Biogen Idec (BIIB)

Q2 2011 Earnings Call

July 26, 2011 8:30 am ET


Francesco Granata - Executive Vice President of Global Commercial Operations

Alfred Sandrock -

George Scangos - Chief Executive Officer and Director

Paul Clancy - Chief Financial Officer and Executive Vice President of Finance

Douglas Williams - Executive Vice President of Research and Development

Kia Khaleghpour - Associate Director of Investor Relations


Gene Mack - Mizuho Securities USA Inc.

Robyn Karnauskas - Deutsche Bank AG

Ravi Mehrotra - Crédit Suisse AG

Thomas Wei - Jefferies & Company, Inc.

Joshua Schimmer - Leerink Swann LLC

Yaron Werber - Citigroup Inc

Michael Yee - RBC Capital Markets, LLC

Eric Schmidt - Cowen and Company, LLC

Mark Schoenebaum - ISI Group Inc.

Matthew Roden - UBS Investment Bank

Rachel McMinn - BofA Merrill Lynch

Geoffrey Meacham - JP Morgan Chase & Co



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Good morning, my name is Steve, and I will be your conference operator today. At this time, I would like to welcome everyone to the Biogen Idec's Second Quarter 2011 Earnings Conference Call. [Operator Instructions] Kia Khaleghpour, you may begin your conference.

Kia Khaleghpour

Thank you, and welcome to Biogen Idec's Second Quarter 2011 Earnings Conference Call. Before we begin, I encourage everyone to go to the Investor Section of to find the press release and related financial tables, including a reconciliation of the non-GAAP financial measures that we'll discuss today. We've also posted slides on our website that follow the discussions related to today's call. As usual, we'll start with the Safe Harbor statement.

Comments made in this conference call include forward-looking statements that are subject to risks and uncertainties. Words such as believe, expects, may, plan, will, and similar expressions are intended to identify such statements. Actual results could differ materially from our expectations, and you should carefully review the risks and uncertainties that are described in our earnings slides, earnings release and in the Risk Factors section of our most recent annual and quarterly reports filed with the SEC. We do not undertake any obligation to publicly update any forward-looking statements.

Today on the call, I'm joined by Dr. George Scangos, Chief Executive Officer; Dr. Francesco Granata, Executive Vice President of Global Commercial Operations; Dr. Doug Williams, Executive Vice President of Research and Development; and Paul Clancy, Executive Vice President of Finance and Chief Financial Officer. We'll also be joined for the Q&A portion of the call by Dr. Al Sandrock, Senior Vice President of Development.

Now I'll turn the call over to George.

George Scangos

Okay, thanks, Kia and thanks to all of you for joining us this morning. We're now halfway through the year and pleased with the performance of the company so far. For the quarter, product revenues grew by 11% year-over-year, the big driver was TYSABRI revenue, which grew 28% year-over-year, and which is now trending to reach over $1.5 billion in annualized end-market sales. Total revenues were $1.2 billion and non-GAAP diluted EPS was $1.36. Both of these numbers were impacted by a charge for an arbitration decision this quarter between Genentech and Hoechst that affected RITUXAN, and which had a negative impact of about $0.15 on our EPS.

In addition to strong TYSABRI sales, AVONEX continued to do well, and AVONEX market share in the ABCRE class has been stabilized. After that, a good quarter for RITUXAN and continued focus on cost, and it all adds up to solid financial and commercial performance. It's been 12 months since I began at Biogen Idec now and the time really does seemed to have flown by. In addition to our strong and improving commercial performance, I'd like to take a moment or 2 to recap some additional accomplishments during this time period, as well as the progress we've made on refocusing and reinvigorating Biogen Idec.

As you know, we've narrowed our strategic focus to the areas we know best: neurology, immunology and hemophilia. And our R&D is now structured around programs that we truly believe in and that leverage our strengths. Because of this focus, we made progress toward driving a more efficient R&D organization and our R&D spend is now in the low to mid-20s as a percent of sales. This level of investment supports an enviable late-stage pipeline, with the potential to produce multiple product launches over the next few years, as well as an emerging high-quality early-stage pipeline.

During the last 12 months, our improved focus and reinvigoration of the organization has driven strong product performance and allowed our late-stage pipeline to mature. Francesco and Doug will talk about these in greater depth. But the highlight, after tremendous work by many people in the organization, we received a new label for TYSABRI in the EU to include JC Virus Antibody Status as an additional risk factor for PML. Physicians and patients can now consider JCV Antibody Status, as well as prior immunosuppressant use and treatment duration when assessing the risk of PML for individual patients. Along with the commercial availability of the JCV assay in Europe, the MS community now has more tools to make an informed treatment decision, which we all believe will unlock the value of TYSABRI. Concurrently, the European Commission renewed the 5-year marketing authorization for TYSABRI. The impressive growth of the TYSABRI business over this past year and the strong demand we've seen this quarter is a testament to the efficacy of TYSABRI, as well as the excellent planning and execution.

After several years of AVONEX share decline, we have substantially improved the business as a result of a thoughtful strategy and excellent execution. In addition this past June, the AVONEX PEN autoinjector device was approved in the EU and Canada, and represents an important convenience for patients and a valuable expansion to our AVONEX franchise. After an initial negative opinion from the CHMP earlier this year and against the odds, we received the positive opinion for marketing authorization for FAMPYRA in May. Yesterday, we announced that we've received approval for the European Commission for FAMPYRA to improve walking in adult patients with multiple sclerosis who have walking disability. We're now ramping up for a successful launch, so that we can maximize the potential of this important compound and address the unmet needs for MS patients with walking impairment.

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