Analyst Conference Summary

Biogen Idec Corporation

conference date: February 9, 2010 @ 5:30 AM Pacific Time
for quarter ending: December 31, 2009 (fourth quarter)

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

Overview: Revenue growth moderates, but net income growth strong.

Basic data (GAAP):

Revenues were $1.13 billion, up 1% sequentially from $1.12 billion, and up 6% from $1.07 billion in the year-earlier quarter.

Net income was $305.6 million, up 9% sequentially from $279.6 million, and up 48% from $206.7 million year-earlier.

EPS (earnings per share) were $1.06, up 11% sequentially from $0.95, and up 51% from $0.70 year-earlier.


Revenue growth in 2010 y/y in mid single digits. Operating expense growth in low single digits, with R&D 24% to 27% of total revenue and SG&A at 20% to 22% of total. Full year GAAP EPS above $3.71; non-GAAP EPS above $4.55; capital expense full year $170 million to $200 million. 28 to 29% tax rate

Conference Highlights:

"We are confident that our continued focus on our products, robust pipeline and disciplined use of cash will fuel future earnings growth and drive value for Biogen Idec shareholders." We have about $100 million in free cash flow monthly.

Revenues from products were $826.9 million; from unconsolidated joint business was $256.6 million; from royalties were $40.8 million; and from a corporate partner were $2.8 million.

Non-GAAP net income was $345 million, up 26% y/y. Non-GAAP EPS $1.20, up 29% y/y.

Revenue by product:

Avonex (interferon beta-1a) revenues $596.5 million, up 5% y/y from $565.8 million. Now has 16 years of remaining patent life. Units, however, have declined in the US, offset by price increases. International units increased but were offset by currency fluctuations.

Tysabri (natalizumab) revenues $216.2 million, up 39% y/y from $155.6 million. About 48,000 patients are using Tysabri, with total to date around 64,600. Significant progress was made in dealing with PML risk of multiple sclerosis patients during 2009. FDA confirmed Tysabri benefits outweigh PML risks. Comparative trial for MS treatments underway. Revenue growth was driven by expanding to more nations in 2009, and expects continued international expansion in 2010. But "potential competitors are on the horizon."

Fumaderm revenues were $14.2 million, up 34% y/y from $10.6 million.

Rituxan for NHL and RA (rheumatoid arthritis) produced $257 million, down 15% y/y, driven by declining royalties on sales outside the U.S. These are profit sharing revenues.

Cash and marketable securities balance ended at near $2.5 billion. Stock repurchase expense was $694 million. Since January 1, 2010 an additional $289 million in repurchases were made; $288 million remains authorized but unused.

Cost of sales was $99.7 million. R&D expense was $283.1 million. Selling, general and administration $241.6 million. Amortization of acquired intangibles was $56.0 million. Collaboration profit sharing expense was $63.3 million. Leaving income from operations of $383.4 million. Other income was $6.4 million. Income tax $83.7 million. Tax rate reduced by settling outstanding issues.

In December, with Genentech, Biogen announced ocrelizumab plus methotrexate Phase III trial for RA (rheumatoid arthritis) met its primary endpoints.

Two Rituxan submissions to the FDA were issued "complete responses," which means that approval has been delayed until further discussions have taken place.

Anti-Lingo-1 Phase I trial underway in January. Factor IX for hemophilia B and Factor VIII for hemophilia A trials started. Adentri program for heart failure stopped. Fampridine for MS was approved for Canada and Europe.


R&D expense projections? Surpass Tysabri competition trial is very important; trial to conclude in 2013. There are a number of initiatives putting upward pressure on R&D expense.

Ocrelizumab in MS? We will be presenting the Phase II results at a major medical meeting. Results seem to indicate we should proceed to Phase III.

MS competitive threat? We expect the two oral products to be moving along and get improved. Impact in 2010 is more likely on increased sales expense rather than revenue impact. With MS it is about the course of disease and safety; it is really outcomes patients are looking for.

Tysabri PML trial design? If most people are in lower risk category, the higher risk patients may drop out, but we would still see the lower risk in that category. We'll collect samples to see if JC virus was present before Tysabri use; it may have multiple test types for the virus.

PEG enrollment? On track, will take about a year to complete. (Pegylated Interferon Beta-1A for multiple sclerosis, Phase III).

Sharecount in 2010? Depends on share-buyback. Ended at 276 million.

Ocrelizumab RA trials? Two trials for read-out the first half of this year. Opportunistic infections in Asia caused the second trial to be halted, but will still get a readout. Right now is an R&D expense, but on approval would flip back to unconsolidated joint business line.

Capital deployment? We would like to capture opportunities for new products, but we want to be disciplined. We don't want to drive revenues if it does not drive profits. We will continue to return cash to shareholders in a disciplined way.

Latest 3 PML cases are believed to be of patients on Tysabri over 2 years; there will be an update later this month.

Drug holidays for Tysabri? It is too early to tell, and varies by physicians. The tendency is to increase vigilance rather than take them off. We should have a better read after Q1 ends.

Fampridine potential revenues? Launched in U.S. by Acorda Therapeutics as Ampyra. Pricing by Biogen outside U.S. not yet set. Patients appreciate results beyond what will be on the label. So it may be a big opportunity in MS, maybe in other diseases.

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Copyright 2010 William P. Meyers