Biogen Idec Corporation
conference date: October 28, 2011 @ 5:30 AM Pacific Time
for quarter ending: September 30, 2011 (third quarter, Q3)
Overview: Another quarter with solid y/y growth. Great stuff in the pipeline.
Basic data (GAAP):
Revenues were $1.310 billion, up 8% sequentially from $1.209 billion and up 11% from $1.176 billion in the year-earlier quarter.
Net income was $351.8 million, up 22% sequentially from $288.0 million and up 38% from $254.1 million year-earlier.
EPS (earnings per share) were $1.43, up 21% sequentially from $1.18 and up 36% from $1.05 year-earlier.
Revised full year 2011 guidance: revenue growth y/y in mid-single digit range. GAAP EPS above $4.91, non-GAAP EPS above $5.70. Capital expenditure range $200 to $220 million.
Revenue growth was driven by Tysabri sales. Positive data for the Phase III CONFIRM trial of BG-12 for multiple sclerosis (MS) means Biogen can file for FDA approval in the first half of 2012.
Non-GAAP numbers: net income $395 million; EPS $1.61, up 19% y/y.
Avonex (interferon beta-1a) revenue was $682 million, up 6% y/y. PEN autoinjector device rollout is helping, with new starts in the U.K. tripling over the prior rate.
Tysabri (natalizumab) revenues were $277 million, up 26% y/y. Patients receiving Tysabri numbered about 63,500. Now available in over 60 countries.
Rituxan for NHL and RA (rheumatoid arthritis) revenue was $266 million, up 3% y/y.
Fampyra launch in Germany is gaining traction, with revenue of $3 million, and launched in the U.K. and Australia.
Other product revenues were $17 million, up 42% from $12 million year-earlier. Royalties were $52 million, up 43% y/y. Corporate partner revenues were $16 million, more than tripling from year-earlier.
Cash and marketable securities balance was $2.9 billion.
Oral BG-12 (dimethyl fumarate) CONFIRM trial for relapsing-remitting MS "demonstrated significant efficacy and favorable safety and tolerability profiles." The Phase III DEFINE trial, also reported recently, showed "signifantly reduced the proportionof patients who relapsed ... compared with placebo."
New data from AFFIRM study of long-term MS outcomes for Tysabri patients showed the benefits of earlier treatment with Tysabri. However, the FDA delayed its decision date for updating prescription information to include JC virus (which causes PML) antibody status as a risk factor for Tysabri. The JCV antibody test is now commercially available in the U.S.
Daclizumab HYP showed good Phase 2b trial results. Dexpramipexole for Lou Gehrig's (ALS) disease Phase III trial fully enrolled.
Biogen Idec will collaborate with Portola Pharmaceuticals for novel Syk inhibitors to treat autoimmune diseases including rheumatoid arthritis and lupus. The lead molecule is already in Phase I studies.
Cost of sales was $123.5 million. R&D expense was $301.4 million. Selling, general and administrative expense is $261.4 million. Collaboration and profit sharing expense was $81.5 million. Amortization of acquired intangible assets was $49.3 million. Restructuring charge $1.8 million. Fair value adjustment to contingency was $2.5 million. Making total costs and expenses $821.4 million. Leaving income from operations of $488.5 million. Other expense was $7.7 million. Income taxes $127 million.
How will you balance sales of BG-12 with Tysabri and Avonex? MS is not a homogeneous disease. Patients and doctors have different views and priorities re safety, efficacy, and side effects. We believe a large section of the population will prefer an oral compound and BG-12 stacks up well against oral therapies. We are already prepared to sell BG-12 globally.
Endpoint for Dexpramipexole trial? It is a joint rank score, using both time to death and ALSFRS scale.
There is a dissatisfied pool of MS patients, or warehouse. BG-12? We believe there are about 100,000 such patients. Some are already trying an oral agent, Gilenya.
Cash use, in light of BG-12 data? Cash is at a high point. Cash flow outlook is robust. We use cash to drive shareholder value. No reportable decisions yet.
Tolerability of BG-12? We have run a small study to see if drugs like aspirin mitigate tolerability. We will announce results when they are available. But BG-12 discontinuation rate is low anyway.
New formulation for BG-12? We are looking at the ability to get it down to two pills from one pill.
Other indications for BG-12? We are considering the possibilities.
JCV positive patients, will remain on Tysabri? So far we have seen a lot of stability even with positive patients, which we believe is due to its efficacy. Europe might be different from the U.S. because they are more likely to have started with an immunosuppressant.
False negatives for JCV assays? We have not heard those reports. We validated the assay, we have a lot of confidence in it. We only have about 30 days of assays conducted by Quest so far.
There is some natural concern about taking JCV positive patients and putting them on other immunomodulatory drugs.
We are funding the assays, so that could have a cost impact on margins. We hope to get the assays reimbursed through normal channels, eventually. Down the road margins should improve when we open the Denmark plants. We believe the PEN and the assay are very good investments.
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