Analyst Conference Call Summary

Biogen Idec Corporation

conference date: January 28, 2013 @ 5:00 AM Pacific Time
for quarter ending: December 31, 2012 (fourth quarter, Q4 2012)

Forward-looking statements

Overview: Continued revenue growth, tax charge hitting earnings, focus on 2013 product introductions.

Basic data (GAAP):

Revenues were $1.418 billion, up 2% sequentially from $1.385 billion and up 7% from $1.327 billion in the year-earlier quarter.

Net income was $292.1 million, down 27% sequentially from $398.4 million, and down 3% from $300.2 million year-earlier

EPS (earnings per share) were $1.23, down 26% sequentially from $1.67, but up 1% from $1.22 year-earlier.


Full year 2013 guidance includes revenue growth of about 10%. Non-GAAP diluted EPS expected range of $7.15 to $7.25. GAAP EPS $6.45 to $6.55. Capital expenditures between $250 and $270 million.

Conference Highlights:

Biogen Idec exceeded its financial goals, both revenue and earnings for the year. Investment in future products was heavy during the year. Expects strong earnings growth over the next few years as new products are launched and commercialized.

Full year 2012 revenue of $5.5 billion was up 9% from 2011. Full year GAAP EPS was $5.76, up 14%. Full year GAAP net income was $1.4 billion, up 12% y/y.

Long-lasting Factor IX for hemophilia had its BLA (Biologics License Application) submitted to the FDA for marketing approval on January 4. Building out the team in preparation for a successful launch late in 2013.

Biogen is preparing for the potential launch of BG-12 for MS (multiple sclerosis) in 2013. The initial PDUFA decision date for BG-12 was extended three months to late March, but no further data was requested. BG-12 should be patent protected through 2028. Tecfidera will be the brand name for BG-12, dimethyl fumarate. Believes Tecfidera can become the leading oral treatment for MS.

Dexpramipexole for ALS failed to show efficacy in its Phase III trial for ALS (amyotrophic lateral sclerosis) and will discontinue its development.

Last week Biogen reported that a Phase III trial of PEGylated interferon for MS (multiple sclerosis) met its endpoints and the data would be submitted to the FDA and EMA for approval in 2013.

Non-GAAP numbers: net income was $335 million, down 26% sequentially from $455 million, and down 10% y/y. EPS $1.40, down sequentially from $1.91 and down 7% y/y.

A charge of $29 million for Danish taxes, due to a long-term accounting error, was made in the quarter, hurting EPS by 12 cents.

Avonex (interferon beta-1a) revenue was $753.2 million, up 2% sequentially from $736.2 million, and up 7% from $703.2 million year-earlier. Avonex had an up year after a couple of years of decline.

Tysabri (natalizumab) revenue was $295.2 million, up 7% sequentially from $274.8 million and up 10 % from $269.4 million year-earlier. 1500 new commercial patients in the quarter. Tysabri is gaining market share as JCV testing has spread. New patients are mostly JCV negative. An expanded label has been requested.

Rituxan for NHL and RA (rheumatoid arthritis) revenue was $281 million, down 2% sequentially from $288 million, but up 9% from year-earlier.

Fampyra revenue was $10.5 million, down 14% sequentially from $12.2 million but up 1% from $10.4 million year-earlier.

Fumaderm revenue was $15.8 million, down 1% sequentially from $16.0 million, but up 17% from $13.5 billion year-earlier.

Royalty revenue was $56 million, up 19% sequentially from $47 million, and up 7% from year-earlier. Corporate partner revenue was $6 million.

Cash and equivalents balance ended at $3.7 billion. 2/3 is in U.S.

Cost of sales was $133.8 million. Research and development expense $345.2 million. Selling, general and administrative expense $376.0 million. Collaboration profit sharing $78.0 million. Amortization of acquired intangible assets $50.9 million. Fair value adjustment of contingent consideration $3.6 million. Gain on sale of rights $15.1 million. Other expense $14.3 million. Income taxes $136.3 million (includes the Danish charge). Equity in loss of investee $2.7 million.

During the quarter a new research consortium was created for ALS. A manufacturing alliance with Eisai was announced. A collaboration agreement with Isis Pharmaceuticals for antisense drugs for neurological disorders was announced. A new building was opened in Research Triangle Park. A free hemophilia genetic testing program, My Life, was announced.

See also the Biogen-Idec product pipeline for information on Biogen Idec's Phase I and Phase II candidates.


PML cases with BG-12, other side effects? We also worry about unlikely events. BG-12 has been studied in 3600 patients with no PML. Fumaderm has had 4 cases out of 180,000 patient-years, which is the normal rate for patients with autoimmune disease, and all 4 had other risk factors involved. This is not new information, and these are not new cases. As to the kidney issue, the information was from an internal web site and was not vetted. The data is old and the FDA has had the data for years. We did renal monitoring during Phase III and found no signs of the problem for BG-12.

BG-12 analyst model $330 million for 2013? Post the PDUFA delay, some street models did not adjust to 9 months vs. 12 months. We don't know about compliance will work out for the twice a day dose. The revenue number is a range.

ADVANCE trial PEG dosing differences? Both doses are good news from a convenience standpoint. Placebo patients roll over to active drugs in the 2 year study. We'll get some additional long-term tolerability and efficacy data.

Pricing of BG-12 versus competitors? There is a range between Aubagio ($45K) and Gilenya. Gross to net price dynamics differ private to government, and should be manageable.

New patient starts for Tysabri? We feel good, Q4 is typically softer. Risk stratification is starting to take hold and improve physician confidence.

Margins, R&D? In 2013 we expect to deleverage SG&A because of potential launches. We should make that up in R&D. We will continue to look at business development deals in R&D, but that is not in guidance. We do want to continue to build our early and mid-stage pipelines.

Do you see PEG interferon as the future market leader among interferons? Our theory is convenience is an important differentiator. PEG could be the leading injectable, not just the leading interferon.

Pricing and reimbursement changes for BG-12 outside U.S.? The European pricing environment has been very difficult the last couple of years and we figure that to continue as long as the Euro economy is poor. So pricing differential with U.S. has increased over time.

PEG Avonex data is still being analyzed, but the discontinuation rate was low, so flu-like symptoms were of tolerable, short duration.

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Copyright 2013 William P. Meyers