10-QPeriod: Q2 FY2007

BIOGEN INC. Quarterly Report for Q2 Ended Jun 30, 2007

Filed July 24, 2007For Securities:BIIB

Summary

Biogen Idec Inc. reported strong revenue growth for the first six months of 2007, reaching $1,489.1 million, a significant increase driven by price adjustments and the successful re-launch of TYSABRI. Net income for the period was $317.6 million, resulting in diluted earnings per share of $0.92. The company successfully executed a large tender offer in June 2007, repurchasing approximately $2.99 billion of its common stock, financed through a combination of cash, marketable securities, and a new term loan. Additionally, Biogen Idec acquired Syntonix Pharmaceuticals, Inc. for $44.4 million plus potential contingent payments, which included an in-process R&D charge. The company's core products, AVONEX and RITUXAN, continue to be strong performers, with AVONEX showing robust growth in both the U.S. and international markets due to price increases and higher volume internationally. TYSABRI's re-launch has significantly contributed to revenue, and while ZEVALIN sales are expected to decline due to a planned divestiture, FUMADERM sales are beginning to be recognized in the German market. The company also saw increased revenue from its unconsolidated joint business, primarily driven by higher copromotion profits from RITUXAN, boosted by its approval for rheumatoid arthritis, and increased royalty revenue from international RITUXAN sales.

Key Highlights

  • 1Total revenue for the first six months of 2007 increased to $1,489.1 million, up from $1,271.2 million in the prior year, driven by product sales and joint business revenue.
  • 2Net income for the first six months of 2007 was $317.6 million, with diluted EPS of $0.92.
  • 3The company completed a $2.99 billion tender offer in June 2007, repurchasing 56.4 million shares of common stock.
  • 4AVONEX revenues grew by 10.3% in the first six months of 2007 compared to the same period in 2006, with significant increases in both U.S. and international markets.
  • 5TYSABRI, re-launched in July 2006, generated $77.3 million in revenue for the first six months of 2007, a substantial increase from a negative figure in the prior year.
  • 6Research and Development expenses increased by 33.0% to $409.6 million for the first six months of 2007, reflecting investments in new clinical trials and manufacturing of molecules for clinical supply.
  • 7Selling, General, and Administrative expenses rose by 20.6% to $391.7 million for the first six months of 2007, primarily due to increased sales and marketing activities for TYSABRI and higher headcount.

Frequently Asked Questions

The primary drivers of revenue growth were price increases across key products, particularly AVONEX, and the successful re-launch of TYSABRI in July 2006. Additionally, increased copromotion profits from RITUXAN, fueled by its approval for rheumatoid arthritis and higher international sales, contributed significantly.

The company funded its $2.99 billion tender offer through a combination of approximately $1.49 billion from existing cash and marketable securities and approximately $1.50 billion from a new term loan facility.

Biogen Idec anticipates that research and development expenses will continue to be higher in 2007 compared to 2006, driven by increased clinical trial activity for products like BG-12, Adentri, and Anti-CD80, as well as manufacturing of molecules for clinical supply and costs associated with the Syntonix acquisition.

As of June 30, 2007, the company had $2,720.1 million in total cash, cash equivalents, and marketable securities. However, working capital was negative at $(770.9) million primarily due to the classification of the tender offer obligation as a current liability. The company has outstanding borrowings including convertible notes and other debt, and has entered into a new term loan facility.