10-QPeriod: Q2 FY2011

BIOGEN INC. Quarterly Report for Q2 Ended Jun 30, 2011

Filed July 26, 2011For Securities:BIIB

Summary

Biogen Idec reported total revenues of $1,208.6 million for the second quarter of 2011, a slight decrease of 0.3% compared to the same period in 2010. Despite this, income from operations saw a modest increase of 3.8% to $410.8 million, although net income attributable to Biogen Idec decreased by 1.8% to $288.0 million. Diluted earnings per share improved by 5.4% to $1.18. The company's performance was significantly influenced by varying revenue trends across its key products: AVONEX revenues grew 5.0%, TYSABRI revenues surged by 28.4%, while RITUXAN revenues experienced a substantial decline of approximately 29.3%, largely due to an accrual for estimated damages related to an arbitration proceeding. Biogen Idec is actively managing its pipeline with promising developments, including the European Commission's conditional marketing authorization for FAMPYRA for multiple sclerosis (MS) and positive Phase 3 trial results for BG-12, another MS candidate. The company also continues to focus on operational efficiencies, having initiated a restructuring charge expected to total $100.0 million. Financially, Biogen Idec maintained a strong liquidity position with $2,510.3 million in cash and cash equivalents and marketable securities as of June 30, 2011, and actively engaged in share repurchases.

Financial Highlights

54 data points
Beta

Revenue

$1.21B

91.7% Gross Margin

Net Income

$288.00M

23.8% Net Margin

EPS (Diluted)

$1.18

Total Assets

$8.62B

Cash & Equivalents

$697.53M

Free Cash Flow

$375.58M

Financial Statements
Beta
Revenue$1.21B
Cost of Revenue$100.50M
Gross Profit$1.11B
R&D Expenses$285.64M
SG&A Expenses$266.30M
Operating Expenses$797.83M
Operating Income$410.81M
Interest Expense$8.40M
Net Income$288.00M
EPS (Basic)$1.19
EPS (Diluted)$1.18
Shares Outstanding (Basic)242.38M
Shares Outstanding (Diluted)244.97M

Key Highlights

  • 1Total revenues for Q2 2011 were $1,208.6 million, a slight 0.3% decrease year-over-year.
  • 2Income from operations increased by 3.8% to $410.8 million, while net income decreased by 1.8% to $288.0 million.
  • 3AVONEX and TYSABRI revenues showed strong growth (5.0% and 28.4%, respectively), while RITUXAN revenues declined significantly by 29.3% due to arbitration-related accruals.
  • 4Significant progress in the MS pipeline with the conditional EU approval for FAMPYRA and positive Phase 3 data for BG-12.
  • 5The company is undergoing a restructuring initiative with expected total charges of $100.0 million.
  • 6Strong liquidity position with $2,510.3 million in cash and marketable securities as of June 30, 2011.
  • 7Biogen Idec repurchased $386.6 million of its common stock in the first six months of 2011.

Frequently Asked Questions

The substantial decrease in Biogen Idec's share of RITUXAN revenues (approximately 29.3%) for the second quarter of 2011 was primarily due to an accrual of $50.0 million for estimated compensatory damages, including interest, related to an intermediate decision in an ongoing arbitration between Genentech and Hoechst GmbH. This arbitration concerns royalty payments related to RITUXAN sales.

Biogen Idec has two significant pipeline developments. Firstly, FAMPYRA received a conditional marketing authorization from the European Commission for improving walking ability in people with MS. Secondly, BG-12, an oral compound for relapsing-remitting MS, showed positive results in a Phase 3 clinical trial (DEFINE), with a second trial (CONFIRM) ongoing.

Biogen Idec has implemented a restructuring initiative announced in November 2010, aimed at becoming more efficient. This involves discontinuing certain R&D programs, reducing workforce by 13%, and consolidating facilities. The company expects to incur approximately $100.0 million in total restructuring charges, with most incurred and paid by the end of 2011. This initiative is expected to yield annual operating expense savings of approximately $300.0 million beginning in the second half of 2011.

The company maintains a strong financial position, with $2,510.3 million in cash and cash equivalents and marketable securities as of June 30, 2011. Working capital increased by 16.4% to $1,734.3 million. The company generated $683.2 million in net cash flow from operating activities for the first six months of 2011 and believes its existing funds and cash generated from operations are sufficient to meet its foreseeable requirements.