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Press release from Business Wire

Biogen Idec Reports Second Quarter 2011 Results

<p class='bwalignc'> <i>TYSABRI® Global In-Market Revenue Trending over $1.5 Billion Annualized Run Rate; Second Quarter TYSABRI Revenues Increase 28%</i> </p>

Tuesday, July 26, 2011

Biogen Idec Reports Second Quarter 2011 Results07:15 EDT Tuesday, July 26, 2011 WESTON, Mass. (Business Wire) -- Biogen Idec Inc. (NASDAQ: BIIB), a global biotechnology leader in the discovery, development, manufacturing and commercialization of innovative therapies, today announced its second quarter 2011 results. Second Quarter 2011 Highlights: Second quarter revenues were $1.2 billion, flat compared to the second quarter of 2010. TYSABRI (natalizumab) revenues increased 28% year-over-year to $281 million while AVONEX® (interferon beta-1a) revenues increased 5% year-over-year to $659 million. RITUXAN® (rituximab) revenues from our unconsolidated joint business arrangement were $216 million for the quarter, down 29% versus prior year. Our share of RITUXAN revenues from our unconsolidated joint business was reduced by approximately $50 million during the second quarter of 2011 as a result of an accrual relating to an intermediate decision in Genentech, Inc.'s ongoing arbitration with Hoechst GmbH. Global in-market sales of TYSABRI in the second quarter of 2011 were $389 million, an increase of 31% over the second quarter of 2010. The total was comprised of $183 million in U.S. sales and $206 million in sales to markets outside the U.S. On a reported basis, calculated in accordance with accounting principles generally accepted in the U.S. (GAAP), second quarter 2011 GAAP diluted EPS were $1.18, an increase of 5% over the second quarter of 2010. GAAP net income attributable to Biogen Idec for the quarter was $288 million, a decrease of 2% from the second quarter of 2010. Non-GAAP diluted EPS for the second quarter of 2011 were $1.36, an increase of 4% over the second quarter of 2010. Non-GAAP net income attributable to Biogen Idec for the second quarter of 2011 was $332 million, a decrease of approximately 3% from the second quarter of 2010. A reconciliation of our GAAP to non-GAAP results is included on Table 3 within this press release. As of June 30, 2011, Biogen Idec had cash, cash equivalents and marketable securities of approximately $2.5 billion. “We are pleased with our strong second quarter performance” said George A. Scangos, Ph.D., chief executive officer of Biogen Idec. “Our commercial and financial performance has been strong, and we have made great progress on our pipeline, which is now focused on high quality projects in areas of our expertise – neurology, immunology, and hemophilia. This quarter, we were excited by the European Commission's approval of the inclusion of JCV antibody status as an additional PML risk factor in TYSABRI labeling, as well as the conditional approval for FAMPYRA. We continue to focus on execution to insure that we achieve our ambitious goals and continue our positive momentum into the second half of this year.” Share Repurchases During the second quarter of 2011, Biogen Idec repurchased 2.2 million shares of stock at a total cost of $191 million. TYSABRI Patient Growth Based upon data available to us through the TOUCH® prescribing program and other third-party sources, as of the end of June 2011, we estimate that approximately 61,500 patients were on commercial and clinical TYSABRI therapy worldwide, and that cumulatively approximately 88,100 patients have ever been treated with TYSABRI in the post-marketing setting. Other Products and Royalties Revenues from other products in the second quarter of 2011 were $16 million, an increase of 36% over the second quarter of 2010. Table 4 provides individual product revenues. Royalties were $29 million in the second quarter of 2011, a decrease of 5% compared to the second quarter of 2010. Corporate partner revenues in the second quarter of 2011 were $7 million, compared to $17 million in the second quarter of 2010. Revised Financial Guidance Biogen Idec also revised its 2011 financial guidance. This guidance consists of the following components: Revenue growth is expected to be in the low to mid-single digits versus 2010. Cost of Sales is expected to be approximately 9% to 10% of total revenue. R&D is expected to be approximately 22% to 24% of total revenue. SG&A is expected to be approximately 20% to 21% of total revenue. Tax rate is expected to be approximately 26% to 28% of pretax income. GAAP diluted EPS is expected to be above $4.91. Non-GAAP diluted EPS is expected to be above $5.70. Capital expenditures are expected to be in the range of $200 to $220 million. Biogen Idec may incur charges, realize gains or experience other events in 2011 that could cause actual results to vary from this guidance. Recent Events On July 26, 2011, Biogen Idec and Swedish Orphan Biovitrum presented data on the long-lasting recombinant factor VIII therapy at the International Society on Thrombosis and Haemostasis meeting. Results showed the potential to significantly reduce the burden of treatment for people with Hemophilia A. On July 20, 2011, Biogen Idec received conditional approval in the European Union for FAMPYRA® (prolonged-release fampridine tablets) to improve walking in adults with multiple sclerosis. The novel oral therapy provides clinically meaningful improvement in daily function. On July 3, 2011, Biogen Idec researchers identified a novel approach for promoting remyelination and inhibiting autoimmune activation as a potential therapeutic option for the treatment of multiple sclerosis. On June 23, 2011, Biogen Idec announced that its share of RITUXAN revenues from the unconsolidated joint business will be reduced by approximately $50 million during the second quarter of 2011 as a result of an accrual relating to an intermediate decision in Genentech's ongoing arbitration with Hoechst. On June 22, 2011, the European Commission approved the inclusion of Anti-JC Virus Antibody Status as a PML risk factor in TYSABRI labeling. A five year marketing authorization for TYSABRI was also renewed in the EU. On June 7, 2011, Biogen Idec received approval in the European Union for AVONEX(R) PEN(TM), the first single-use intramuscular autoinjector designed to improve convenience of once-weekly AVONEX administration. On June 6, 2011, Biogen Idec announced positive data from the AVONEX Dose Titration Study at the 2011 Annual Meeting of the Consortium of Multiple Sclerosis Centers. The data showed that titrating AVONEX at the initiation of treatment reduced the severity of flu-like symptoms. On May 20, 2011, the European Medicines Agency's (EMA) Committee for Medicinal Products for Human Use issued a positive opinion on the Marketing Authorisation Application for FAMPYRA. On May 16, 2011, Biogen Idec received approval for FAMPYRA from The Australian Therapeutic Goods Administration to improve walking ability in adult patients with multiple sclerosis. On May 9, 2011, Biogen Idec and Swedish Orphan Biovitrum received an opinion from the EMA agreeing to a pediatric investigational plan for the companies' long-lasting Hemophilia B therapy. Conference Call and Webcast The company's earnings conference call for the second quarter will be broadcast via the internet at 8:30 a.m. ET on July 26, 2011, and will be accessible through the Investors section of Biogen Idec's homepage, www.biogenidec.com. Supplemental information in the form of a slide presentation will also be accessible at the same location on the internet at the time of the earnings conference call and will be available there subsequently through August 26, 2011. About Biogen Idec Biogen Idec uses cutting-edge science to discover, develop, manufacture and market therapies for the treatment of serious diseases with a focus on neurological disorders. Founded in 1978, Biogen Idec is the world's oldest independent biotechnology company. Patients worldwide benefit from its leading multiple sclerosis therapies, and the company generates more than $4 billion in annual revenues. For product labeling, press releases and additional information about the company, please visit www.biogenidec.com. Safe Harbor This press release contains forward-looking statements, including statements about the anticipated development of programs in our clinical pipeline and financial guidance. These forward-looking statements may be accompanied by such words as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “target,” “will” and other words and terms of similar meaning. You should not place undue reliance on these statements. These statements involve risks and uncertainties that could cause actual results to differ materially from those reflected in such statements, including our dependence on our three principal products, AVONEX, RITUXAN and TYSABRI, the importance of TYSABRI's sales growth, product competition, uncertainty of success in commercializing other products, the occurrence of adverse safety events with our products, changes in the availability of reimbursement for our products, adverse market and economic conditions, our dependence on collaborations and other third parties over which we may not always have full control, failure to execute our