Biogen Idec Completes Review of Strategic Alternatives
On October 12, the Board announced the start of a process to determine whether potential strategic interest on the part of major pharmaceutical companies might result in superior value for stockholders in the current environment. Biogen Idec, which was represented by independent financial advisors Goldman Sachs & Co. and Merrill Lynch & Co., conducted a comprehensive and thorough sale process. At the conclusion of this process, Biogen Idec did not receive any definitive offers to purchase the Company.
The Board emphasized that Biogen Idec's business strategy is working and generating strong operating and financial performance. The Board noted that it is confident that continued execution of the Company's business plan will result in attractive value for stockholders. As previously announced, Biogen Idec's business plan is focused on achieving a series of goals by year-end 2010:
-- 100,000 patients on TYSABRI(R) (natalizumab);
-- More than 40% of the Company's revenue coming from its International business;
-- Four new products and/or existing products launched in new indications;
-- Six programs in late-stage clinical development; and,
-- Generating revenue growth at a 15% compound annual growth rate (CAGR) and non-GAAP EPS at a 20% CAGR from 2007 through 2010.
The Company reiterated guidance for the full-year 2007, which was first announced on July 24, in reporting its second-quarter financial results.
GAAP EPS Reconciliation for 2010 Goals
On a reported basis, calculated in accordance with accounting principles generally accepted in the U.S. (GAAP), the Company aims to grow GAAP EPS from 2007 through 2010 at a 25% CAGR. The long-term non-GAAP EPS goal excludes the impact of purchase accounting, merger-related adjustments, stock option expense, and their related tax effects. In order to reconcile long-term GAAP and non-GAAP EPS figures, the Company has excluded the following items for the years 2008 through 2010 from our non-GAAP EPS goal provided above:
-- Purchase accounting charges, including amortization of acquired intangible assets and IPR&D, estimated to be $800-$840 million for already completed transactions;
-- Stock option expense due to FAS 123R is estimated to be in the range of $80-$90 million;
-- Tax benefit of $220-$240 million related to the pre-tax reconciling items.
Because the Company cannot predict with certainty the nature or the amount of non-operating or unusual charges through 2010, it has made no assumption regarding new purchase accounting charges in this GAAP EPS goal. The Company may incur charges or realize income through 2010 that could cause actual results to vary from the goal.
Use of Non-GAAP Financial Measures
Our "non-GAAP EPS" financial measure is defined as reported, or GAAP, EPS excluding, for the reasons discussed below, (1) purchase accounting and merger-related adjustments and (2) stock option expense. We believe it is important to share these non-GAAP financial measures with shareholders as they: better represent the ongoing economics of the business, reflect how we manage the business internally and set operational goals, and form the basis of our management incentive programs. Accordingly, we believe investors' understanding of the Company's financial performance is enhanced as a result of our disclosing these non-GAAP financial measures. Non-GAAP EPS should not be viewed in isolation or as a substitute for reported, or GAAP, EPS.
Purchase accounting and merger-related adjustments - Non-GAAP EPS excludes certain purchase accounting impacts such as those related to the merger with Biogen, Inc. (the "Merger") and the acquisitions of Fumapharm AG, Conforma Therapeutics and Syntonix Pharmaceuticals. These charges relate to in-process research and development charges incurred upon the payment of future milestones and incremental charges related to the amortization of the acquired intangible assets. Excluding these charges allows management and investors an alternative view of our financial results "as if" the acquired intangible asset had been developed internally rather than acquired and, therefore, provides a supplemental measure of performance in which the Company's acquired intellectual property is treated in a comparable manner to its internally developed intellectual property.
Stock option expense - Non-GAAP EPS excludes the impact of our stock option expense recorded in accordance with SFAS No. 123R. We believe that excluding the impact of expensing stock options better reflects the recurring economic characteristics of our integrated business. We do include the P&L impact of restricted stock awards and cash incentives in our non-GAAP results.
About Biogen Idec
Biogen Idec creates new standards of care in therapeutic areas with high unmet medical needs. Founded in 1978, Biogen Idec is a global leader in the discovery, development, manufacturing, and commercialization of innovative therapies. Patients in more than 90 countries benefit from Biogen Idec's significant products that address diseases such as lymphoma, multiple sclerosis, and rheumatoid arthritis. For product labeling, press releases and additional information about the Company, please visit www.biogenidec.com.
This press release contains forward-looking statements about our expected revenues, earnings, cash flows, product sales, product development and other matters. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from that which we expect. Important factors that could cause our actual results to differ include our continued dependence on our two principal products, AVONEX(R) (Interferon beta-1a) and RITUXAN(R) (rituximab), the uncertainty of success in commercializing other products including TYSABRI, the occurrence of adverse safety events with our products, the failure to execute our growth strategy successfully or to compete effectively in our markets, our dependence on collaborations over which we may not always have full control, possible adverse impact of government regulation and changes in the availability of reimbursement for our products, problems with our manufacturing processes and our reliance on third parties, fluctuations in our operating results, our ability to protect our intellectual property rights and the cost of doing so, the risks of doing business internationally and the other risks and uncertainties that are described in Item 1A Risk Factors in our most recent Form 10-Q filing with the SEC. These forward-looking statements speak only as of the date of this press release, and we do not undertake any obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise.
Biogen Idec Inc.
Naomi Aoki, 617-914-6524
Keith Regnante, 617-679-2812
Posted: December 2007