10-QPeriod: Q3 FY2007

BIOGEN INC. Quarterly Report for Q3 Ended Sep 30, 2007

Filed October 23, 2007For Securities:BIIB

Summary

Biogen Idec Inc. reported strong revenue growth for the nine months ended September 30, 2007, with total revenue reaching $2,278.3 million, a significant increase driven by price adjustments and the successful re-launch of TYSABRI. Net income for the period was $437.0 million, resulting in diluted earnings per share of $1.34. The company is actively managing its product portfolio, announcing an agreement to sell U.S. rights for ZEVALIN and continuing to see strong performance from AVONEX and RITUXAN, particularly with RITUXAN's expanded use in rheumatoid arthritis. Financially, the company undertook a substantial tender offer in July 2007, repurchasing approximately $3 billion of its common stock, funded by existing cash and a new $1.5 billion term loan. This significantly impacted the company's cash position and working capital. Research and development expenses saw a notable increase, driven by investments in new clinical trials and product development, including lixivaptan. The company is also evaluating a potential acquisition, the outcome of which is uncertain.

Key Highlights

  • 1Total revenue for the first nine months of 2007 increased to $2,278.3 million, up from $1,974.7 million in the prior year period, primarily due to price increases and the re-launch of TYSABRI.
  • 2Net income for the first nine months of 2007 was $437.0 million, with diluted earnings per share of $1.34.
  • 3AVONEX revenues grew to $1,365.4 million for the nine months ended September 30, 2007, despite slight volume decreases in the U.S., driven by price increases and foreign exchange rates internationally.
  • 4TYSABRI revenues showed substantial growth, reaching $140.2 million for the nine months ended September 30, 2007, compared to $18.3 million in the prior year, reflecting its successful re-launch.
  • 5The company entered into an agreement to sell U.S. marketing, sales, manufacturing, and development rights for ZEVALIN for $10 million upfront plus potential milestones and royalties.
  • 6Significant financial activity included a tender offer in July 2007 to repurchase $2,990.5 million of common stock, funded by cash and a $1.5 billion term loan.
  • 7Research and Development expenses increased significantly to $695.9 million for the nine months ended September 30, 2007, driven by new clinical trials and development projects like lixivaptan.

Frequently Asked Questions

The primary drivers of revenue growth were price increases across its product portfolio and the successful re-launch of TYSABRI in July 2006. Increased sales of AVONEX and the strong performance of RITUXAN, particularly following its approval for rheumatoid arthritis, also contributed significantly.

The most significant financial event was a tender offer completed in July 2007, where Biogen Idec repurchased approximately $3 billion of its common stock. This was funded by $1.5 billion in cash and a $1.5 billion term loan, significantly impacting the company's liquidity and increasing its outstanding debt.

R&D expenses increased substantially by 34.1% to $695.9 million for the first nine months of 2007. This rise is attributed to new clinical trial activities, including trials for BG-12, Anti-CD23, and Anti-CD80, as well as a $50 million upfront payment for the development of lixivaptan and R&D costs related to the Syntonix acquisition.

Biogen Idec's Board of Directors authorized management to explore a potential acquisition of the company, seeking to determine if third-party interest would provide greater stockholder value than continuing independently. The outcome of this evaluation is uncertain and could disrupt operations and impact employee retention.