Biogen Idec Inc. (BIIB)

Q2 2010 Earnings Call

July 20, 2010 8:30 AM EST

Executives

Kia Khaleghpour – IR

George Scangos – CEO

Al Sandrock – SVP of Neurology R&D

Paul Clancy – CFO and EVP of Finance

Analysts

Eric Schmidt – Cowen and Company

Mark Schoenebaum – ISI Group

Geoff Meacham – JPMorgan

Yaron Werber – Citi

Josh Schimmer – Leerink Swann

Rachel McMinn – Bank of America

Geoffrey Porges – Bernstein

Jim Birchenough – Barclays Capital

Thomas Wei – Jefferies

Joel Sendek – Lazard Capital Markets

Presentation

Operator

Good morning. My name is Sarah and I’ll be your conference operator today. At this time I would like to welcome everyone to the Biogen Idec second quarter 2010 earnings call.

All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions).

Thank you. Ms. Khaleghpour, you may begin your conference.

Kia Khaleghpour

Thank you and welcome to Biogen Idec second quarter 2010 earnings conference call. Before we begin, I encourage everyone to go the Investor section of biogenidec.com 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 outline the topics discussed on 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 risk and uncertainties. Words such as believe, expect, 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 risk and uncertainties that are described in our earnings slide, financial release and in the Risk Factors section of our most recent annual and quarterly reports filed with the SEC. We do not undertake any obligations to publicly update any forward-looking statements.

Today on the call, I’m joined by Dr. George Scangos, Chief Executive Officer of Biogen Idec; Dr. Al Sandrock, Senior Vice President of Neurology Research & Development; and Paul Clancy, Chief Financial Officer and Executive Vice President of Finance.

Now, I’ll turn the call over to George.

George Scangos

Okay, thanks Kia, and good morning to all of you, and thanks for joining us on our second quarter earnings call. I’ll give a brief update on the quarter, Al Sandrock will give you an R&D update, and then Paul Clancy will go through the business and financial results for the quarter, and I’ll come back at the end for a few closing remarks.

So briefly, I’m pleased to report that Biogen Idec had a solid second quarter. Revenues were $1.21 billion, up 11% versus Q2 of ’09. And as you’ll hear from Paul in a few minutes, we’re revising our 2010 EPS guidance upwards. I’m also pleased to report that after only a few days here, I’m impressed by the willingness and in fact eagerness as well as the ability of the people here to move the company forward aggressively.

In the coming months, we’ll focus on the three priorities that I outlined a few weeks ago, defending and expanding the commercial business, taking a hard look at R&D to ensure that we maximize the return on our investment, and infusing a sense of urgency in all parts of the organization.

Commercially, that means, doing everything that we can to protect and expand our AVONEX franchise, including a vigorous program to address the likely approval on oral MS compounds. I’m pleased to report that AVONEX unit sales ex-US grew 6% versus Q2 ‘09. And, while unit sales inside the US decreased 7% in the same time period, there was a 4% increase in US AVONEX unit sales in Q2 compared to Q1.

Though the numbers are encouraging, it’s a little early to conclude that our newly invigorated marketing efforts led by Dr. Francesco Granata are paying off. The unit sales of AVONEX will continue to be a major focus for us as we move forward. And, as you’ll hear from Paul Clancy, we’ve begun an aggressive program towards that end. Making sure that we identify the proper subsets of patients for TYSABRI is also a crucial importance.

TYSABRI is an extremely efficacious drug that can be life changing for many MS patients. I’m pleased that during Q2, there was an average of a 185 net new patients taking TYSABRI each week. I believe that this number reflects the recognition of the remarkable efficacy of TYSABRI. That being said, we owe it patients to identify those subsets of patients who can safely take TYSABRI with reduced concern about developing PML. The JC virus assay that the company is testing is likely to be an important step in that direction.

As you know, all 17 patients who developed PML – excuse me – and for whom serum was available prior to the onset of the disease has deposited in this assay. The ongoing STRATIFY 1 and STRATIFY 2 trials are intended to confirm the percentage of MS patients who test positive in this assay and to further explore their relationship between the results in assay and the risk of developing PML.

If, as we postulate, PML develops predominantly or exclusively in patients who test positive in the assay. Patients who test negative could use TYSABRI with reduced concern about developing PML. That could lead to improve therapy from many MS patients. Today, I’m happy to say that during the second quarter, enrollment in the STRATIFY 1 trial was completed. And at the end of quarter, over 700 patients had been enrolled in the STRATIFY 2 trial.

As you know, we have our own oral compound BG-12 in development. The DEFINE and CONFIRM trials for BG-12 are on track and both are scheduled to be completed in 2011. Additionally, during Q2, we began the trial of BG-12 in combination with interferon and with glatiramer acetate, the Phase II efficacy and tolerability of BG-12 raise the possibility of the combinations of the compound and other MS agents could be to enhance efficacy for many MS patients and this trial is intended to begin to address that possibility. Personally, I’m enthusiastic about this possibility, because if positive, the results could lead to enhance therapy for many MS patients, and of course to increase revenues for the company as well.

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