Biogen Inc (BIIB) 2009 Q4 法說會逐字稿

Good morning.

My name is Sean and I will be your conference operator today.

At this time I would like to welcome everyone to the fourth-quarter 2009 earnings conference call.

All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question-and-answer session.

(Operator Instructions)

Thank you.

Mr.

Hoffman, you may begin your conference.

Thank you and welcome to Biogen Idec's fourth-quarter and full-year 2009 earnings conference call.

Before we begin I encourage everyone to go to the Investors section of BiogenIdec.com, to find the press release and related financial tables, including a reconciliation of the non-GAAP financial measures we'll discuss today.

We've also posted slides on our website that will outline the topics discussed on today's call.

As usual, we will start with the Safe Harbor statement.

Comments made in this conference call include forward-looking statements about our expected future results, our organization, operational and financial activities and goals, the market potential of TYSABRI and other products, the potential market for our products, and pipeline advancements and regulatory actions.

These statements are subject to risks and uncertainties which could cause actual results to differ materially from expectations.

You should carefully review the risks and uncertainties that are described in our earnings release and in the Risk Factors sections of our most recent annual and quarterly reports filed with the SEC.

We do not undertake any obligation to publicly update any forward-looking statements.

Today on the call I'm joined by Jim Mullen, CEO of Biogen Idec; Dr.

Al Sandrock, SVP of the Neurology R&D organization; Bob Hamm, our Chief Operating Officer; and Paul Clancy, CFO and Executive Vice President of Finance.

I will now turn the call over to Jim Mullen.

Thank you, Eric.

Good morning, everyone.

Thank you for joining us this morning.

I'm pleased to report that in 2009 Biogen Idec once again delivered strong financial and operational results.

For the full-year 2009, total revenue increased 7% to $4.4 billion.

Non-GAAP diluted EPS increased 13% to $4.12.

And the business generated $1.1 billion in cash.

The 13% non-GAAP EPS growth marks the sixth consecutive year of double-digit EPS, which increases date back to the merger between Biogen and Idec in 2003.

On the operational side, I'm also pleased to announce a very successful year.

With $1.1 billion of in-market net sales in 2009, TYSABRI is officially a blockbuster.

I'm especially proud of this accomplishment when you take a step back and consider the voluntary market withdrawal in 2005.

Think about this.

A product that was taken off the market is now generating over $1 billion in annual revenue and is still growing.

Furthermore, we made significant progress in our understanding of PML risk and opportunities to stratify that risk, and I attribute these accomplishments to both TYSABRI's potent efficacy, positive risk-benefit profile, and a very committed team of Biogen Idec employees who are justifiably proud of their accomplishments, but at the same time are aware that there is still more work to be done.

During 2009, we also took steps to extend the durability of our core interferon franchise.

The therapy is now protected until 2026 by virtue of newly issued method of use patents.

In addition, we advanced pegylated interferon into registration trials.

Pegylated interferon has the potential to reinforce AVONEX's advantage and improve on convenience.

With an eye on reinvigorating our efforts to restore AVONEX's market leadership, in Q4 we also announced some new additions to our commercial leadership team.

Bob Hamm will talk about these new leaders later.

Biogen Idec's MS pipeline is deeper and more complete than ever before.

We now have first-in-class or best-in-class therapies that have potential to address a full spectrum of patient needs.

Our strategy has been to slow, stop, and reverse MS; and we have assembled a collection of products and development programs designed to do just that.

During 2009, our R&D organization filed for European and Canadian regulatory approval of Fampridine, well ahead of plan; and we initiated two pivotal trials, three Phase 2 trials, two Phase 1 trials, and four R-to-D transitions -- all while continuing to manage 90 trials for 31 compounds with over 14,000 patients in more than 45 countries.

Finally, we have a strong balance sheet and nearly $100 million in free cash flow monthly.

This is allowing us the flexibility to both return cash to our shareholders and continue to invest in future growth both internally and externally.

Before I turn the call over to Al Sandrock for an update on R&D, let me address a topic I am sure you are interested in, the Board's search for my successor.

The Board has formed a CEO search committee headed by director Brian Posner, which also includes chairman, Bill Young, and directors Alex Danner and Bruce Ross.

The committee is working diligently with a leading search firm, Spencer Stuart.

The process is underway.

But as you can understand, beyond that we are not going to comment on this call today.

I will now hand the call to Dr.

Al Sandrock, our Senior Vice President, Neurology Research and Development.

Al?

Thank you, Jim.

I'd like to begin by welcoming some new additions to the neurology R&D and Medical Affairs teams at Biogen Idec.

You have probably already seen the announcements, so let me take a moment to tell you about each person.

