10-QPeriod: Q3 FY2000

BIOGEN INC. Quarterly Report for Q3 Ended Sep 30, 2000

Filed November 3, 2000For Securities:BIIB

Summary

IDEC Pharmaceuticals Corporation's (now Biogen Inc.) Q3 2000 filing shows strong revenue growth driven by its flagship product, Rituxan. Total revenues increased by 36% year-over-year for the quarter and 30% for the nine-month period, primarily from "revenues from unconsolidated joint business" which includes copromotion profits, bulk Rituxan sales, and royalties. While manufacturing costs for bulk Rituxan have ceased due to transfer to Genentech, research and development expenses have significantly increased, more than doubling in the nine-month period, largely due to investments in the development of ZEVALIN. The company reported a net income of $16.1 million ($0.36 basic EPS) for the third quarter, a substantial increase from $10.7 million ($0.26 basic EPS) in the prior year. For the nine-month period, net income was $33.0 million ($0.74 basic EPS) compared to $35.4 million ($0.86 basic EPS) in the same period of 1999, indicating profitability but also highlighting the impact of increased R&D spending. The company's balance sheet shows a healthy increase in cash and cash equivalents, rising to $96.9 million from $61.4 million at the end of 1999, supported by operating activities and stock issuances.

Key Highlights

  • 1Total revenues grew 36% year-over-year to $41.2 million in Q3 2000, driven by the Rituxan joint business arrangement with Genentech.
  • 2Net income for Q3 2000 was $16.1 million, an increase from $10.7 million in Q3 1999. Basic EPS rose to $0.36 from $0.26.
  • 3Research and development expenses increased significantly, up 67% for the quarter and 77% for the nine-month period, reflecting investment in product pipeline, notably ZEVALIN.
  • 4Manufacturing costs associated with bulk Rituxan sales have ceased as manufacturing responsibilities transferred to Genentech in September 1999.
  • 5Cash and cash equivalents increased substantially to $96.9 million as of September 30, 2000, from $61.4 million at year-end 1999.
  • 6The company is planning a significant expansion with a new manufacturing facility in Oceanside, estimating costs to exceed $300 million over four years.
  • 7A new accounting standard, SAB No. 101, is expected to result in a one-time charge of approximately $9.3 million (net of tax) related to revenue recognition.

Frequently Asked Questions

The primary driver of IDEC Pharmaceuticals' revenue is its joint business arrangement with Genentech for the copromotion, sales, and development of Rituxan in the United States. This includes copromotion profits, royalties on sales outside the US, and reimbursements.

The company's liquidity appears strong, with cash and cash equivalents increasing significantly to $96.9 million as of September 30, 2000. Operating activities provided substantial cash flow, and the company anticipates meeting its foreseeable future operating requirements through existing resources and agreements.

The company is heavily investing in research and development, particularly for ZEVALIN, which has a BLA submission planned. They are also undertaking a major expansion by constructing a new manufacturing facility, indicating a focus on expanding manufacturing capabilities and supporting future product commercialization.

Yes, the company is evaluating the impact of SEC's Staff Accounting Bulletin No. 101 (SAB No. 101) on revenue recognition. They anticipate a one-time charge of approximately $9.3 million (net of tax) to be recorded as a cumulative effect of a change in accounting principle.