10-QPeriod: Q2 FY2012

BIOGEN INC. Quarterly Report for Q2 Ended Jun 30, 2012

Filed July 24, 2012For Securities:BIIB

Summary

Biogen Idec reported strong revenue growth for the second quarter and first half of 2012, driven by robust performance in its key products, AVONEX and RITUXAN. Total revenues increased by 17.6% in the second quarter and 20.4% for the first half, leading to a significant rise in net income attributable to Biogen Idec Inc. and diluted earnings per share. The company is advancing its pipeline, with BG-12 moving through regulatory review in the US and EU, and has recently received FDA approval for the AVONEX PEN. However, the company faces ongoing challenges including increasing competition in the multiple sclerosis market, pricing pressures in international markets due to austerity measures, and potential litigation risks, particularly concerning the AVONEX '755 Patent and TYSABRI's safety profile. The acquisition of Stromedix, Inc. for $207.4 million, including significant contingent consideration for its lead fibrosis candidate STX-100, adds to the company's pipeline. The company is actively managing its financial resources, evidenced by substantial share repurchases and maintaining a strong cash position. Despite the positive financial performance, investors should remain aware of the risks associated with product concentration, competitive dynamics in the MS market, and the ongoing European economic challenges that continue to impact revenue collection and pricing strategies. The successful commercialization of BG-12 and the development of other pipeline candidates will be critical for future growth.

Financial Highlights

56 data points
Beta

Revenue

$1.42B

90.2% Gross Margin

Net Income

$386.80M

27.2% Net Margin

EPS (Diluted)

$1.61

Total Assets

$9.16B

Cash & Equivalents

$456.81M

Free Cash Flow

$562.68M

Financial Statements
Beta
Revenue$1.42B
Cost of Revenue$139.11M
Gross Profit$1.28B
R&D Expenses$329.56M
SG&A Expenses$301.77M
Operating Expenses$915.23M
Operating Income$505.72M
Interest Expense$7.00M
Net Income$386.80M
EPS (Basic)$1.62
EPS (Diluted)$1.61
Shares Outstanding (Basic)238.99M
Shares Outstanding (Diluted)240.62M

Key Highlights

  • 1Total revenues increased by 17.6% to $1.42 billion for the second quarter of 2012 and by 20.4% to $2.71 billion for the first six months of 2012.
  • 2Net income attributable to Biogen Idec Inc. rose significantly, up 34.3% to $386.8 million for the second quarter and 18.4% to $689.5 million for the first six months.
  • 3AVONEX revenue increased by 15.6% to $762.1 million in Q2 2012, driven by price increases and strong rest-of-world demand aided by the AVONEX PEN launch.
  • 4RITUXAN revenue (share of co-promotion profits in the U.S. and rest-of-world sales) increased by 31.5% to $284.6 million in Q2 2012, boosted by commercial demand and price increases, despite a significant charge in the prior year.
  • 5The company acquired Stromedix, Inc. for $207.4 million to bolster its pipeline in fibrosis disorders, including contingent consideration of up to $487.5 million.
  • 6BG-12's New Drug Application (NDA) was accepted for review by the FDA, and its Marketing Authorisation Application (MAA) was validated by the EMA, signaling progress towards potential market launch.
  • 7Share repurchases totaled $909.9 million for the first six months of 2012, demonstrating a commitment to returning capital to shareholders.

Frequently Asked Questions

Biogen Idec's revenue growth is primarily driven by strong performance in its key products, AVONEX and RITUXAN. AVONEX saw revenue increases due to price adjustments and strong demand outside the U.S., supported by the AVONEX PEN launch. RITUXAN's revenue growth was fueled by increased commercial demand and price increases in the U.S., alongside rest-of-world sales.

TYSABRI revenue remained relatively flat year-over-year for the second quarter, with U.S. revenues increasing due to demand and price, while rest-of-world revenues faced challenges from deferred Italian revenue, currency impacts, and austerity measures, despite increased demand. The company anticipates continued competition and potential growth limitations due to safety warnings and ongoing efforts to manage PML risk.

Biogen Idec is actively preparing for BG-12's potential launch, with regulatory applications under review by the FDA and EMA. The company is also increasing spending on late-stage clinical trials for other candidates, such as Factor VIII and dexpramipexole, and investing in building commercial capabilities and sales force readiness for BG-12 and its hemophilia franchise.

Key financial risks include increasing competition in the multiple sclerosis market, pricing pressures and extended collection periods in certain European countries due to economic conditions and austerity measures, ongoing litigation concerning patents (like the AVONEX '755 Patent) and product liability claims, and the potential impact of safety issues on product sales. The company also faces risks related to international operations and currency fluctuations.