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conference date: February 15, 2007 @ 5:30 AM Pacific
Time
for quarter ending: December 31, 2006 (4th quarter)
Overview: Solid year-over-year revenue and profit growth, slower sequential growth, and missed some analyst's estimates
Basic data:
Revenues of $708 million were up less than 1% sequentially from $703 million in Q3 and up 12% from $633 million in Q4.
GAAP net income was $108.5 million, up 95% from $55.6 million year-earlier. The company also release non-GAAP net income of $184 million, up 11% from $165 million year-earlier.
Earnings per share (EPS) were $0.32, up 100% from $0.16 in Q4 2005. Non-GAAP EPS was stated as $0.53, up 10% from $0.48 in Q4 2005.
Cash and equivalents ended at $902.7 million.
Guidance:
For the full year 2007: year-over-year revenue up in mid-teen percentage. Margins similar to 2006, excepting higher R&D expense, which will be 27 to 29% of total revenue. Non-GAAP EPS $2.50 to $2.65. GAAP EPS $1.69 to $1.84. Capital expenditures $250 to $300 million.
Conference Highlights:
Most productive year in business development (acquisitions) in our history. Good year for pipeline development. On track for 20% per year compounded EPS growth through 2007.
Tysabri sales were $30 million, with $23 million in the US and $7 million in Europe. This is in collaboration with Elan; Biogen-Idec recognized $18 million of the revenue, up 20% from year-earlier. To date, nearly 10,000 patients have been prescribed Tysabri. Now in Phase 2 of launch, which emphasizes efficacy of drug. Believes will become 1# drug in MS. Patients are switching from other therapies. Adding 300 patients per week. 1,600 non-US patients in treatment; continuing to roll out in various countries. 5000 current US patients. Current MS patient population over 400,000.
Avonex revenues rose to $439 million, up 6% from prior year. Took a 5% price increase this year.
Rituxan revenues were $218 million, up 20% (sales of Rituxan totaled $560 million by Genentech).
Royalty revenues were $26 million; other products $7 million.
GAAP v. non-GAAP items: $60 million amortization from Biogen merger with Idec; $28 million loss, settlement with Fumedica; $16 million gain on sale of facility; stock compensation expense of $8 million; tax benefit relate to these items.
Avonex launched in Japan on November 8. Reiterated announced study results, new study launches, and sBLA submission for Tysabri for Crohn's disease (CD). Syntonix Pharmaceutical acquisition was completed January 31, 2007, for $40 million.
$62 million cost of goods sold. Gross margin over 90% for full year. R&D $197 million in Q4. SG&A (sales, general and administrative expense) $182 million. Negative $4.4 million collaborative profit sharing (Elan-Tysabri international loss). 30% non-GAAP tax rate.
Q&A:
Rituxan royalty stepdown? Function of when humanized program launch takes place, no sooner than beginning of next decade. The expansion from the next-generation drug will outweigh the stepdown.
Tysabri adoption since January? About 300 patients a week world-wide. Market research shows number of qualified physicians is going to grow as they get TOUCH training.
Genentech arbitration for next generation CD20? Programs (287 & 114) continue in clinic. Dispute is about decision-making rights. Debate is about strategy, it is a typical arbitration proceeding, but still in preliminary stage, may take months to play out. Genetech alleged November 2003 merger consitituted change of control. BIIB disagrees, and window to make that allegation passed 3 years ago. Relationship will go on, just need clarity on decision rights.
Tysabri stopped patient retreatment? 30% of TOUCH forms received are from 1st launch patients.
Big question about Tysabri is its safety once it is out broadly. If safety is what is expected people will become comfortable was we go. Label says expecting to see more cases of PML; hope to identify patients with high risk of that. Safety question gets answered by end of 2008.
Biosimilars in Europe? Expect to see in a couple of years, after they have finished testing.
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Disclaimer: Our analyst summaries may include both our condensations of statements made by company representatives and our own analysis. They are not covered by any warranty. We cannot guarantee anything said by company representatives is true. We try not to make errors, but it's possible. Before making or terminating an investment you should always verify any factual basis of your decision.
Copyright 2007 William P. Meyers