10-QPeriod: Q3 FY2012

BIOGEN INC. Quarterly Report for Q3 Ended Sep 30, 2012

Filed October 25, 2012For Securities:BIIB

Summary

Biogen Idec Inc. reported solid financial results for the third quarter and first nine months of 2012, demonstrating revenue growth and increased profitability. Total revenues for the nine months ended September 30, 2012, reached $4.1 billion, a 10.1% increase year-over-year. Net income attributable to Biogen Idec Inc. also saw a significant rise, reaching $1.09 billion for the nine-month period, up 16.2% from the prior year. Diluted earnings per share (EPS) grew to $4.53 for the nine months, reflecting the company's expanding financial performance. The company's product revenues, driven by key drugs like AVONEX, TYSABRI, and RITUXAN, showed continued strength. The acquisition of Stromedix, Inc. in March 2012, focused on fibrosis disorders, marks a strategic move to expand the pipeline, though it introduced a significant contingent consideration liability. The company also reported a gain on the sale of rights related to BENLYSTA, contributing to non-operating income. Biogen Idec maintained a strong liquidity position with substantial cash, cash equivalents, and marketable securities, providing flexibility for ongoing operations, strategic investments, and shareholder returns through share repurchases.

Financial Highlights

56 data points
Beta

Revenue

$1.39B

89.9% Gross Margin

Net Income

$398.40M

28.8% Net Margin

EPS (Diluted)

$1.67

Total Assets

$9.63B

Cash & Equivalents

$451.72M

Free Cash Flow

$483.72M

Financial Statements
Beta
Revenue$1.39B
Cost of Revenue$139.36M
Gross Profit$1.25B
R&D Expenses$304.22M
SG&A Expenses$299.63M
Operating Expenses$882.02M
Operating Income$535.25M
Interest Expense$8.70M
Net Income$398.40M
EPS (Basic)$1.68
EPS (Diluted)$1.67
Shares Outstanding (Basic)236.47M
Shares Outstanding (Diluted)238.13M

Key Highlights

  • 1Total revenues increased by 10.1% to $4.1 billion for the nine months ended September 30, 2012, compared to the same period in 2011.
  • 2Net income attributable to Biogen Idec Inc. rose by 16.2% to $1.09 billion for the nine-month period.
  • 3Diluted EPS increased to $4.53 for the nine months ended September 30, 2012, from $3.81 in the prior year.
  • 4Product revenues, primarily from AVONEX, TYSABRI, and RITUXAN, showed consistent growth, contributing significantly to overall revenue.
  • 5The acquisition of Stromedix, Inc. in March 2012 added a new drug candidate (STX-100) for fibrosis and resulted in significant goodwill and contingent consideration.
  • 6Biogen Idec reported a $31.7 million gain on the sale of rights related to BENLYSTA in the third quarter of 2012.
  • 7The company maintained a strong balance sheet with $3.35 billion in cash, cash equivalents, and marketable securities as of September 30, 2012, and continued its share repurchase program.

Frequently Asked Questions

Revenue growth was primarily driven by increased product revenues from key products like AVONEX, TYSABRI, and RITUXAN. The company also saw growth from its unconsolidated joint businesses. The acquisition of Stromedix and the sale of BENLYSTA rights contributed to overall financial performance, though the former also added significant contingent liabilities.

The acquisition of Stromedix in March 2012 added $219.2 million in In-Process Research and Development (IPR&D) and $51.6 million in goodwill to the balance sheet. It also resulted in a $122.2 million liability for contingent consideration, which is subject to future fair value adjustments and recognized in the income statement.

Biogen Idec has several promising pipeline candidates. The New Drug Application (NDA) for BG-12 for relapsing MS was under review by the FDA with an extended PDUFA date in late March 2013. The company also announced positive Phase 3 results for its long-lasting recombinant Factor IX (rFIXFc) for hemophilia B, with plans for regulatory submissions in early 2013. Other late-stage programs for ALS and hemophilia A were also progressing.

Key risks include substantial dependence on revenues from AVONEX, TYSABRI, and RITUXAN, potential competition from new MS treatments and biosimilars, risks associated with TYSABRI's safety profile (PML), and the high cost and inherent risk of drug development. Additionally, global economic conditions, pricing pressures in international markets, and reimbursement uncertainties pose significant challenges.