Biogen Idec to launch $3B buyback of up to 16 percent of outstanding shares

Drug maker Biogen Idec Inc. on Tuesday said it would start buying $3 billion worth of its own shares, potentially cutting the number of outstanding shares by a sixth.

In a statement, chief executive James Mullen said strong cash flows from sales of Avonex, for multiple sclerosis, and Rituxan, for non-Hodgkin's lymphoma, allowed the company to return money to shareholders.

"Following this transaction, Biogen Idec will maintain the capacity to pursue substantial and attractively valued external growth opportunities," Mullen said.

In a tender offer starting Wednesday and running to June 26, Biogen will buy back up to 57 million shares at a price between $47 and $53. The stock closed Tuesday at $49.21, down 26 cents.

The company said it would use $1.5 billion in cash to finance the buyback and would borrow the rest of the money, noting that it has little debt.

A month ago, the Cambridge-based company 7 percent increase in profits on strong sales of Rituxan and Avonex. The company also announced progress in the launch of its next generation multiple-sclerosis drug, Tysabri, but said expenses from the launch and ongoing clinic trials would initially pull down earnings this year.

On Tuesday, Biogen and development partner Elan Corp. PLC announced that U.S. regulators would soon review Tysabri for possible use by sufferers of Crohn's disease, a gastrointestinal ailment.