Biogen Idec Reports First Quarter 2006 Results.CAMBRIDGE, Mass. -- Biogen Idec Biogen Idec, Inc. (NASDAQ: BIIB) is a biotechnology company specializing in drugs for neurological disorders, autoimmune disorders and cancer. The company was formed in 2003 by the merger of Cambridge, Massachusetts-based Biogen and San Diego, California-based Idec Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : BIIB BIIB Basic Imagery Interpretation Brief ), a global biotechnology leader with leading products and capabilities in oncology oncology /on·col·o·gy/ (ong-kol´ah-je) the sum of knowledge regarding tumors; the study of tumors. on·col·o·gy n. , neurology neurology (n  rŏl`əjē, ny–), study of the morphology, physiology, and pathology of the human nervous system. and immunology immunology, branch of medicine that studies the response of organisms to foreign substances, e.g., viruses, bacteria, and bacterial toxins (see immunity). Immunologists study the tissues and organs of the immune system (bone marrow, spleen, tonsils, thymus, lymphatic , today reported its first quarter 2006 results.First Quarter 2006 Highlights --Total revenues for the first quarter were $611 million vs. prior year $588 million, an increase of 4%, driven primarily by RITUXAN(R) (rituximab) revenues from the unconsolidated joint business arrangement up 14% to $183 million and AVONEX(R) (Interferon beta-1a interferon beta-1a Avonex, Rebif Pharmacologic class: Biological response modifier Therapeutic class: Antiviral, immunoregulator Pregnancy risk category C Action) worldwide sales up 5% to $393 million.--On a reported basis, calculated in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with U.S. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ), first quarter diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of (EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. ) were $0.36, an increase of 200% over the same period last year; excluding merger-related accounting impacts and employee stock option expense, non-GAAP EPS were $0.55, an increase of 83% over the same period last year. --With the adoption of Statement of Financial Accounting Standards (FAS) 123R as of January 1, 2006, Biogen Idec is reporting employee stock option expense in its GAAP results for the first time. Total stock option expense on a pre-tax basis in R&D and SG&A for the first quarter 2006 was $13 million, or $0.03 per share. This impact has been excluded from non-GAAP performance metrics Performance metrics are measures of an organizations activities and performance. Performance metrics should support a range of stakeholder needs from customers, shareholders to employees [1]. . James Mullen, Biogen Idec's Chief Executive Officer, commented, "During the quarter we took several key steps to secure the continued growth of our core business, specifically achieving major milestones with two products, TYSABRI and RITUXAN. We are pleased with the unanimous vote by the U.S. Food and Drug Administration's Advisory Committee supporting the reintroduction Noun 1. reintroduction - an act of renewed introduction intro, introduction, presentation - formally making a person known to another or to the public of TYSABRI and expect to have this important therapeutic option available to multiple sclerosis multiple sclerosis (MS), chronic, slowly progressive autoimmune disease in which the body's immune system attacks the protective myelin sheaths that surround the nerve cells of the brain and spinal cord (a process called demyelination), resulting in damaged areas patients later this year. The approval and launch of RITUXAN in rheumatoid arthritis rheumatoid arthritis Chronic, progressive autoimmune disease causing connective-tissue inflammation, mostly in synovial joints. It can occur at any age, is more common in women, and has an unpredictable course. has allowed us to expand our business focus and enter a therapeutic area with significant unmet un·met adj. Not satisfied or fulfilled: unmet demands. medical need." Financial Performance On a reported basis, calculated in accordance with GAAP, Biogen Idec reported net income of $123 million (or EPS of $0.36) in the first quarter of 2006 (Q1 2005: net income of $43 million, or EPS of $0.12). The 2006 first quarter results include an after-tax credit of $4 million ($0.01 per share after-tax) attributable to the cumulative effect of a change in accounting principle associated with the adoption of FAS 123R on January 1, 2006. The cumulative effect adjustment reflects the impact of estimating forfeitures of equity awards at the date of grant instead of the prior accounting practice of recognizing forfeitures as incurred. The difference between non-GAAP net income and EPS and GAAP net income and EPS in the first quarter are itemized in Table 3 and are primarily due to: --pre-tax charges of $75 million, consisting of amortization of intangibles ($70.7 million), inventory step-up ($4.0 million), and severance ($0.7 million). --pre-tax employee stock option expense of $13 million. On a non-GAAP basis, Biogen Idec reported net income of $189 million in the first quarter of 2006 (Q1 2005 non-GAAP: $106 million). Non-GAAP EPS were $0.55 for the first quarter of 2006 (Q1 2005 non-GAAP: $0.30).
