10-QPeriod: Q3 FY2008

BIOGEN INC. Quarterly Report for Q3 Ended Sep 30, 2008

Filed October 21, 2008For Securities:BIIB

Summary

Biogen Idec reported strong revenue growth for the nine months ending September 30, 2008, driven primarily by significant increases in TYSABRI sales (up 208.8%) and continued growth in AVONEX sales, which benefited from price increases. Total revenue reached $3,028.6 million, with net income of $576.5 million. The company's RITUXAN revenue, derived from an unconsolidated joint business arrangement with Genentech, also showed substantial growth, increasing by 23.0% in the third quarter and 18.3% year-to-date. Despite the positive revenue trends, Biogen Idec is navigating challenges including increased R&D and SG&A expenses, and cautionary notes regarding the safety profile of TYSABRI, with two recent PML cases disclosed. The company's liquidity remains robust, with substantial cash and marketable securities, though it has seen increased debt due to refinancing and share repurchases. The company is also investing in its manufacturing facility in Hillerod, Denmark, which is expected to be operational in 2010.

Financial Highlights

28 data points
Beta

Revenue

$1.09B

90.2% Gross Margin

Net Income

$206.79M

18.9% Net Margin

EPS (Diluted)

$0.70

Cash & Equivalents

$1.01B

Free Cash Flow

$133.14M

Financial Statements
Beta
Revenue$1.09B
Cost of Revenue$107.49M
Gross Profit$985.47M
R&D Expenses$268.80M
SG&A Expenses$232.82M
Operating Expenses$747.11M
Operating Income$345.85M
Net Income$206.79M
EPS (Basic)$0.71
EPS (Diluted)$0.70
Shares Outstanding (Basic)291.41M
Shares Outstanding (Diluted)293.92M

Key Highlights

  • 1Total revenue for the first nine months of 2008 reached $3,028.6 million, a significant increase driven by strong product sales.
  • 2TYSABRI revenue experienced explosive growth, increasing by 208.8% year-over-year for the nine-month period, indicating strong market adoption.
  • 3AVONEX revenue saw a 16.1% increase in the U.S. and a 25.3% increase in the Rest of World for the nine-month period, supported by price increases and increased unit shipments.
  • 4Revenue from the unconsolidated joint business with Genentech (primarily RITUXAN) increased by 18.3% year-over-year for the nine-month period.
  • 5Despite revenue growth, R&D expenses increased by 12.0% and SG&A expenses increased by 19.2% for the nine-month period, reflecting investments in growth and operations.
  • 6Two confirmed cases of Progressive Multifocal Leukoencephalopathy (PML) associated with TYSABRI were disclosed in July 2008, which the company continues to monitor.
  • 7Biogen Idec maintained a strong liquidity position with $2,103.9 million in cash, cash equivalents, and marketable securities as of September 30, 2008.

Frequently Asked Questions

The primary drivers of revenue growth are the strong performance of TYSABRI, which saw a 208.8% increase in sales year-over-year, and continued growth in AVONEX, supported by price increases and higher unit shipments, especially in international markets. Additionally, revenues from the unconsolidated joint business with Genentech, primarily related to RITUXAN, also contributed significantly.

The report highlights two confirmed cases of Progressive Multifocal Leukoencephalopathy (PML), a serious side effect, in patients taking TYSABRI. While these are the first reported cases since TYSABRI's reintroduction, they underscore the safety concerns and ongoing monitoring required, which could impact market acceptance and future sales growth.

Biogen Idec maintains a strong liquidity position, with over $2.1 billion in cash, cash equivalents, and marketable securities as of September 30, 2008. The company generated substantial cash from operations and has been actively managing its debt, including repaying a $1.5 billion term loan facility. They plan to finance current and future operating requirements through cash from operations and existing resources.

Biogen Idec anticipates that both R&D and SG&A expenses will remain higher in 2008 than in 2007. R&D expenses are increasing due to investments in key programs like BG-12, Anti-CD23, and Adentri. SG&A expenses are rising to support the global expansion of AVONEX and TYSABRI sales, as well as increased personnel and general administrative costs.