Biogen Idec Corporation
conference date: February 1, 2011 @ 5:30 AM Pacific Time
for quarter ending: December 31, 2010 (fourth quarter)
Overview: Continued steady revenue improvement. $75 million restructuring charge hurt GAAP net income.
Basic data (GAAP):
Revenues were $1.219 billion, up 4% sequentially from $1.176 billion and up 8% from $1.127 billion in the year-earlier quarter.
Net income was $240.3, down 5% sequentially from $254.1 million, also down 21% from $305.6 million year-earlier.
EPS (earnings per share) were $0.99, down 6% sequentially from $1.05 and down 7% from $1.06 year-earlier.
For 2011 revenue growth expected to be flat to low single digits compared to 2010. GAAP EPS above $4.82, non-GAAP EPS above $5.70. Capital expenditures range of $200 to $220 million. Includes $95 million negative impact on revenue from U.S. healthcare reform. R&D expense will decline significantly due to focus and restructuring.
Revenue growth resulted largely from Tysabri and Avonex sales for multiple sclerosis. Entered 2011 with a strong financial position and momentum. Streamlining of company will save about $300 million a year in expenses. Strong pipeline is in place.
Avonex (interferon beta-1a) revenues were $654 million, up 10% y/y. Unit demand grew 6% y/y. U.S. decline has been halted, while continuing to make gains in rest of world.
Tysabri (natalizumab) revenues were $242 million, up 8% y/y. Number of patients rose to 56,600 worldwide, by adding 1700 patients in the quarter. Approved in India in December.
Fumaderm and other product revenues were $14 million. Royalty revenues were $45 million.
Rituxan for NHL and RA (rheumatoid arthritis) produced $258 million (listed as unconsolidated joint business revenues on income statement), up 1% y/y. But continues to expire in individual nations.
Non-GAAP numbers: net income $347 million, EPS $1.42.
Cash and equivalents balance ended at $2.0 billion. 47% is outside the U.S.
In the quarter Biogen agreed to end collaboration with Cardiokine on lixivaptan. It is also "terminating its efforts in cardiovascular medicine and seeking to spin our or outlicense its oncology assets." Headcount is to be reduced by about 13%. A Phase 2/3 study of rFVIIIFc for hemophilia A patients was initiated. Biogen also acquired the rights to three pre-clinical immunotherapy programs from Neurimmune.
With Elan, Biogen submitted a supplemental BLA to the FDA to get a label update for Tysabri to include anti-JC virus antibody status as an indicator of risk for PML infections.
Since the quarter ended Fampyra was rejected by the European Medicines Agency (EMA), but Biogen is appealing the decision. The FDA however, approved Rituxan as a maintenance treatment for advanced follicular lymphoma.
Cost of goods sold was $100.3 million. Research and development costs $290.8 million. Selling, general and administrative $276.4 million. collaborative profit sharing expense $67.8 million. Amortization of acquired intangible assets $53.4 million. Restructuring charges $75.2 million. Leaving income from operations of $355.3 million. Income tax expense was $78.8 million. Net income attributable to noncontrolling interest was $31.5 million.
Non-GAAP adjustments to GAAP net income included plus $53.4 million amortization, $5.3 million stock compensation, $75.2 million restructuring charges, and minus the tax impact of $28.3 million.
Seven products have Phase III trials in progress: BG-12, PEGylated IFNB1a, rFIXFc, rFVIIIFc, Daclizumab, and GA101 for both CLL and NHL, with two addition Phase III trials to be initiated in 2011.
Goal in 2011 is to take multiple sclerosis market share and advance the pipeline.
Royalties for ? in 2011? Some, but small single digit, included in guidance.
Avonex volume growth in 2011? Objective is to change share losses to share gains.
$300 million target savings is pure savings. We have money for business development transactions. We do need to strengthen the pipeline with profitable products.
PML events in Stratify 2 study? It is an open label study. Not looking at data yet. 13,700 patients have been tested for JCV so far.
Pricing assumption in 2011? For guidance, it is what is already in the marketplace. The new entrant has the potential to expand the market. No plans for price increases.
Share buy backs in 2011? Guidance assumes number of shares flat during year. But will continue to review possible uses of strong cash flow.
JC virus assays, effects of? There has been a slight increase in discontinuations or drug holidays. Assays could be done annually, but that will depend on the regulatory guidelines.
Data for Tysabri should be very accurate in the U.S., based on the study, but outside the U.S. are more based on a variety of factors.
Vampyra appeal? Key is there are two positive Phase III trials with robust data. The 25% walking speed increase is meaningful. We need to get the EMA to recognize this. Entire process should take 6 to 7 months.
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