Total Revenues Up 21 Percent over Second Quarter 2002
Biogen, Inc. (NASDAQ: BGEN) today announced financial results for the second quarter of 2003.
For the three months ended June 30, 2003, total revenues were $326 million, an increase of 21 percent over the second quarter of 2002.
- AVONEX® (Interferon beta-1a) worldwide sales were $286 million, an increase of 14 percent over second quarter 2002. U.S. sales were $196 million, and international sales were $90 million.
- AMEVIVE® (alefacept) sales were $7 million.
- Royalties were $31 million, an increase of 63 percent over the second quarter 2002.
Reported net income was $58 million in the second quarter of 2003 versus $43 million in the second quarter of 2002, a 33 percent increase. Reported earnings per share were $0.38 in the second quarter of 2003 versus $0.29 in the same period of 2002, an increase of 31 percent.
Operating results in the second quarter of 2003 exclude charges of $3.8 million related to the pending merger with IDEC Pharmaceuticals Corporation, partially offset by $1.4 million in gains from sales of certain non-current marketable securities reflected in other income, net. On an after-tax basis, the net charge was $1.7 million, or $0.01 per share. Operating earnings per share was $0.39 in the second quarter of 2003 versus $0.31 in the same period of 2002, an increase of 26 percent. See attached “Operating Condensed Consolidated Statements of Income” tables for a reconciliation of reported results (GAAP) to operating results (Non-GAAP).
Jim Mullen, Biogen’s Chairman and Chief Executive Officer, said, “Our operations are solid. Biogen grew AVONEX sales in both the U.S. and Europe. AMEVIVE’s launch is progressing in the U.S., and we continue to make headway with payers.
“Strategically, our merger with IDEC to create one of the world’s largest biotechnology companies will be a significant step forward. We expect the planned merger to capitalize on the momentum of both companies in the near term, and create a new, even stronger company characterized by sustainable long-term growth, a richer, more balanced product portfolio in autoimmune diseases and oncology, significant R&D; resources to develop the pipeline, higher cash flow and improved return on assets. Our integration planning team has already begun work on transition planning, including the identification of growth opportunities and potential cost synergies.”
During the second quarter of 2003, Biogen’s Royalties were negatively impacted by $7.7 million due to Schering-Plough’s announced first quarter INTRON® A (interferon alpha-2b) sales decline, which they indicated was driven by a channel inventory reduction and a competitive environment.
Cost of Product and Royalty Revenues in the second quarter included a $6 million charge for writedowns of inventory that did not meet quality specifications. Additionally, during the quarter, as a result of the Company’s assessment of Columbia University’s “275 patent”, the Company is no longer accruing expenses related to this patent and has eliminated prior accruals of $8 million in Cost of Product and Royalty Revenues. On July 15, 2003, Biogen, Genzyme Corporation and Abbott Bioresearch Center, Inc. initiated a lawsuit against Columbia claiming this patent is invalid and unenforceable.
Finally, in the second quarter, Research and Development included a $5.5 million milestone expense in the form of a loan forgiveness to ICOS, increased production costs for AMEVIVE, and increased development costs related to four Phase 3 ANTEGREN trials.
In May, the U.S. Food and Drug Administration approved a new prefilled syringe for AVONEX, designed to make treatment even more convenient for people with MS. Biogen expects the prefilled syringe to be available in the U.S. in August. The European Agency for the Evaluation of Medicinal Products (EMEA) approved the new prefilled syringe in July, and Biogen will make it available on a country-by-country basis in the EU beginning this month.
As of mid-July, almost 1,500 physicians are pursuing AMEVIVE therapy for more than 5,500 patients in the U.S., most of whom are awaiting insurance verification. More than 90 percent of patients who have completed the insurance verification process have received coverage for AMEVIVE. Biogen expects acceleration of sales in the second half of 2003 as more patients start therapy, the reimbursement process develops, and physicians and patients become more familiar with AMEVIVE.
Elan Corporation, plc and Biogen announced today that the Phase III induction trial of ANTEGRENÒ known as ENACT-1 (Evaluation of Natalizumab in Active Crohn’s disease Therapy-1) did not meet the primary endpoint of “response” as defined by a 70-point decrease in the Crohn’s Disease Activity Index (“CDAI”) at week 10. There were no notable differences in the overall rates of side effects between natalizumab and placebo treatment groups through week 12. The most common adverse events seen in the trial were headache, nausea, and abdominal pain across both groups.
The natalizumab “maintenance” trial in Crohn’s disease – ENACT-2 (Evaluation of Natalizumab as Continuous Therapy-2) is ongoing.
Concurrently, two Phase III studies in MS are also underway. AFFIRM (natalizumab safety and efficacy in relapsing-remitting MS) will evaluate the ability of natalizumab to slow the rate of disability in MS and to reduce the rate of clinical relapses; SENTINEL (safety and efficacy of natalizumab in combination with AVONEX® in patients with relapsing-remitting MS) will determine if the combination of natalizumab and AVONEX is more effective than treatment with AVONEX alone in slowing the rate of disability and reducing the rate of clinical relapses.
For more information on the ENACT-1 results, please refer to the joint Biogen and Elan Corporation, plc press release issued on July 24, 2003 entitled ANALYSIS OF ANTEGREN PHASE III INDUCTION CLINICAL TRIAL IN CROHN’S DISEASE COMPLETED.