Revenue Performance for the 3 Months ended March 31, 2006:
-- Revenues from AVONEX increased 5% to $393 million (Q1 2005:
$374 million).
-- U.S. sales were $232 million (Q1 2005: $233 million)
-- International sales increased 15% to $161 million.
(Q1 2005: $141 million)
-- Revenues from Biogen Idec's joint business arrangement with
Genentech, Inc. related to RITUXAN were up 14% to $183 million
(Q1 2005: $160 million). All U.S. sales of RITUXAN are
recognized by Genentech and Biogen Idec records its share of
the pretax co-promotion profits on a quarterly basis.
-- U.S. net sales of RITUXAN increased 8% to $477 million
in the first quarter of 2006 (Q1 2005: $440 million),
as reported by Genentech.
-- Revenues from other products were $13 million (Q1 2005: $24
million). Details are provided in Table 4.
-- Royalties were $21 million (Q1 2005: $27 million).
Financial Guidance Biogen Idec continues to expect that its 2006 non-GAAP earnings per share will be in the range of $1.95 - $2.10. Guidance for full year 2006 reported earnings per share (GAAP-based financial measure) is not currently known, as the Company cannot predict with any certainty the nature or the amount of non-operating or unusual charges for subsequent quarters. The Company does anticipate that certain charges related to purchase accounting will be included in the GAAP financials, such as amortization of intangibles of approximately $250 - 330 million, primarily related to the AVONEX intangibles. Separately, the impact of stock options being expensed due to FAS 123R in 2006 is now estimated to be in the range of $0.08 - $0.12. The Company additionally anticipates that it may have to take other charges in subsequent quarters and that such charges, if material, would cause reported earnings per share to further differ from non-GAAP earnings per share. The Company anticipates that 2006 capital expenditures will be in the range of $190 - $275 million. Recent Highlights --On February 28, 2006, Biogen Idec and Genentech announced that the FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. had approved, following Priority Review, the therapeutic antibody RITUXAN in combination with methotrexate methotrexate, drug used in halting the growth of actively proliferating tissues. Introduced in the 1950s, it is used in the treatment of leukemia, psoriasis, and non-Hodgkin's lymphoma. (MTX MTX abbr. methotrexate methotrexate (amethopterin, MTX) Warning - Hazardous drug! Maxtrex (UK), Metoject (UK) Pharmacologic class: ) to reduce signs and symptoms in adult patients with moderately-to-severely active rheumatoid arthritis (RA) who have had an inadequate response to one or more tumor necrosis factor tumor necrosis factor n. Abbr. TNF A protein that is produced in the presence of an endotoxin, especially by monocytes and macrophages, is able to attack and destroy tumor cells, and exacerbates chronic inflammatory diseases. (TNF TNF abbr. tumor necrosis factor TNF, n an abbreviation for tumor necrosis f ) antagonist antagonist /an·tag·o·nist/ (an-tag´o-nist) 1. a substance that tends to nullify the action of another, as a drug that binds to a cell receptor without eliciting a biological response, blocking binding of substances that could therapies. --On March 8, 2006, Biogen Idec and Elan (Emulated LAN) A virtual LAN in the ATM world. See LANE and virtual LAN. Elan - ["Top-down Programming with Elan", C.H.A. Koster, Ellis Horwood 1987]. Corporation, plc announced that the Peripheral and Central Nervous System Drugs Advisory Committee of the FDA voted unanimously to recommend reintroduction of TYSABRI(R) (natalizumab) as a treatment for relapsing relapsing /re·laps·ing/ (re-lap´sing) (re´lap-sing) recurrent; denoting an illness that is characterized by periods of remission alternating with attacks of symptomatic disease. forms of MS. The Committee's recommendation is advisory to the FDA, and the agency is not bound by this recommendation. The FDA has designated TYSABRI for Priority Review, a status for products that are considered to be significant therapeutic advancements over existing therapies that address an unmet medical need. Biogen Idec and Elan will continue to work closely with the FDA in the weeks ahead with the goal of making TYSABRI available. Discussions with FDA will include, among other things, finalizing the details of the TYSABRI risk management plan. The companies anticipate action by the FDA by June 28, 2006. --On March 29, 2006, Biogen Idec and Elan announced that the first patients in the TYSABRI monotherapy monotherapy /mono·ther·a·py/ (-ther´ah-pe) treatment of a condition by means of a single drug. mon·o·ther·a·py n. Treatment of a disorder with a single drug. safety extension study program in MS have been enrolled and dosed. Patients who previously participated in the Phase III Noun 1. phase III - a large clinical trial of a treatment or