Dr.

John Richert joins us from the National Multiple Sclerosis Society, where he served as executive vice president for research and clinical programs for the past five years.

Prior to that, John was at Georgetown University, where he was professor and chair in the Department of Microbiology and Immunology; professor of neurology; and founder of the University's MS clinic.

Dr.

Frederick Munschauer joins us from the State University of New York at Buffalo School of Medicine, where he was the Irvin and Rosemary Smith Professor in the Department of Neurology and chair of the Department of Neurology.

Dr.

Nancy Richert, an expert in neuroimaging, joins us from the National Institute of Neurologic Disorders and Stroke, where she served as a staff clinician in the neuroimmunology branch.

And Dr.

Doug Kerr, an expert on transverse myelitis and MS, joins us from Johns Hopkins, where he was associate professor of neurology.

We are extremely excited to add these distinguished leaders of the multiple sclerosis community to the Biogen Idec team.

I would like to begin now with an update of our pipeline starting with one of my favorite programs.

I'm very pleased to report that in January we initiated a Phase 1 trial of our fully human anti-LINGO-1 monoclonal antibody.

This is especially exciting for us because most of the biology of LINGO-1 was elucidated in Biogen Idec's own research laboratories.

It had been known for some time that when myelin, the insulation around nerve fibers, is damaged by diseases such as multiple sclerosis, neurons often lose the ability to transmit nerve impulses.

It was also known that the ability of the human central nervous system to repair myelin was limited.

As reported in such publications as Nature Medicine and Nature Neuroscience, our scientists found that treatment with anti-LINGO-1 antibody promoted the re-myelination of damaged nerve fibers when tested in various animal models of demyelination.

Although current MS therapies can slow disease progression, none are designed to directly affect this repair process.

As such, anti-LINGO-1 antibody represents a novel therapeutic approach in multiple sclerosis.

Another new technology that we advanced into development last quarter was our biospecific antibody targeting TNF-alpha and TWEAK.

With this novel biospecific antibody design, which was also pioneered by Biogen Idec's scientists, we can simultaneously bind TNF-alpha and TWEAK with high affinity while retaining many of the desired properties of traditional monoclonal antibodies, including a long circulating half-life and ease of production.

Simultaneous inhibition of the TNF-alpha and TWEAK pathways also offers the potential to more effectively block inflammatory pathologies and autoimmune diseases.

Now an update on our blood factor programs.

In December, with our partner Swedish Orphan Biovitrum, we announced that our Factor VIII product for hemophilia A moved into clinical trial, making ours the only long-acting Factor VIII compound in clinical trials.

In January, we announced that our Factor IX product for hemophilia B moved into a registrational trial, making ours the first long-acting Factor IX compound to reach this milestone.

The case for innovating in hemophilia is strong, where the only treatment options are those with relatively short half-lives, requiring between 100 and 150 infusions per year.

Our products substantially increase the half-life, which offers the hope that hemophilia patients would need to receive 50 or fewer infusions per year.

We will present results of our Phase 1/2 Factor IX study at an upcoming medical meeting.

As you may already know, Biogen Idec regularly reviews and adjusts its pipeline as scientific, market, or regulatory conditions change.

In accordance with this process, we reviewed the data for ADENTRI and determined that the results are not supportive of continuing either the oral or the IV program.

The efficacy and safety data from our TRIDENT trial analyzed to date suggest a beneficial effect on symptoms, without a positive impact on clinical morbidity or mortality outcomes.

These results are consistent with recent Phase 3 results from Merck's were lawful rolofylline program and the QT compensated heart failure.

Now let me take a moment to provide an update on TYSABRI.

When we reintroduced TYSABRI in July of 2006, you will recall that we set out to answer three questions about PML in TYSABRI treated patients.

Who is at risk?

What is the risk?

And how can we mitigate the risk?

With the start of the new year, I thought it would be a good time to revisit the progress we've made in answering these questions.

I'll begin with what we know about the risks.

During our Q3 earnings call, I announced that we had initiated conversations with regulators worldwide about updating the TYSABRI product label, as we began to believe that the risk of PML increases with the length of time on therapy.

In the US, we updated the label to include language stating that in patients treated with TYSABRI the risk of developing PML increases with longer treatment duration; and that for patients treated for 24 to 36 months the risk is generally similar to the rate seen in clinical trials.

There is limited experience beyond three years.

As recently as last Friday, February 5, the FDA reaffirmed that it believes that the clinical benefits of TYSABRI continue to outweigh the potential risks.

On January 21, the European Medicines Agency announced that they had finalized a review of TYSABRI and the risk of PML.

