10-QPeriod: Q3 FY2011

BIOGEN INC. Quarterly Report for Q3 Ended Sep 30, 2011

Filed October 28, 2011For Securities:BIIB

Summary

Biogen Idec Inc. reported strong financial performance for the third quarter and first nine months of 2011, demonstrating significant revenue and profit growth compared to the prior year. Total revenues increased by 11.4% year-over-year for the quarter, reaching $1.31 billion. Net income attributable to Biogen Idec Inc. saw a substantial rise of 38.5% to $351.8 million, translating to a diluted EPS of $1.43. This robust performance was driven by the continued strength of its key products, AVONEX and TYSABRI, which experienced significant revenue growth. The company also made progress in its pipeline, with positive developments in BG-12 and FAMPYRA, indicating future growth potential. Management highlighted operational efficiencies and strategic resource allocation as contributing factors to improved profitability, alongside disciplined capital allocation, including share repurchases. Financially, Biogen Idec maintained a strong liquidity position with over $2.8 billion in cash and marketable securities as of September 30, 2011. The company successfully managed its operating expenses, with a notable decrease in total costs and expenses driven by the absence of a large in-process R&D charge recorded in the prior year and ongoing restructuring initiatives. However, investors should note the ongoing patent litigations and regulatory monitoring, particularly concerning TYSABRI's safety profile and competition in the multiple sclerosis market, which present potential risks. The company also highlighted its strategic collaboration with Portola Pharmaceuticals for the development of Syk inhibitors, signaling continued investment in its R&D pipeline.

Financial Highlights

55 data points
Beta

Revenue

$1.31B

90.6% Gross Margin

Net Income

$351.80M

26.9% Net Margin

EPS (Diluted)

$1.43

Total Assets

$8.80B

Cash & Equivalents

$575.14M

Free Cash Flow

$519.17M

Financial Statements
Beta
Revenue$1.31B
Cost of Revenue$123.53M
Gross Profit$1.19B
R&D Expenses$301.39M
SG&A Expenses$261.40M
Operating Expenses$821.44M
Operating Income$488.49M
Interest Expense$7.90M
Net Income$351.80M
EPS (Basic)$1.45
EPS (Diluted)$1.43
Shares Outstanding (Basic)242.88M
Shares Outstanding (Diluted)245.37M

Key Highlights

  • 1Total revenues increased by 11.4% to $1.31 billion for the third quarter ended September 30, 2011, compared to the same period in 2010.
  • 2Net income attributable to Biogen Idec Inc. grew by 38.5% to $351.8 million in Q3 2011, with diluted EPS rising to $1.43 from $1.05 in Q3 2010.
  • 3AVONEX revenue increased by 5.9% to $681.7 million in Q3 2011, driven by price increases and increased commercial demand in the rest of world.
  • 4TYSABRI revenue saw a significant increase of 25.6% to $277.3 million in Q3 2011, fueled by strong commercial demand in both the U.S. and international markets.
  • 5Total cost and expenses decreased by 16.3% in Q3 2011, primarily due to the absence of a large IPR&D charge in the prior year and ongoing restructuring initiatives.
  • 6The company ended the quarter with a strong liquidity position, reporting $2.87 billion in cash and marketable securities as of September 30, 2011.
  • 7Positive developments in key pipeline candidates, BG-12 (dimethyl fumarate) and FAMPYRA, were noted, with BG-12 showing positive Phase 3 results and FAMPYRA receiving conditional marketing authorization in the EU.

Frequently Asked Questions

The primary drivers of Biogen Idec's revenue growth in the third quarter of 2011 were the strong performance of its key products, AVONEX and TYSABRI. AVONEX revenues increased by 5.9% year-over-year, supported by price increases and favorable international demand. TYSABRI demonstrated particularly strong growth, with revenues up 25.6% due to increased commercial demand in both U.S. and international markets. Increased royalty revenues from ANGIOMAX also contributed to overall top-line performance.

Biogen Idec successfully managed its expenses, with total costs and expenses decreasing by 16.3% in the third quarter of 2011 compared to the prior year. This reduction was largely attributed to the absence of a significant $205.0 million in-process R&D (IPR&D) charge that was recorded in the third quarter of 2010. Additionally, ongoing restructuring initiatives, which aim to improve efficiency and cost-effectiveness, contributed to lower operating expenses. Research and development expenses saw a decrease, reflecting a reallocation of resources and discontinuation of certain programs.

Biogen Idec maintained a robust financial position as of September 30, 2011, with cash and cash equivalents and marketable securities totaling approximately $2.87 billion, providing ample liquidity. The company expects its operating cash flows, combined with existing cash resources, to be sufficient for its foreseeable future needs, including operations, capital expenditures, and strategic initiatives. However, investors should be aware of potential risks related to ongoing legal proceedings, including patent litigation and regulatory reviews concerning TYSABRI's safety profile. The company also faces competitive pressures in the multiple sclerosis market and the evolving regulatory landscape for biosimilars. Furthermore, economic conditions in Europe continue to pose challenges for receivables collection and pricing.

Biogen Idec reported positive developments in its pipeline. BG-12 (dimethyl fumarate) showed positive top-line results from pivotal Phase 3 trials for relapsing-remitting multiple sclerosis, indicating strong efficacy and a favorable safety profile. FAMPYRA received conditional marketing authorization in the EU for improving walking ability in MS patients and has been launched in Germany and the UK. The company also noted progress in other development programs, highlighting its continued investment in future growth areas such as neurology and hemophilia.