drug that in phase I and phase II has been shown to be efficacious with tolerable side effects; after successful conclusion of these clinical trials it will receive formal approval from the FDA MS trials and subsequent safety evaluation are eligible to be screened for entry in this open label multi-center study. Sites throughout Europe, the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , Canada, Australia, New Zealand New Zealand (zē`lənd), island country (2005 est. pop. 4,035,000), 104,454 sq mi (270,534 sq km), in the S Pacific Ocean, over 1,000 mi (1,600 km) SE of Australia. The capital is Wellington; the largest city and leading port is Auckland. and Israel are expected to enroll patients. This safety extension study is being conducted under an FDA Investigational New Drug (IND) application in the U.S. and similar investigational approvals internationally. --On March 30, 2006, Biogen Idec and Genentech announced that the companies submitted a supplemental Biologics License Application (sBLA) to the FDA for the use of RITUXAN as first-line treatment A first-line treatment or first-line therapy is a medical therapy recommended for the initial treatment of a disease, sign or symptom, usually on the basis of empirical evidence for its efficacy. of previously-untreated patients with low-grade or follicular fol·lic·u·lar adj. 1. Relating to, having, or resembling a follicle or follicles. 2. Affecting or growing out of a follicle or follicles. , CD20-positive, B-cell non-Hodgkin's lymphoma non-Hodg·kin's lymphoma n. Any of various malignant lymphomas characterized by the absence of Reed-Sternberg cells. Non-Hodgkin's lymphoma in combination with CVP CVP central venous pressure. CVP abbr. central venous pressure CVP central venous pressure. CVP Central venous pressure, see there (cyclophosphamide cyclophosphamide /cy·clo·phos·pha·mide/ (-fos´fah-mid) a cytotoxic alkylating agent of the nitrogen mustard group; used as an antineoplastic, as an immunosuppressant to prevent transplant rejection, and to treat some diseases , vincristine vincristine /vin·cris·tine/ (vin-kris´ten) an antineoplastic vinca alkaloid; used as the sulfate salt in the treatment of various neoplasms, including Hodgkin's disease, acute lymphocytic leukemia, non-Hodgkin's lymphoma, Kaposi's and prednisone prednisone (prĕd`nĭsōn): see corticosteroid drug. ) or CHOP chemotherapy chemotherapy (kē'mōthĕr`əpē), treatment of disease with chemicals or drugs. One chemotherapeutic approach is the development of selectively toxic substances, i.e. or following CVP chemotherapy in those patients who achieved a response of stable disease or better. --As part of the restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). plan announced in September 2005, Biogen Idec completed the sale of the worldwide rights for AMEVIVE(R) (alefacept) to Astellas Pharma Astellas Pharma Inc. (アステラス製薬株式会社 US, Inc. in April 2006. AMEVIVE is a biologic anti-inflammatory compound used in the treatment of moderate-to-severe plaque plaque (plak) 1. any patch or flat area. 2. a superficial, solid, elevated skin lesion. attachment plaques psoriasis psoriasis (sôrī`əsĭs), occasionally acute but usually chronic and recurrent inflammation of the skin. The exact cause is unknown, but the disease appears to be an inherited, possibly autoimmune disorder that causes the . Use of Non-GAAP Financial Measures The non-GAAP financial measures presented in this press release are utilized by Biogen Idec management to gain an understanding of the comparative financial performance of the Company. Management believes that the non-GAAP financial measures are useful because they exclude those non-operational activities or transactions that are not necessarily relevant to understanding the trends of the Company or the prospects of future performance such as charges related to amortization of intangibles, inventory step-up values, and employee stock option expense. Management uses these measures to establish operational goals and believes that non-GAAP measures may assist investors in analyzing the underlying trends in the Company's business over time. The presentation of this information is not meant to be considered in isolation or as a substitute for GAAP financial measures. Conference Call and Webcast The Company's earnings conference call for the first quarter will be broadcast via the Internet at 8:30 a.m. ET on April 26, 2006, and will be accessible through the investor relations Investor relations The process by which the corporation communicates with its investors. section of Biogen Idec's homepage, http://www.biogenidec.com. About Biogen Idec Biogen Idec (NASDAQ: BIIB) creates new standards of care Standards of care are medical or psychological treatment guidelines, and can be general or specific. They specify appropriate treatment protocols based on scientific evidence, and collaboration between medical and/or psychological professionals involved in the treatment of a given in oncology, neurology and immunology. As a global leader in the development, manufacturing, and commercialization of novel therapies, Biogen Idec transforms scientific discoveries into advances in human healthcare. For product labeling, press releases and additional information about the company, please visit http://www.biogenidec.