10-QPeriod: Q3 FY2002

BIOGEN INC. Quarterly Report for Q3 Ended Sep 30, 2002

Filed November 14, 2002For Securities:BIIB

Summary

IDEC Pharmaceuticals Corporation (now Biogen Inc.) reported for the nine months ended September 30, 2002, a significant increase in total revenues to $280.6 million, up from $191.0 million in the prior year period. This growth was primarily driven by strong performance in "revenues from unconsolidated joint business," largely attributed to its copromotion agreement for Rituxan with Genentech, and the initial product sales of ZEVALIN, which received FDA approval in February 2002. Net income rose to $103.5 million ($0.68 per share basic, $0.60 per share diluted) from $72.9 million ($0.49 per share basic, $0.42 per share diluted) in the comparable 2001 period. The company's financial position also strengthened, with total assets increasing substantially to $1.9 billion from $1.1 billion, largely due to significant increases in cash and cash equivalents and securities available-for-sale. This was bolstered by the issuance of $696 million in senior notes in April 2002, although a portion was used to repurchase $135 million of common stock. Despite increased operating expenses, particularly in R&D and SG&A, reflecting commercialization efforts for ZEVALIN and ongoing development, the company ended the period with a healthy cash position and retained earnings of $218.6 million, indicating a positive outlook based on its key product lines.

Key Highlights

  • 1Total revenues increased by approximately 47% to $280.6 million for the nine months ended September 30, 2002, compared to $191.0 million for the same period in 2001.
  • 2Net income rose to $103.5 million for the nine months ended September 30, 2002, up from $72.9 million in the prior year period, with diluted EPS increasing to $0.60 from $0.42.
  • 3Product sales of ZEVALIN, approved in February 2002, generated $8.3 million in revenue for the first nine months of its commercial availability.
  • 4Revenues from the unconsolidated joint business (primarily Rituxan copromotion with Genentech) significantly increased to $269.3 million for the nine months ended September 30, 2002, from $175.2 million in the prior year.
  • 5The company raised substantial capital through the issuance of $696 million in senior notes in April 2002, contributing to a significant increase in cash and cash equivalents and securities available-for-sale.
  • 6Total assets grew to $1.9 billion as of September 30, 2002, compared to $1.1 billion as of December 31, 2001, reflecting strong cash and investment balances.
  • 7Research and development expenses increased to $67.6 million for the nine months ended September 30, 2002, up from $63.9 million in the prior year, indicating continued investment in product pipeline.

Frequently Asked Questions

Revenue growth was primarily driven by strong performance in 'revenues from unconsolidated joint business,' which is largely attributed to the copromotion agreement for Rituxan with Genentech. Additionally, the initial product sales of ZEVALIN, approved in February 2002, contributed to the revenue increase.

The company's financial position strengthened, with total assets significantly increasing due to higher cash and securities available-for-sale. This was significantly bolstered by the issuance of approximately $696 million in senior notes in April 2002. A portion of these proceeds was used to repurchase $135 million of common stock.

ZEVALIN, approved in February 2002, began generating product sales, contributing $4.96 million in the third quarter and $8.26 million for the first nine months of 2002. The company also reported increased selling, general, and administrative (SG&A) expenses related to the commercialization of ZEVALIN.

Key risks include significant reliance on Rituxan sales, potential challenges in the successful commercialization of ZEVALIN in the US and Europe, the ability to develop and commercialize new products, heavy reliance on contract manufacturers, intellectual property protection, patent litigation (particularly related to Rituxan and ZEVALIN), and uncertainties surrounding healthcare reimbursement and clinical trial outcomes.