Analyst Conference Summary

conference date: April 20, 2010 @ 5:30 AM Pacific Time
for quarter ending: March 31, 2009 (first quarter)

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

Overview: Flat revenues, higher expenses lead to drop in earnings, despite sales of Tysabri still ramping.

Basic data (GAAP):

Revenues were $1.11 billion, down 2% sequentially from $1.13 billion but up 7% from $1.04 billion in the year-earlier quarter.

Net income was $220.0 million, down 28% sequentially from $305.6 million and also down 11% from $246.6 million year-earlier.

EPS (earnings per share) were $0.80, down 25% sequentially from $1.06 and also down 5% from $0.84 year-earlier.

Guidance:

May make $30 million milestone payment on daclizumab in Q2.

Guidance for 2010 unchanged [Full year GAAP EPS above $3.71; non-GAAP EPS above $4.55]. $70 to $90 million decrease in revenue due to health care law changes, but long term coverage of uninsured patients will help later.

Conference Highlights:

Hurt by a $14 million charge for impaired investment in Aveo Pharmaceuticals and a $13 million charge due to passage of Patient Protection and Affordable Care Act requiring increased Medicaid rebates.

Believes has "the potential to drive long-term Tysabri adoption, including the JC virus assay and a comparative study." Long term growth could also come from six possible new product introductions from the clinical pipeline.

Revenue by product:

Avonex (interferon beta-1a) revenues $592.5 million, up 7% from $555.3 million year-earlier. Price increased on February 26. Building sales and marketing efforts for this drug again. Sales volume impacted by high unemployment and free drug programs.

Tysabri (natalizumab) revenues $218.6 million, up 32% from $165.2 million year-earlier. About 50,300 patients are currently taking Tysabri. Tysabri patient starts accelerated in March in the U.S., but decelerated in the quarter in Germany. Estimates less than 10% for U.S. patients were in drug suspension.

Fumaderm revenues were $13.1 million, up % from $10.6 million year-earlier.

Rituxan for NHL and RA (rheumatoid arthritis) produced $255.0 million, down 9% from $278.8 million year-earlier. These are profit sharing, unconsolidated joint business revenues. Decline due to expiration of royalties outside the U.S.

Royalty revenue was $26.0 million, up 8% from $24.1 million year-earlier.

Cash and marketable securities ended the quarter at $2.18 billion, down from $2.45 billion year-earlier. $577.6 million was spend in the quarter on share repurchases. An additional $1.5 billion share repurchase program has been approved. $337 million cash flow was generated from operations.

Non-GAAP numbers: EPS $1.08, up 3% y/y. Net income $296 million, down 3% from year-earlier.

BG-12 (dimeythl fumarate) trials completed enrollment, PEGylated interferon beta-1a enrollment continues, daclizumab continues clinical development.

SURPASS study compares Tysabri to Copaxone or Ebif for relapsing MS (multiple sclerosis) patients. With Elan, started a clinical study to detect JC virus antibodies, to help ascertain risk of PML for Tysabri patients. Preliminary data indicates much lower PML risk in JC antibody negative patients.

Ocrelizumab for rheumatoid arthritis program was suspended in March. But remains ongoing in MS, where the study achieved its primary endpoint.

Rituxan combo approved in February by FDA for CD20-positive CLL (chronic lymphocytic leukemia). Other label expansions for Rituxan are underway.

Hemophilia treatments rFVIIIfc and rFIXFc agreement amended to give Biogen full responsibilities and manufacturing rights. Readouts expected later this year.

$40.0 million paid in the quater as research milestone to Syntonix for B-LONG for hemophilia B. Enrollment for B-LONG trial is underway.

76 clinical trials in total currently being supported.

Cost of sales was $97.1 million. Research and development $307.0 million. Selling general and administrative $248.7. Amortization of acquired intangibles $48.9 million. Collaboration profit-sharing $63.6 million. Acquired in-process R&D $40.0 million. Total costs and expenses was $805.2 million. Other expense $8.4 million. Income tax $75.3 million.

Q&A:

Avonex sequential sales decline? In U.S. y/y unit decline about 9%. Outside U.S. up mid-single digits y/y.

Size of share repurchase plan? Continues to look for strategic alternatives; capable of making acquisitions on top of repurchases due to credit availability and strong cash flow.

Tysabri patient suspensions? We reported single digits in Q4, so change to about 10% is not a big change for Q1.

PML rate? Monitoring incidence by duration of therapy. These are very small numbers, within expected variability. We constantly communicate with the FDA about this. We are encouraged by preliminary JC virus testing data. 9000 patients will be in trial, that should give us good information for stratifying patient risk.

Suspensions vs. discontinuation rates? We get that from the TOUCH program, which every Tysabri patient in the U.S. is in, but there is still ambiguity because a doctor can restart a patient at any time.

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