Biogen Idec Management Discusses Q2 2012 Results - Earnings Call Transcript

Biogen Idec (BIIB)

Q2 2012 Earnings Call

July 24, 2012 8:00 am ET

Executives

Wendy Gabel

George A. Scangos - Chief Executive Officer and Director

Douglas Edward Williams - Executive Vice President of Research and Development

Tony Kingsley - Executive Vice President of Global Commercial Operations

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

Alfred Sandrock - Head of Neurology Research & Development

Analysts

Brian Corey Abrahams - Wells Fargo Securities, LLC, Research Division

Geoffrey C. Porges - Sanford C. Bernstein & Co., LLC., Research Division

Matthew Roden - UBS Investment Bank, Research Division

Marshall Urist - Morgan Stanley, Research Division

Navdeep Singh - Deutsche Bank AG, Research Division

Rachel L. McMinn - BofA Merrill Lynch, Research Division

Mark J. Schoenebaum - ISI Group Inc., Research Division

Eric Schmidt - Cowen and Company, LLC, Research Division

Geoffrey C. Meacham - JP Morgan Chase & Co, Research Division

Yaron Werber - Citigroup Inc, Research Division

Ravi Mehrotra - Crédit Suisse AG, Research Division

Michael J. Yee - RBC Capital Markets, LLC, Research Division

Charles Anthony Butler - Barclays Capital, Research Division

Thomas Wei - Jefferies & Company, Inc., Research Division

M. Ian Somaiya - Piper Jaffray Companies, Research Division

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 Q2 2012 Earnings Conference Call. [Operator Instructions] After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the call over to Wendy Gabel, Vice President, Investor Relations. Ms. Gabel, you may begin your conference.

Wendy Gabel

Thank you, Sarah, and welcome to Biogen Idec's Second Quarter 2012 Earnings Conference Call. Before we begin, I encourage everyone to go to the Investors 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.

Our GAAP financials are provided in Tables 1 and 2. Table 3 includes a reconciliation of the GAAP to non-GAAP results, which we believe better represents the ongoing economics of our business and reflects how we manage the business internally. We have also posted slides on our website that follow the discussions related to this 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, 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 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. Doug Williams, Executive Vice President of Research and Development; Tony Kingsley, Executive Vice President of Global Commercial Operations; and Paul Clancy, Executive Vice President of Finance and Chief Financial Officer. I'll also be joined for the Q&A portion of the call by Dr. Al Sandrock, Senior Vice President of Development Sciences and Chief Medical Officer.

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

George A. Scangos

Okay, thank you, Wendy, and good morning everyone. We had an excellent second quarter, and we're on track to achieve our financial business and R&D goals for the year. Revenues and earnings for the quarter were solid. Costs were in line with expectations. We continue to make headway preparing for the approval and launch of BG-12. We completed enrollment in the trials for long-lasting Factor VIII and Factor IX and expect to have top line data within the next several months. We continue to expect data for dexpramipexole and ALS later this year, and we made real progress advancing the rest of our pipeline as well.

So some highlights for the quarter. Total revenues grew by 18% year-over-year to $1.4 billion, and non-GAAP diluted EPS were up 34% to $1.82. These numbers are a bit inflated. Since a year ago, we took a charge related to Genentech's arbitration with sanofi. However, even with that charge backed out, we posted solid double-digit revenue and earnings growth.

AVONEX had a particularly strong quarter with revenues of $762 million, up 16% year-over-year. The introduction of the AVONEX PEN autoinjector and AVOSTARTGRIP titration dosing regimen in the U.S., as well as our continued rollout in the EU and Canada, is not only improving the AVONEX experience for patients, but also driving renewed physician interest in one of the world's most trusted MS therapies.

Global in-market sales of TYSABRI grew 2% to $395 million while revenues to Biogen Idec were $280 million, which is flat compared to the second quarter last year, primarily due to the deferral of revenue in our Italian affiliate. While revenue growth slowed, TYSABRI unit sales were up 10%, as we continue to roll out risk stratification based on JC virus antibody status.

Patient demand for FAMPYRA in the EU continues to be encouraging, and RITUXAN revenues from our partnership with Roche and Genentech generated $285 million for the quarter.

Turning to our pipeline. We achieved a number of important milestones in the second quarter. While Doug Williams will provide more details, I wanted to highlight a few of those achievements: U.S. and EU regulatory authorities accepted our marketing applications for the review of our oral MS drug candidate, BG-12, and we submitted additional filings in Australia, Canada and Switzerland. In addition to completing the enrollment in our Phase III trials for long-lasting Factor VIII and Factor IX, we initiated 2 global pediatric clinical studies for the programs to support our global regulatory strategy. And ultimately, we hope to address the significant need for longer-acting therapies for children with Hemophilia.

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