Biogen Idec Corporation
conference date: April 25, 2013 @ 5:00 AM Pacific Time
for quarter ending: March 31, 2013 (first quarter, Q1 2013)
Overview: Revenue sequentially flat, but up 10% y/y; EPS growth strong.
Basic data (GAAP):
Revenues were $1.415 billion, nearly flat sequentially from $1.418 billion but up 9.5% from 1.292 billion in the year-earlier quarter.
Net income was $426.7 million, up 46% sequentially from $292.1 million and up 41% from $302.7 million year-earlier.
EPS (earnings per share) were $1.79, up 46% sequentially from $1.23 and up 43% from $1.25 year-earlier.
Updating to reflect Tysabri asset purchase. Expects 16 to 18% revenue growth in 2013. Core assumptions remain unchanged. Non-GAAP diluted EPS between $7.80 and $7.90 (previously was $7.15 to $7.25). GAAP diluted EPS $6.69 to $6.90. Capital expenditure between $250 and $270 million. Cash balance at end of year should be greater than $1 billion. $75 million is earmarked for new business development activity.
Tecfidera for MS (multiple sclerosis) (formerly BG-12, dimethyl fumarate) was approved by the FDA on March 27, 2013, at the end of the quarter. It is now for sale in the U.S. Biogen believes Tecfidera can become the leading oral treatment for MS. It has received a positive recommendation from the CHMP in Europe. A final decision is likely this quarter. Early physician interest seems good. New patient ramp will take some time for insurance reimbursement approvals. Label has broad appeal, is for first-line treatment for relapsing form of multiple sclerosis.
Case reports in New England Journal of Medicine on PML are old news. There have been no cases of PML with TECFIDERA; they were with different drugs. The overall rate is 4 cases out of 180,000.
Non-GAAP numbers: net income was $469.4 million, up 40% sequentially from $335 million. EPS was $1.97, up 41% sequentially from $1.40. Taxes were more favorable than usual in the quarter mainly based on a $33 million benefit for the period 2005 to 2012, plus the R&D tax benefit. Non-GAAP excludes $48.6 million amortization of intangibles, $2.3 million contingent consideration, $3.5 million stock option expense, and ads back in $11.7 million taxes.
Avonex (interferon beta-1a) revenue was $746.1 million, down 1% sequentially from $753.2 million but up 13% from $661.6 million year-earlier. Continues to gain market share within its class. International revenue was weakened by no shipments to Brazil.
Tysabri (natalizumab) revenue was $312 million, up 6% sequentially from $295.2 million and was up 9% y/y. Full rights to Tysabri were purchased from Elan. This eliminates the change of control provision. $199 million of revenue was international. Also affected by Brazil, and revenue from Italy was deferred.
Rituxan for NHL and RA (rheumatoid arthritis) revenue was $264.6 million, down 6% sequentially from $281 million, and also down 7% from $284.6 million year-earlier. $42 million profit arbitration charge for profit share and royalties in quarter.
Fampyra revenue was $22.2 milion, up 111% sequentially from $10.5 million and up 48% from $15.0 million year-earlier. Price finalized in Germany, resulting in a one-time bump.
Fumaderm revenue was $14.3 million, down 10% sequentially from $15.8 million but up from $13.3 million year-earlier.
Royalty revenue was $32.8 million, down 41% sequentially from $56 million, but up 14% from $28.8 million year-earlier.
Cash and equivalents balance ended at $3.63 billion.
Cost of sales was $133.7 million. Research and development expense $284.3 million. Selling, general and administrative expense $352.6 million. Collaboration profit sharing $85.4 million. Amortization of acquired intangible assets $51.3 million. Fair value adjustment of contingent consideration $2.3 million. Gain on sale of rights $5.0 million. Other expense $14.4 million. Income taxes $65.5 million. Equity loss $3.8 million.
Plegridy (peginterferon beta-1a) for MS pivotal Phase III data met all primary and secondary endpoints after 1 year cutoff of a two-year study. Expects to file with FDA and EMA by mid-2013
Daclizumab-HYP Phase III data readout expected in 2014.
Filed for approval with FDA for Hemophilia Factor 8 for A and 9 for B.
BIIB037 Anti-AB antibody for Alzheimer's disease Phase I data showed acceptable safety and tolerability and may have a specific preferential binding activity to destroy amyloid plaque.
Expects to invest in new, high-quality Phase I and II asset aquisitions.
See also the Biogen-Idec product pipeline for information on Biogen Idec's Phase I and Phase II candidates.
Categories of patients for Tecfidera? It is early, but initial stages of adoption seem positive. We want a strong start, but it is really about building a strong trajectory.
In Europe we believe we will qualify for data protection, 8 plus 2 years of exclusivity.
We did not explore T-cell subsets in the Tecfidera study. The data was published in the New England Journal. We did see a drop in white blood cells that then plateaud after about 6 months. All patients in the study continued on the drugs and there were no opportunistic infections.
Italian Tysabri dispute? We are assuming in our guidance is the deferal will be resolved this year, with bookings at a full price. But we are not assuming that deferred revenue will go back into the P&L this year.
Brazil impact? Units for Avonex were up in the rest of world if you exclude Brazil.
Tecfidera patients sticking to therapy? We have not tempered our enthusiasm. We believe it will be the leading oral drug. We only have 3 weeks of experience so far. It has a great label and product profile.
Copay and financial assistance for Tecfidera will be typical, and while it takes some time to get insurance approval in early days we have a program for that as well. In U.S. gross to net should be more favorable than our other MS therapies.
Are CBC counts to be monitored more closely for Tecfidera? Monitoring requirements are minimal: a CBC lymphocyte count within 6 months, then annually or at the discretion of the physician.
New guidance is driven by the asset purchase, the tax upside, and the investment in new potential products. Much of the tax upside already occurred in Q1.
Revenue details in new guidance? Driven by Tysabri asset purchase. It is early to project much Tecfidera revenue, but we will monitor during the year. We paid off notes in the quarter and are now thinking about future capital deployment. If we have excess cash we will consider ways to return it to shareholders.
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