8-KOther Events

BIOGEN INC. 8-K Report, Corporate Update (Jun 23, 2011)

Filed June 23, 2011For Securities:BIIB

Summary

Biogen Inc. (BIIB) announced via an 8-K filing on June 23, 2011, an anticipated reduction in its share of RITUXAN® (rituximab) revenues by approximately $50 million for the second quarter of 2011. This reduction is due to an accrual for estimated compensatory damages, including interest, stemming from an intermediate arbitration decision involving Genentech, Inc. and Hoechst GmbH. Although Biogen is not a direct party to this arbitration, the damages awarded to Hoechst may be charged as a cost to Biogen's collaboration with Genentech related to RITUXAN. The arbitration concerns Hoechst's claims under a terminated license agreement with Genentech's predecessor, which stipulated royalty payments on net sales of certain products. An arbitrator's decision has indicated that RITUXAN falls under this agreement, necessitating the disclosure of sales data for a past period to determine the damages. While the immediate financial impact is estimated at $50 million, future quarters may see adjustments based on the final damages attributable to the collaboration or if Genentech successfully challenges the arbitrator's decision.

Key Highlights

  • 1Biogen expects a $50 million reduction in its RITUXAN revenue share for Q2 2011.
  • 2The reduction is related to an accrual for estimated compensatory damages from an arbitration involving Genentech and Hoechst.
  • 3Biogen is not a direct party to the arbitration but may bear costs from it.
  • 4The damages relate to Hoechst's claims under a license agreement regarding RITUXAN sales.
  • 5An arbitrator's decision has identified RITUXAN as a product subject to royalty payments.
  • 6Genentech will provide RITUXAN sales data to the arbitrator to determine the final damages.
  • 7Future impacts are contingent on the final damages and potential successful challenges by Genentech.

Frequently Asked Questions

Biogen expects a reduction in its share of RITUXAN revenues by approximately $50 million in the second quarter of 2011 due to an accrual for estimated compensatory damages resulting from an arbitration decision between Genentech and Hoechst GmbH.

No, Biogen is not a direct party to the arbitration. However, the company anticipates that certain damages awarded to Hoechst in this arbitration could be charged as a cost to its collaboration with Genentech concerning RITUXAN.

The arbitration concerns Hoechst's claims under a terminated license agreement with Genentech's predecessor. An arbitrator has ruled that RITUXAN is a product covered by this agreement, which stipulated royalty payments. Sales data for RITUXAN from a specific past period will be used to calculate the damages.

The $50 million is an estimate for the second quarter of 2011. Subsequent quarters may see adjustments based on the final damages attributed to Biogen's collaboration or if Genentech successfully challenges the arbitrator's decision.