2003 FINANCIAL GUIDANCE
The Company reiterated that it expects its full year 2003 operating earnings per share to be in the range of $1.72 – $1.85 as announced on April 2, 2003. Specifics are provided in the attached table. Guidance for full year 2003 reported earnings per share (GAAP-based financial measure) is not currently assessible 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, however, anticipate that it may have to take such charges in subsequent quarters and that such charges, if material, would cause reported earnings per share to differ from operating earnings per share.
CONFERENCE CALL AND WEBCAST
The Company’s earnings conference call for the second quarter will be broadcast via the Internet at 8:30 a.m. ET on July 24, 2003, and will be accessible through the investor relations section of Biogen’s homepage, http://www.biogen.com.
In addition, Biogen and Elan Corporation plc are conducting a joint conference call to discuss ANTEGREN results in Crohn’s disease at 7:30 am ET on July 24, 2003, and the playback information can be accessed through Elan’s homepage, http://www.elan.com and Biogen’s homepage, http://www.biogen.com.
Third quarter resultsTuesday, October 28, 2003, 8:30 a.m. ET
A pioneer in leading edge research in immunology, neurobiology and oncology, Biogen brings novel therapies to improve patients’ lives around the world through its global marketing
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FORWARD LOOKING STATEMENTS / SAFE HARBOR
This press release contains forward-looking statements regarding expected future financial results, the availability of the pre-filled syringe formulation of AVONEX, and the proposed merger with IDEC, including integration plans and expected synergies.
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, including future revenues, revenue growth, earnings per share, product sales, royalties, expenses, income tax rate and capital expenditures, may be affected by any slowing of growth of the multiple sclerosis market, any change in market acceptance of AVONEX in key markets worldwide, the Company’s ability to achieve market acceptance of AMEVIVE and to successfully launch AMEVIVE in the U.S., the impact of reimbursement and pricing decisions related to the Company’s products, the impact of competitive products on AVONEX and AMEVIVE sales, any material decreases in sales by licensees of products on which the Company receives royalties, the impact of litigation, any unanticipated increase in expenses including in the areas of research and development and sales and marketing, and in-licensing and product opportunities. The Company’s expectations regarding the availability of the pre-filled syringe formulation of AVONEX is subject to the risk of unexpected technical or manufacturing issues. The Company’s current view related to the merger with IDEC are subject to a number of risks and uncertainties. For example, the Company may be unable to obtain shareholder or regulatory approvals required for the merger. Unanticipated difficulties encountered in its business or with its products or pipeline may have an impact on its ability to close the merger or to achieve anticipated results as a combined company. Problems may arise in successfully integrating the two companies businesses. The merger may involve unexpected costs. The combined company may be unable to achieve cost-cutting synergies. The Company’s business may suffer as a result of uncertainty surrounding the merger.
For more detailed information on the risks and uncertainties associated with these forward looking statements and the Company’s other 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, whether as a result of new information, future events, or otherwise.
For more detailed information on the risks and uncertainties associated with IDEC’s business activities see IDEC’s reports filed with the SEC. IDEC does not undertake any obligation to publicly update its forward-looking statements, whether as a result of new information, future events, or otherwise.
Additional Information and Where to Find It
On July 16, 2003, IDEC Pharmaceuticals Corporation filed a registration statement with the SEC on Form S-4 that includes a preliminary joint proxy statement/prospectus of Biogen, Inc. and IDEC and other relevant materials regarding the proposed merger transaction. Investors and security holders of Biogen and IDEC are urged to read the preliminary joint proxy statement/prospectus filed with the SEC on July 16, 2003, the definitive joint proxy statement/prospectus when it becomes available and any other relevant materials filed by Biogen or IDEC with the SEC when they become available, because they contain, or will contain, important information about IDEC, Biogen and the proposed transaction. The definitive joint proxy statement/prospectus will be sent to the security holders of Biogen and IDEC seeking their approval of the proposed transaction. Investors and security holders may obtain a free copy of these materials and other documents filed by Biogen or IDEC with the SEC at the SEC’s website at www.sec.gov. A free copy of the definitive joint proxy statement/prospectus may also be obtained from Biogen, Inc., Fourteen Cambridge Center, Cambridge, MA 02142, Attn. Investor Relations or IDEC Pharmaceuticals Corporation, 3030 Callan Road, San Diego, CA 92121 when it becomes available. In addition, investors and security holders may access copies of the documents filed with the SEC by Biogen on Biogen’s website at www.biogen.com and investors and security holders may access copies of the documents filed with the SEC by IDEC on IDEC’s website at idecpharm.cdmail.biz. Investors and securityholders are urged to read the definitive joint proxy statement/prospectus and the other relevant materials relating to the proposed transaction when they become available before voting or making any investment decision with respect to the proposed transaction.
Biogen, IDEC and their respective executive officers and directors may be deemed to be participants in the solicitation of proxies from their respective stockholders with respect to the proposed transaction. Information about the executive officers and directors of Biogen and their ownership of Biogen common stock is set forth in the proxy statement for Biogen’s 2003 annual meeting of stockholders, which was filed with the SEC on April 17, 2003. Information about the executive officers and directors of IDEC and their ownership of IDEC common stock is set forth in the proxy statement for IDEC’s 2003 annual meeting of stockholders, which was filed with the SEC on April 11, 2003. Information regarding the interests of the officers and directors of Biogen and IDEC in the proposed transaction may be obtained by reading the preliminary joint proxy statement/prospectus of IDEC and Biogen filed with the SEC on July 16, 2003 and the definitive joint proxy statement/prospectus when it becomes available.
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