growth initiatives, failure to comply with government regulation and possible adverse impact of changes in such regulation, charges and other costs relating to our properties, problems with our manufacturing processes and our reliance on third parties, fluctuations in our effective tax rate, our ability to attract and retain qualified personnel, the risks of doing business internationally, our ability to protect our intellectual property rights and the cost of doing so, product liability claims, fluctuations in our operating results, the market, interest and credit risks associated with our portfolio of marketable securities, our level of indebtedness, environmental risks, aspects of our corporate governance and collaborations, representation of activist shareholders on our board of directors, and the other risks and uncertainties that are described in the Risk Factors section of our most recent annual or quarterly report and in other reports we have filed with the SEC. These statements are based on our current beliefs and expectations and speak only as of the date of this press release. We do not undertake any obligation to publicly update any forward-looking statements.   TABLE 1Biogen Idec Inc.June 30, 2011Consolidated Statements of Income(in thousands, except per share amounts)(unaudited)                   Three Months EndedSix Months EndedJune 30,June 30,   2011     2010   2011     2010   REVENUES   Product $ 956,703 $ 859,235 $ 1,863,805 $ 1,683,455   Unconsolidated joint business 216,458 306,371 472,583 561,300   Royalties 28,649 30,098 54,227 56,120   Corporate partner   6,837     16,998   21,375     20,687     Total revenues   1,208,647     1,212,702   2,411,990     2,321,562     COST AND EXPENSES   Cost of sales, excluding amortization of acquired intangible assets 100,503 106,985 203,616 204,040   Research and development 285,644 331,675 579,277 638,705   Selling, general and administrative 266,301 262,322 510,819 510,987   Collaboration profit sharing 88,050 62,692 162,844 126,249   Amortization of acquired intangible assets 55,136 53,148 108,352 102,037   Restructuring charges - - 16,587 -   Fair value adjustment of contingent consideration 2,200 - 3,400 -   Acquired in-process research and development   -     -   -     39,976     Total cost and expenses   797,834     816,822   1,584,895     1,621,994     Income from operations 410,813 395,880 827,095 699,568   Other income (expense), net   (11,728 )   1,012   (1,777 )   (7,373 )   INCOME BEFORE INCOME TAX EXPENSE 399,085 396,892 825,318 692,195   Income tax expense   95,036     102,243   212,504     177,553     NET INCOME $ 304,049   $ 294,649 $ 612,814   $ 514,642     Net income attributable to noncontrolling interest, net of tax   16,015     1,211   30,450     3,762     NET INCOME ATTRIBUTABLE TO BIOGEN IDEC INC. $ 288,034   $ 293,438 $ 582,364   $ 510,880       BASIC EARNINGS PER SHARE $ 1.19   $ 1.13 $ 2.40   $ 1.92     DILUTED EARNINGS PER SHARE $ 1.18   $ 1.12 $ 2.38   $ 1.91       WEIGHTED-AVERAGE SHARES USED IN CALCULATING:BASIC EARNINGS PER SHARE   242,375     259,938   241,932     265,018     DILUTED EARNINGS PER SHARE   244,966     261,658   244,899     267,272       TABLE 2Biogen Idec Inc.June 30, 2011Condensed Consolidated Balance Sheets(in thousands)(unaudited)       June 30,2011   December 31,2010ASSETS   Cash, cash equivalents and marketable securities $ 1,326,744 $ 1,207,744   Accounts receivable, net 666,960 605,329   Inventory 308,254 289,066   Other current assets   386,665   438,281   Total current assets   2,688,623   2,540,420   Marketable securities 1,183,559 743,101   Property, plant and equipment, net 1,712,869 1,641,634   Intangible assets, net 1,678,867 1,772,826   Goodwill 1,146,314 1,146,314   Investments and other assets   211,747   248,198   TOTAL ASSETS $ 8,621,979 $ 8,092,493     LIABILITIES AND SHAREHOLDERS' EQUITY     Current portion of notes payable and other financing arrangements $ 131,981 $ 137,153   Other current liabilities 822,349 912,969   Long-term deferred tax liability 196,784 200,950   Notes payable and line of credit 1,062,986 1,066,379   Other long-term liabilities 351,685 325,599   Shareholders' equity   6,056,194   5,449,443   TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 8,621,979 $ 8,092,493     TABLE 3Biogen Idec Inc.June 30, 2011Condensed Consolidated Statements of Income - Non-GAAP(in millions, except per share amounts)(unaudited)                   Three Months EndedSix Months EndedJune 30,June 30,EARNINGS PER SHARE   2011     2010     2011     2010     GAAP earnings per share - Diluted $ 1.18 $ 1.12 $ 2.38 $ 1.91 Adjustments to net income attributable