10-QPeriod: Q3 FY2003

BIOGEN INC. Quarterly Report for Q3 Ended Sep 30, 2003

Filed October 31, 2003For Securities:BIIB

Summary

This 10-Q filing for IDEC Pharmaceuticals Corporation (which is in the process of merging with Biogen, Inc. and will be renamed Biogen Idec Inc.) for the quarter ended September 30, 2003, showcases significant growth driven primarily by its key product, Rituxan, which is co-promoted with Genentech. Total revenues increased substantially year-over-year, largely due to strong performance in copromotion profits and royalty revenue from Rituxan sales outside the U.S. The company also saw an increase in net income and earnings per share for both the quarter and the year-to-date periods. The proposed merger with Biogen is a major ongoing event, with both companies' boards having approved the transaction, and stockholder votes scheduled. The company is actively managing its financial resources, investing in significant capital projects for manufacturing facilities, and maintaining a strong liquidity position. However, the company faces ongoing risks related to product commercialization, competition, regulatory environments, and potential litigation.

Key Highlights

  • 1Total revenues for the nine months ended September 30, 2003, increased to $379.3 million from $280.6 million in the prior year period, driven by a significant rise in revenues from unconsolidated joint business.
  • 2Net income for the nine months ended September 30, 2003, grew to $115.5 million ($0.74 basic EPS, $0.67 diluted EPS) from $103.5 million ($0.68 basic EPS, $0.60 diluted EPS) in the prior year period.
  • 3The company reported $45.5 million in net income for the three months ended September 30, 2003, compared to $38.4 million for the same period in 2002, with basic EPS of $0.29 and diluted EPS of $0.26.
  • 4The proposed merger with Biogen, Inc. is progressing, with both boards approving the agreement and stockholder meetings scheduled to vote on the transaction and name change to Biogen Idec Inc.
  • 5Cash and cash equivalents, along with securities available-for-sale, stood at $847.6 million as of September 30, 2003, indicating a strong liquidity position.
  • 6Research and Development expenses increased significantly, reflecting investment in pipeline development and collaboration activities, notably a $20 million payment to Genentech for an amended collaboration agreement.
  • 7Selling, General, and Administrative expenses also rose, partly due to increased legal fees and integration efforts related to the proposed Biogen merger.

Frequently Asked Questions

The primary driver of revenue growth is the significant increase in revenues from unconsolidated joint business, which is largely attributable to copromotion profits and royalty revenue from Rituxan sales. For the nine months ended September 30, 2003, these revenues grew to $363.2 million from $269.3 million in the prior year.

The merger agreement has been unanimously approved by the boards of directors of both IDEC and Biogen. Stockholder meetings have been scheduled for November 12, 2003, to approve the transaction and related matters, including the name change to Biogen Idec Inc. The transaction is being accounted for as a purchase with IDEC as the acquiror.

The company maintains a strong liquidity position with $847.6 million in cash, cash equivalents, and securities available-for-sale as of September 30, 2003. It is financing its operations and capital expenditures through existing cash, revenues from its joint business, and anticipated future sales. Significant investments are being made in manufacturing facilities.

Key risks include a substantial reliance on Rituxan sales, the success of Zevalin commercialization and European approval, the ability to develop and commercialize new products, limited manufacturing experience, intense industry competition, intellectual property protection and litigation, uncertainties in healthcare reimbursement, and the potential impact of the proposed merger on management's attention and financial risk.