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. regarding expected future financial results, including non-GAAP EPS and capital expenditures, the potential reintroduction of TYSABRI in MS, and the potential for RITUXAN in RA. These statements are based on the Company's current beliefs and expectations. A number of risks and uncertainties could cause actual results to differ materially. For example, financial results and external growth opportunities may be affected by a number of factors, including any unexpected slowing of growth of the markets for AVONEX and RITUXAN, any change in market acceptance of AVONEX and RITUXAN in key markets worldwide, the impact of reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. and pricing decisions related to the Company's products, the impact of competitive products on the Company's products, any material decreases in royalties which the Company receives, the impact of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , increases in costs related to, or an inability for us to enter into in-licensing deals, collaborations or acquisitions on acceptable terms, increases in costs related to research and development of new products as well as increases in costs related to development of existing products in new indications, and any material issues, delays or failures related to the manufacturing or supply of the Company's products. Our long-term growth will depend on the successful development and commercialization of new products as well as the development and commercialization of existing products in new indications. Drug development involves a high degree of risk. For example, the plans for our development programs could be negatively affected if unexpected concerns arise from additional data or analysis, if regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities require additional information or further studies, or if we were to encounter other unexpected hurdles. The potential for TYSABRI in MS is subject to a number of risks and uncertainties. There is no assurance, for example, that we will be able to gain sufficient information to fully understand the risks associated with the product. There is also no assurance that the Company and Elan will be able to resume marketing and sales of TYSABRI. For more detailed information on the risks and uncertainties associated with these forward looking statements and the Company's other activities, see the periodic reports filed by the Company with the Securities and Exchange Commission. The Company does not undertake any obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise.
TABLE 1
Biogen Idec Inc.
First Quarter 2006
Condensed Consolidated Statements Of Income
(in thousands, except per share amounts)
Three Months Ended
March 31,
2006 2005
--------- ---------
REVENUES
Product $406,519 $397,584
Unconsolidated joint business 183,380 160,453
Royalties 20,561 26,749
Corporate partner 715 3,016
--------- ---------
Total revenues 611,175 587,802
--------- ---------
COST AND EXPENSES
Cost of goods sold and royalty revenues 67,494 99,609
Research and development 145,892 172,477
Selling, general and administrative 154,391 158,472
Amortization of acquired intangible assets 70,707 75,677
Impairment and loss on sale of long lived assets (298) 6,293
--------- ---------
Total cost and expenses 438,186 512,528
--------- ---------
Income from operations 172,989 75,274
Other income, net 18,665 (8,926)
--------- ---------
INCOME BEFORE TAXES AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGE 191,654 66,348
Income taxes 72,464 22,890
--------- ---------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING
CHANGE 119,190 43,458
Cumulative effect of accounting change, net of
income tax 3,779 -
--------- ---------
NET INCOME $122,969 $43,458
========= =========
BASIC EARNINGS PER SHARE
Income before cumulative effect of accounting
change $0.35 $0.13
Cumulative effect of accounting change, net of
income tax 0.01 -
--------- ---------
BASIC EARNINGS PER SHARE $0.36 $0.13
========= =========
DILUTED EARNINGS PER SHARE
Income before cumulative effect of accounting
change $0.34 $0.12
Cumulative effect of accounting change, net of
income tax 0.01 -
--------- ---------
DILUTED EARNINGS PER SHARE $0.36 $0.12
========= =========
SHARES USED IN CALCULATING:
BASIC EARNINGS PER SHARE 339,653 335,279
========= =========
DILUTED EARNINGS PER SHARE 345,815 352,173
========= =========
Numbers may not foot due to rounding.
