Analyst Conference Call Summary

conference date: July 24, 2012 @ 5:00 AM Pacific Time
for quarter ending: June 30, 2012 (second quarter, Q2 2012)

Forward-looking statements

Overview: Growing revenue, generating cash for stock buy backs.

Basic data (GAAP):

Revenues were $1.421 billion, up 10% sequentially from $1.292 billion and up 17.5% from $1.209 billion in the year-earlier quarter.

Net income was $386.8 million, up 28% sequentially from $302.7 million and up 34% from $288.0 million year-earlier.

EPS (earnings per share) were $1.61, up 29% sequentially from $1.25 and up 36% from $1.18 year-earlier.

Guidance:

Updated guidance for the full year 2012. Revenue expected up in the mid-single digits over 2011. Cost of sales 9 to 10% of revenue. R&D expense 24% to 25% of revenue. SG&A expense $22% to 23% of revenue. Tax rate near 24%. Non-GAAP diluted EPS at $6.20 or above, with GAAP EPS above $5.44. Capital expenditures from $230 million to $250 million.

Conference Highlights:

Revenue increase was led by Rituxan revenues, but year-earlier Rituxan revenue had been reduced by a $50 million charge. Tysabri not showing growth, but Avonex was strong. Costs were in line with expectations.

Preparing for BG-12 launch and four pivotal trial results in the next nine months.

Non-GAAP numbers: net income was $439 million, up 30% sequentially from $338 million and up 32% y/y. EPS $1.82, up 30% sequentially from $1.40 and up 34% y/y. Note there was a $50 million charge in Q2 2011.

Avonex (interferon beta-1a) revenue was $762 million, up 15% sequentially from $661.6 million, and up 16% y/y. The PEN and AVOSTARTGRIP dosing kits have been well-received. The PEN became available in the U.S. on May 14. 11% global unit gain, but down 2% y/y in U.S. Benefited from resupply in some markets. Expects to see increased competition later in 2012 from a second oral therapy.

Tysabri (natalizumab) revenue was $280 million, down 2% sequentially from $285.5 million and flat y/y. Total global Tysabri sales were $395 million, with $184 million in the U.S. Approximately 69,100 patients used the therapy in the quarter. Unit sales were up 10%. Italian affiliate deferred $16 million revenue, and exchange rates hurt. Believes risk stratification is working. Overall discontinuations have been modest, with solid new patient adds.

Rituxan for NHL and RA (rheumatoid arthritis) revenue was $285 million, flat sequentially from $285 million, but up 31% y/y partly due to a $50 million charge in Q2 2011.

Fampyra revenue was $19.7 million, up 31% sequentially $15.0 million (not for sale year-earlier). Most sales are currently in Germany. Expects to see that cut in half for rest of year due to a change in the reimbursement process.

Fumaderm revenue was $14.6 million, up 10% sequentially from $13.3 million, but down 3% from $15.1 million year-earlier.

Royalty revenue was $37.1 million, up from $28.6 million year-earlier. Corporate partner revenue (manufacturing contracts) was $22.4 million, up from $6.8 million year-earlier.

Cash and marketable securities balance was $2.87 billion. Received substantial overdue payments from Spain. Repurchased $447 million of shares, completed $500 million in early July.

BG-12 (dimethyl fumarate), an oral therapy for multiple sclerosis, was submitted for FDA approval on February 28, 2012, followed by a submission in Europe in March, and in Canada, Switzerland and Australia during Q2.

A Phase 2 anti-LINGO MS trial is now expected to be initiated in the second half of 2012.

Two global pediatric trials were initiated for long-lasting hemophilia factor VIII and IX, and the Phase III trials completed enrollment, with readouts before year's end. Daclizumab Phase III multiple sclerosis completed enrollment. STX-100 for IPF (idiopathic pulmonary fibrosis) Phase 2a study enrolled first patient. Dexpramipexole for amyotrophic lateral sclerosis (ALS) Phase III readout also due this year.

Biogen Idec entered into an option and collaboration agreement with Isis Pharmaceuticals to develop an antisense drug for DM1 (myotonic dystrophy), a genetic neuromuscular disease. $12 million payment made to Isis in Q2 for R&D.

Revitalizing discovery efforts with greater emphasis of target identification.

See also Biogen-Idec product pipeline.

Q&A:

Tysabri discontinuation rates? It does vary country by country as we test for JVC, but not significantly.

Avonex in U.S., how much was stocking new products? Strength was global, benefiting from resupply and Brazil tender. Our inventories ended up under 2 weeks, we don't know about retailer inventories. The PEN is the real advantage.

Cash balance use? No change. Small acquisitions with share buybacks.

Tysabri patient mix post-assay? Most patients tested now are candidates, not already patients. We are seeing new patients, with 2400 net adds in the quarter. Believes vast majority of existing Tysabri patients were in 2011, but some are retesting. The majority of Tysabri patients have stayed on the product even after testing positive.

In Brazil the government tries to reduce what they pay in tenders each year. We believe MS is underdiagnosed in Brazil. The tender was a little less than $10 million.

In Germany we won't know the price for Fampyra because it won't be decided until 2013 and will be retroactive. So we will be conservative in accounting, then bring in line with price when we know it. We believe the demand for Fampyra in Germany remains strong.

We do feel Q2 was very strong and guidance reflects possible lightening of Avonex revenues as well as increased expenses for BG-12 launch.

Hopes to get Italian resolution in the autumn. It is a pricing dispute.

Second study for Dexpramipexole was delayed in order to see results from first study and modify if indicated.

LINGO? We are unlikely to get data in 2013. Remyelination data will come from visual function and nerve responses, and through tomography for neural protection. We will be looking at lesions. We believe some remyelination occurs naturally, but that anti-Lingo increases that.

Avonex competition with oral MS therapies will depend heavily on relative effectiveness.

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