Analyst Conference Call Summary

Biogen Idec Corporation

conference date: October 25, 2012 @ 5:00 AM Pacific Time
for quarter ending: September 30, 2012 (third quarter, Q3 2012)

Forward-looking statements

Overview: Solid net income growth.

Basic data (GAAP):

Revenues were $1.385 billion, down 3% sequentially from $1.421 billion, but up 6% from $1.309 billion in the year-earlier quarter.

Net income was $398.4 million, up 3% sequentially from $386.8 million, and up 13% from $351.8 million year-earlier.

EPS (earnings per share) were $1.67, up 4% sequentially from $1.61 and up 17% from $1.43 year-earlier.


Updated full year 2012 to: y/y revenue growth in the mid to high single digits. GAAP EPS between $5.63 and $5.73. Non-GAAP EPS between $6.40 and $6.50.

Conference Highlights:

Long-lasting Factor IX for hemophilia reached primary endpoints in a Phase 3 trial.

Biogen is preparing for the potential launch of BG-12 in 2013. There should soon be data from Factor VIII, from dexpramipexole for ALS, and PEGylated interferon for MS. But the initial PDUFA decision date for BG-12 was extended three months to late March, but no further data was requested.

Non-GAAP numbers: net income was $455 million, up 4% sequentially from $439 million and up 19% from year-earlier. EPS $1.91, up 4% sequentially from $1.82 and up 19% from year-earlier.

A gain of $32 million was recognized related to the sale of royalty rights to Benlysta to DRI capital, with royalties continuing through September 2014.

Avonex (interferon beta-1a) revenue was $736.2 million, down 3% sequentially from $762 million, and up 8% from $681.7 million year-earlier. Pen is continuing to drive sales.

Tysabri (natalizumab) revenue was $274.8 million, down 2% sequentially from $280 million, and down 1% from $277.3 million year-earlier. Second generation JCV assay was launched in Europe and will soon be launched in the U.S. 2100 new patients added in the quarter. We are seeing increased testing of potential patients. Units grew, but revenue was impacted by deferring of revenue in Italy.

Rituxan for NHL and RA (rheumatoid arthritis) revenue was $288 million, up sequentially from $285 million, and up 8% y/y.

Fampyra revenue was $12.2 million, down sequentially from $19.7 million, but up from $3.1 million year-earlier.

Fumaderm revenue was $16.0 million, up from $13.6 billion year-earlier.

Royalty revenue was $47 million, down from $52 million year-earlier.

Cash and equivalents balance ended at $3.3 billion.

See also Biogen-Idec product pipeline.

Cost of sales was $139.4 million. Research and development expense $304.2 million. Selling, general and administrative expense $299.6 million. Collaboration profit sharing expense $75.5 million. Amortization of acquired intangibles $53.0 million. Fair value adjustment $9.5 million. Restructuring $0.8 million. Gain on sale of rights $31.7 million. Resulting in operating income of $535.3 million. Other expense $4.5 million. Income taxes $131.0 million. Equity in loss of investee $1.3 million.


BG-12 delay? Technically we made a major amendment, in answering FDA questions. That is their judgment, whether it is major or not. It is their only way to extend a PDUFA date.

Investment in BG-12 ahead of time? As guidance implies, quarterly SG&A spend will be lumpy. It is more than just customer-facing resource costs. We are really preparing for BG-12 over the next 60 to 90 days. This is a rare opportunity we have. We hope the launch will be early in Q2 2013.

Tysabri patient growth? There is not an exact correlation between patients and units. Both grew y/y. Visibility is excellent in the U.S., but not quite as clear in other countries. We did not see any compliance trends in the quarter.

Avonex saw modest price reductions, notably in France.

Fumaderm and BG-12 are different drugs. Obviously the regulators are aware of the data on Fumaderm.

Dexpramipexole preparations based on unblinded data? No, not based on data. The thinking is that if this trial is positive, the unmet need is very high, so there could be a quick review and need to supply patients. We have done some work in preparation, but not of the magnitude of BG-12 preparations.

BG-12 pricing versus competitions? Thinking hard about it. Looking at the other drugs in the category.

Italy resolution? We are frustrated that we were not able to get this done this year. It is a big objective of ours for 2013.

SG&A Q4 and 2013 run rate? A lot of the Q3 to Q4 increase is fees and services. To clearly see 2013 we need the next few months under our belts and the pivotal trial readouts. It depends on how many products we are able to launch.

037 clinical developments? It has not changed our thinking about our own antibody, which works by a different mechanism to remove beta amyloid. We are still excited about our product.

Did Spain pay you this quarter? We got a large payment from Spain in Q2. In Q3 they went back to slow payment. We have a total of about $200 million in accounts receivable in Italy, Spain, and Portugal combined. In Greece we are on a cash basis.

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Copyright 2012 William P. Meyers