TABLE 2
Biogen Idec Inc.
First Quarter 2006
Condensed Consolidated Balance Sheets
(in thousands)
Mar. 31, Dec. 31,
2006 2005
----------- -----------
Assets
Cash, cash equivalents and securities
available-for-sale $849,355 $850,753
Accounts receivable, net 276,441 265,742
Inventory 191,022 182,815
Other current assets 278,863 318,771
----------- -----------
Total current assets 1,595,681 1,618,081
----------- -----------
Long-term securities available-for-sale 1,407,541 1,204,378
Property and equipment, net 1,191,968 1,174,396
Intangible assets, net 2,904,838 2,975,601
Goodwill 1,130,430 1,130,430
Other 293,768 264,061
----------- -----------
Total assets $8,524,226 $8,366,947
=========== ===========
Liabilities and shareholders' equity
Current liabilities $520,797 $583,036
Long-term deferred tax liability 736,255 762,282
Non-current liabilities 124,332 115,753
Shareholders' equity 7,142,842 6,905,876
----------- -----------
Total liabilities and shareholders' equity $8,524,226 $8,366,947
=========== ===========
Numbers may not foot due to rounding.
TABLE 3
Biogen Idec Inc.
First Quarter 2006
Condensed Consolidated Statements Of Income - Non-GAAP
(in millions, except per share amounts)
Three Months
Ended
March 31,
2006 2005
------- -------
Earnings per share
GAAP Earnings per share - Diluted $0.36 $0.12
Adjustment to Net Income (as detailed below) 0.19 0.18
------- -------
Non-GAAP Earnings per share - Diluted $0.55 $0.30
======= =======
AN ITEMIZED RECONCILIATION BETWEEN NET INCOME ON A GAAP
BASIS
AND NET INCOME ON A NON-GAAP BASIS IS AS FOLLOWS:
GAAP Net Income $123.0 $43.5
COGS: Fair value step up of inventory acquired from
former Biogen, Inc 4.0 9.3
R&D: Stock option expense 4.8 -
SG&A: Severance and restructuring 0.7 0.5
SG&A: Stock option expense 8.3 -
Purchase accounting: Amortization of acquired
intangible assets related to the merger with former
Biogen, Inc. 70.7 75.7
Impairment and loss on sale of long lived assets (0.3) -
Income taxes: Income tax effect of reconciling
items (18.4) (23.1)
Cumulative effect of accounting change from adoption
of FAS123R, net of income tax (3.8) -
------- -------
Non-GAAP Net Income $188.9 $105.8
======= =======
Numbers may not foot due to rounding.
The non-GAAP financial measures presented in this table are utilized
by Biogen Idec management to gain an understanding of the comparative
financial performance of the Company. Management believes that the
non-GAAP financial measures are useful because they exclude those
non-operational activities or transactions that are not necessarily
relevant to understanding the trends of the Company or the prospects
of future performance. Management uses these measures to establish
operational goals and believes that non-GAAP measures may assist
investors in analyzing the underlying trends in the Company's
business over time. The presentation of this information is not
meant to be considered in isolation or as a substitute for GAAP
financial measures.
TABLE 4
Biogen Idec Inc.
First Quarter 2006
Product Revenues
(in thousands)
Three Months Ended
March 31,
2006 2005
--------- ---------
PRODUCT REVENUES
Avonex(R) $393,427 $373,586
Amevive(R) 8,278 12,016
Tysabri(R) (196) 5,946
Zevalin(R) 5,010 6,036
--------- ---------
Total Product Revenues $406,519 $397,584
========= =========
Numbers may not foot due to rounding.
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