Biogen Idec Inc. beat second-quarter earnings estimates.
For the period ended June 30, the Cambridge, Mass.-based firm posted earnings per share of 34 cents on an adjusted pro-forma basis. The consensus forecast called for earnings per share of 32 cents. In the year-earlier period, the company posted earnings per share of 29 cents.
Management expects full-year earnings per share to range between $1.34 and $1.55, on an adjusted basis.
"The last few months certainly have been an exciting time for the organization as we work toward commercializing Antegren," Biogen Idec CEO James Mullen said during a conference call. "That's a year earlier than we had anticipated coming into this year, but nevertheless is an exciting outcome."
As were the overall results the company posted during the quarter. Biogen Idec's net income was up 20 percent to $122 million, compared to last year's second-quarter total of $102 million. The adjusted figures exclude merger-related accounting impacts and other non-operating charges.
The company's earnings were driven by gains in revenue, which climbed to $539 million, up from $447 million reported in the year-ago quarter.
"That's up 20 percent year over year," Mullen said, "and with revenue topping $1 billion in the first half of 2004, we're obviously well positioned to achieve north of $2 billion of revenue this year."
The increased revenue was boosted by better sales of the company's top two products, Avonex (interferon beta-1a) and Rituxan (rituximab). Specifically, second-quarter revenues of Avonex for multiple sclerosis increased 21 percent to $347 million - $227 million in the U.S. and $120 million abroad.
Second-quarter revenues included $151 million from Biogen Idec's joint business arrangement with Genentech Inc. related to Rituxan for certain B-cell non-Hodgkin's lymphomas. The drug's sales contributed $118 million to Biogen Idec's revenue in last year's second quarter. The partners co-promote the product in the U.S., though South San Francisco-based Genentech recognizes all such sales and Biogen Idec records its share of the pretax co-promotion profits on a quarterly basis. Rituxan generated $390 million in U.S. net sales during the quarter, up from $328 million last year.
Mullen pointed to initiatives to squeeze more revenue out of both products, given efforts to complete development of a pre-filled syringe of Avonex and a Phase III study of Rituxan for rheumatoid arthritis. Data from the trial are expected in the first half of next year.
Two other marketed products generated more modest sales - Amevive (alefacept) for psoriasis produced $12 million in second-quarter revenues, up from $7 million last year, while the radioimmunotherapeutic agent Zevalin (ibritumomab tiuxetan) turned in revenues of $5 million, flat against last year's corresponding quarter.
Royalty income fell to $24 million, compared to $31 million a year ago, primarily due to lower U.S. sales of alpha-interferon products by partner Schering-Plough Corp., of Kenilworth, N.J.
Looking to the future, Biogen Idec is hopeful about the prospects of Antegren, a multiple sclerosis product partnered with Elan Corp. plc, of Dublin, Ireland. Earlier this week, the FDA accepted the partners' biologics license application and last month designated the submission for priority review and accelerated approval. The agency will base its review on one-year data from a pair of ongoing Phase III trials scheduled to last two years. A decision could come by the end of this year.
The partners also have applied for European approval of the drug, which they expect to launch early next year.
"We are convinced that Antegren has blockbuster potential," Mullen said. "Nevertheless, we recognize that the [intravenous] capacity and reimbursement will be gating factors in the initial uptake over the first few quarters. For this reason, our commercialization efforts are focused on addressing those areas."
The company also expects to double its sales force and continue to synchronize launch plans with Elan in the coming months.
Further down the road, Biogen Idec hopes to reap the benefits of a drug development deal it entered during the quarter in which it will work to advance an adenosine A2A receptor antagonist program in partnership with Vernalis plc, of London. The collaboration initially will focus on completing Phase I work for the lead compound, V2006, with the goal of beginning Phase II proof-of-concept studies in Parkinson's disease patients next year.
Biogen Idec reported an increase in research and development costs to $169.5 million, compared to $137.4 million a year earlier. Selling, general and administrative costs also grew, climbing to $138.4 million from $125.4 million a year ago.
The company's second-quarter earnings register flatter on a reported basis, calculated in accordance with U.S. generally accepted accounting principles. According to GAAP rules, Biogen Idec's net income totaled $800,000 on break-even earnings per share of 0 cents. The difference between non-GAAP income and GAAP income primarily was due to $173 million of non-cash, merger-related accounting impacts. Biogen Idec's adjusted earnings per share and net income include revenue and expenses from the former Biogen Inc. from April 1 to June 30 of last year, but exclude other non-operating charges of Biogen and IDEC Pharmaceuticals Corp.
At the close of the quarter, the company had 337 million common shares outstanding, as well as monetary reserves of about $741.4 million in cash, cash equivalents and available-for-sale securities.
On Tuesday, Biogen Idec's stock (NASDAQ:BIIB) gained $1.94 to close at $58.45.