to Biogen Idec Inc. (as detailed below)   0.18     0.19     0.40     0.48   Non-GAAP earnings per share - Diluted $ 1.36   $ 1.31   $ 2.78   $ 2.39       An itemized reconciliation between net income attributable to Biogen Idec Inc. on a GAAP basis and net income attributable to Biogen Idec Inc. on a non-GAAP basisis as follows:   GAAP net income attributable to Biogen Idec Inc. $ 288.0 $ 293.4 $ 582.4 $ 510.9 Adjustments: R&D: Restructuring and severance - 0.6 - 1.3 R&D: Stock option expense 0.5 0.8 1.7 2.4 R&D: Expenses paid by Cardiokine - 1.9 - 3.8 SG&A: Restructuring and severance - 1.5 - 5.8 SG&A: Stock option expense 1.2 8.8 2.5 19.5 Amortization of acquired intangible assets 55.1 53.2 108.4 102.0 Restructuring charges - - 16.6 - Fair value adjustment of contingent consideration associated with the 2010 Panima acquisition 2.2 - 3.4 - Acquired in-process research and development related to the contingent considerationpayment associated with the 2007 Syntonix acquisition - - - 40.0 Income tax expense: Income tax effect related to reconciling items (14.8 ) (15.1 ) (33.5 ) (42.3 ) Noncontrolling interest: Expenses paid by Cardiokine   -     (1.9 )   -     (3.8 ) Non-GAAP net income attributable to Biogen Idec Inc. $ 332.2   $ 343.2   $ 681.5   $ 639.6       2011 Full Year Guidance GAAP to non-GAAP adjustments An itemized reconciliation between projected EPS on a GAAP basis and on a non-GAAP basis is as follows:   $ MillionsSharesDiluted EPSProjected GAAP net income attributable to Biogen Idec Inc.$1,203.0245$4.91Adjustments: Stock option expense 12.4 Amortization of acquired intangible assets 220.7 Restructuring charges 23.1 Contingent consideration 5.5 Income taxes   (68.2 )     Projected Non-GAAP net income attributable to Biogen Idec Inc.$1,396.5     245   $5.70     Use of Non-GAAP Financial MeasuresOur “non-GAAP net income attributable to Biogen Idec Inc.” and “non-GAAP diluted EPS” financial measures exclude the following items from GAAP net income attributable to Biogen Idec Inc. and diluted EPS: 1. Purchase accounting and merger-related adjustments. We exclude certain purchase accounting impacts, such as those related to the 2003 merger between Biogen, Inc. and Idec Pharmaceuticals, Inc., the acquisitions of Fumapharm AG, Conforma Therapeutics, Syntonix Pharmaceuticals, and Panima Pharmaceuticals AG and the consolidation of Knopp and Cardiokine. These include charges for in-process research and development and amortization of the acquired intangible assets. Excluding these charges provides management and investors with a supplemental measure of performance in which the Company's acquired intellectual property is treated in a comparable manner to its internally developed intellectual property. 2. Stock option expense recorded in accordance with the accounting standard for share-based payments. We believe that excluding the impact of expensing stock options better reflects the recurring economic characteristics of our business. We exclude stock option expense from our non-GAAP R&D expenses and SG&A expenses, but include the impact of all other share-based awards and cash incentives in our non-GAAP results. 3. Other items. We evaluate these on an individual basis, and consider both the quantitative and qualitative aspects of the item, including (i) its size and nature, (ii) whether or not it relates to our ongoing business operations, and (iii) whether or not we expect it to occur as part of our normal business on a regular basis. We believe it is important to share these non-GAAP financial measures with shareholders as they better represent the ongoing economics of the business, reflect how we manage the business internally and set operational goals, and form the basis of our management incentive programs. Non-GAAP net income attributable to Biogen Idec Inc. and diluted EPS should not be viewed in isolation or as a substitute for reported, or GAAP, net income attributable to Biogen Idec Inc. and diluted EPS.   TABLE 4Biogen Idec Inc.June 30, 2011Product Revenues(in thousands)(unaudited)       Three Months EndedJune 30,   2011   2010PRODUCT REVENUES   Avonex® $ 659,233 $ 628,134   Tysabri® 281,383 219,238   Fumaderm® 15,064 11,841   Other 1,023 22     Total product revenues $ 956,703 $ 859,235     Six Months EndedJune 30,   2011   2010PRODUCT REVENUES   Avonex® $ 1,301,711 $ 1,220,661   Tysabri® 532,776 437,882   Fumaderm® 27,570 24,890   Other 1,748 22     Total product revenues $ 1,863,805 $ 1,683,455 Media:Biogen IdecChristina Chan, 781-464-3260Senior Manager, Public AffairsorInvestment Community:Biogen IdecKia Khaleghpour, 781-464-2442Associate Director, Investor Relations