Q2 2002 EPS Guidance Adjusted to $0.28 – $0.32, Reflects Q2 Inventory Adjustment by U.S. Wholesalers
Full Year 2002 Operating EPS Guidance Adjusted to $1.50 – $1.60,
Reflects Q2 Revision and Softer Expected U.S. Market Growth in 2002
AVONEX® (Interferon beta-1a) U.S. Market Share Percentage Remains in the Mid 50’s
International Performance of AVONEX on Track for High Teen Growth
For Immediate Release
Biogen, Inc. (NASDAQ: BGEN) today announced revised financial guidance for the second quarter and full year 2002, due to inventory adjustments by AVONEX U.S. wholesalers in both April and May and softer than expected overall U.S. market growth.
“We carefully reviewed market growth, distribution channel inventories and AVONEX demand to understand the sales shortfall,” said James C. Mullen, Biogen’s President and CEO. “The overall market growth in the U.S. is five percent below our forecast. Our market share according to IMS data changed from 57.4 percent in December to 56.9 percent in April. Wholesalers have reduced inventory levels from about 15 days to 10 days, which represents $11 million of sales. Our revised guidance assumes this new inventory will not change over the balance of the year.”
U.S. MS Market Growth Softer than Expected
IMS data for the January to April period has demonstrated that the U.S. multiple sclerosis (MS) market has grown more slowly than initially expected. These trends now indicate that the overall U.S. MS market growth in 2002 will be in the low double-digit range, as opposed to mid-teens assumed in previous guidance. In 2001, the U.S. MS market grew about 20 percent versus prior year.
AVONEX® U.S. Market Share In Line With Expectations
IMS data and shipments by wholesalers to customers both confirm that U.S AVONEX market share remains in the mid 50’s, as expected. However, U.S. AVONEX sales have been relatively flat year-to-date, because of the softer growth in the U.S. market overall.
U.S. Wholesalers Rebalancing AVONEX Inventory Levels
Wholesalers reduced their U.S. inventory levels of AVONEX during April and May by roughly five days, bringing stock levels from over two weeks to slightly less than one and one-half weeks. The impact of this inventory reduction in the second quarter is approximately $11 million. This new inventory level is below historical trends and, based on conversations with major wholesalers, Biogen now assumes these levels will remain for the balance of 2002.
Revised Guidance for Q2 2002
As a result of these inventory actions, Biogen expects second quarter U.S. AVONEX revenues will be $170 – $180 million, or about $20 million less than previously expected. This will have a negative impact of approximately $0.09 per share on second quarter earnings, which are now expected in the range of $0.28 – $0.32 per share.
Revised Guidance for Full Year 2002
Accordingly, Biogen is revising full year 2002 financial guidance, driven by its second quarter earnings adjustment and slightly softer overall U.S. market growth.
Full year 2002 revised guidance is as follows:
For revenues in 2002, the Company expects:
- U.S. product revenues will reach $730 – $755 million
- Worldwide AVONEX® revenue growth of 6 – 10%
- Royalties will remain within the range of $75 – 85 million
- Leading to total revenue growth of 6-10%
For operating expenses in 2002, Biogen expects:
- R&D; will increase as a percent of sales to 33 – 35%, driven by our expanding pipeline, Phase 3 activity with ANTEGREN® (natalizumab), and additional tech transfer costs related to CDP-571
- SG&A; will also increase to 26 – 28% of sales to support our ongoing step-up in competitiveness on AVONEX as well as launch preparation for
Operating earnings per share in 2002 is expected to be $1.50 – $1.60. Included in this guidance is the cost of CDP 571 development.
Biogen will provide financial guidance for 2003 later this year, after the outlook and timing for AMEVIVE and CDP 571 are clarified.
This press release contains forward-looking statements regarding the Company’s financial results for the remainder of 2002, including anticipated levels of revenues, expenses, earnings per share and growth rates. These statements are based on the Company’s current beliefs and expectations, and are subject to risks and uncertainties that could cause actual results to differ materially. Such risks and uncertainties include, without limitation, the impact of competitive products on AVONEX sales, any change in market acceptance for AVONEX in key markets worldwide, and any unanticipated increases in expenses including in the areas of research and development and sales and marketing. For more detailed information on the risks and uncertainties associated with future financial results and the Company’s activities see the Outlook section in MD&A; of the Company’s Annual Report on Form 10-K and quarterly reports on Form 10-Q filed with the Securities and Exchange Commission. The Company does not undertake any obligation to publicly update any forward-looking statements.
Biogen, Inc., winner of the U.S. National Medal of Technology, is a biotechnology company principally engaged in discovering and developing drugs for human healthcare through genetic engineering. Headquartered in Cambridge, MA, the Company’s revenues are generated from U.S. and European sales of AVONEX® (Interferon beta-1a) for treatment of relapsing forms of multiple sclerosis (Please see full prescribing information at http://www.avonex.com.), and from the worldwide sales by licensees of a number of products, including alpha interferon and hepatitis B vaccines and diagnostic products. Biogen’s research and development activities are focused on novel products to treat inflammatory and autoimmune diseases, neurological diseases, cancer, fibrosis and congestive heart failure. The Company maintains active clinical research programs in protein therapeutics, small molecules, genomics and gene therapy. For copies of press releases and additional information about the Company, please consult Biogen’s homepage on the World Wide Web at http://www.biogen.com.
Conference Call Information
Biogen will hold a conference call at 8:30 a.m. EST today. To access the call, please dial (877) 650-1145 (domestic) or (706) 643-1326 (international). A live webcast also is available through the investor relations section of Biogen’s homepage, http://www.biogen.com.
Vice President, Public Affairs
Tel: (617) 679-3763
Investment Community Contact:
Director, Investor Relations
Tel: (617) 679-2822