. During the quarter 9 million shares were repurchased for $468 million. $420 million cash generated from operating activities.

Net impact of agreement with Knopp Neurosciences was negative $86 million GAAP, negative $26 million non-GAAP. Took an equity stake in Knopp.

Licensed KNS-760704 (dexpramipexole) for treatment of ALS (amyotrophic lateral sclerosis or Lou Gehrig's disease) from Knopp. Phase II data was good.

TYSABRI risk stratification progress was reported. Data has been presented supporting an assay to detect JC virus antibodies. This could help identify patients at risk for PML (progressive multifocal leukoencephalopathy). About half of the MS population was positive for JC virus antibodies. Prevalence increases with age. Tysabri exposure does not appear to affect the prevalence. Plans to submit label changes to FDA based on this.

Amended the CD20 antibodies collaboration agreement with Genentech/Roche, which will fund 100% of ocrelizumab for MS; Biogen will receive tiered royalties on U.S. sales. Biogen's share of GA101 profit and loss will increase to 35% in the U.S. Good ocrelizumab data continues to accumulate.

Cost of sales was $95.9 million. R&D expense $319.1 million. Selling, general and administrative expense $244.2 million. Collaboration profit sharing expense $64 million. Amortization $53.5 million. Acquired in-process R&D expense $205 million. Leaving GAAP income from operations of $194.1 million. Other expense $7 million. Income tax expense was $75.0 million.

BG-12 data readouts should be released in 2011.

Believes new, competing MS therapies while more convenient, are not as effective.


JCV assay label amendment effects? First we need laboratory test approved. Then label can be changed.

Copay competitive pressures? We allow for charitable institutions to assiste patients; we will continue to look at alternatives?

Gilenya for MS impact? Anecdotal feedback is some insurance still not covering yet. We are prepared to manage the challenge of this competition, despite the value of oral therapy to patients.

New adds for Tysabri down in quarter? 2300 patients added in quarter, about flat sequentially. Steady, sure Tysabri growth. Discontinuation rates also about flat.

In addition to the price increase, we have given discounts and allowances, and the effect of healthcare reform. Avonex outside the U.S. costs 50 to 60% as much, but varies.

Why was Tysabri down 4% on unit basis in U.S.? The largest impact was the inventory pull down Q2 to Q3.

Risk factor for JCV positive patients? It will come down to a risk versus efficacy assessment.

Expenses going forward? Cost of goods sold in Q3 should be indicative of future quarters.

Healthcare reform impact in quarter? Range was $40 to $50 million for the year, still what we are looking at, bled throughout the year.

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Copyright 2010 William P. Meyers