The Agency's Committee for Medicinal Products for Human Use concluded that the risk of developing PML increases after two years of use of TYSABRI, although this risk remains low.

The Committee also reaffirmed its position that TYSABRI's benefits continue to outweigh its risks for patients with highly active relapsing-remitting multiple sclerosis, for whom there are few treatment options available.

We expect that the TYSABRI label in the EU will be revised to reflect the Committee's conclusions.

We continue to explore avenues for stratifying risk.

One key area focus is on the development of a serological assay to detect the presence of JC virus antibody.

We are currently planning to initiate clinical studies to determine whether antibody-negative patients are at lower risk for PML.

Our aim is to make these studies widely accessible to TYSABRI patients worldwide.

Risk mitigation efforts have also continued.

When TYSABRI was introduced, the expectation was that PML was usually fatal.

This assumption was largely based on outcomes seen in the HIV-AIDS population.

It is still too early to draw firm conclusions; but so far survival rates have been approximately 75%.

We believe that clinical vigilance, combined with rapid action including the ability to shut off the activity of natalizumab by timely dose suspension and plasma exchange have contributed to improved outcomes.

We will continue to put considerable resources into PML research, to further refine ways of identifying who is at risk for this rare event and to provide other approaches that could improve patient outcomes.

A final note on TYSABRI's efficacy.

Based on the data coming from our clinical trials, the real-world observations from various studies and registries around the world, as well as the uplifting stories we hear from many patients, we believe strongly in the benefit that TYSABRI can offer many patients with multiple sclerosis.

While PML seems to get all of the headlines, we think TYSABRI's efficacy is a story that also needs to be reinforced.

To that end, last month we announced our decision to launch a head-to-head trial of TYSABRI versus Copaxone and Rebif, a trial we call SURPASS.

SURPASS has a target enrollment of 1,800 patients at 230 sites worldwide.

As such, it will be the largest well-controlled comparator trial of MS treatments ever undertaken.

As you know, many neurologists currently switch patients from one ABCR therapy to another; and they do this without any clinical trial evidence that has evaluated the utility of this approach.

The SURPASS study will be the first trial to provide Class I data on whether patients who are not doing well on first-line therapies are better off if they switch to TYSABRI versus waiting to switch or switching among the ABCR therapies.

We expect the study to be completed in 2013.

I will now pass the call over to Bob Hamm, our Chief Operating Officer.

Thank you, Al.

In the fourth quarter, AVONEX, TYSABRI, and RITUXAN generated combined worldwide revenues to Biogen Idec of $1.1 billion, up 5% year-over-year, with continued growth in our core MS business offsetting a modest decline in RITUXAN revenues.

For the year, this product revenue totaled $4.2 billion, which represents 7% growth versus 2008.

As Jim mentioned, TYSABRI achieved blockbuster status in its fourth year, exceeding $1 billion in sales with 30% growth in both in-market sales and patients.

Our durable AVONEX franchise, now in its 14th year in the market, delivered 5% revenue growth.

In general, we installed new commercial leadership.

Dr.

Francesco Granata joined Biogen Idec to lead our global commercial organization and our global medical affairs team.

Dr.

Granata is a trained MD who previously held executive commercial leadership positions at Schering-Plough, Pharmacia, and Pfizer.

Joining Dr.

Granata as head of the US business is Tony Kingsley, an entrepreneurial leader who previously held senior operational management positions at Hologic and Cytyc.

Together, Francesco and Tony's focus during 2010 will be on re-energizing our US AVONEX business and continuing to drive TYSABRI adoption.

I will now provide more detail on each franchise individually.

TYSABRI finished 2009 with over 48,000 patients on therapy worldwide.

In the US, the number of patients grew by 21%.

Outside the US, the number of patients grew by 40%.

The higher growth rate outside the US was in part fueled by geographic expansion.

During 2009, we launched TYSABRI in seven countries, bringing the total number of countries where TYSABRI is sold to 45.

AVONEX is currently available in over 70 countries, so we still have plenty of room to continue to expand.

We anticipate making TYSABRI available in five or six additional countries in Latin America and Central Europe during 2010.

No doubt much of the interest in TYSABRI is due to its efficacy, having demonstrated a 42% to 54% reduction in disability progression, a 68% reduction in relapse rate, and 5 times as many patients free of disease activity versus placebo.

Doctors and patients appear to be taking TYSABRI efficacy into account when weighing TYSABRI's benefit and risk.

In Q4, we updated TYSABRI's label information to include a duration effect following two years of treatment.

Response to this new so far appears to be measured.

Worldwide, TYSABRI grew by an average of 867 patients net per month during Q4, which is somewhat lower than during the second and third quarters, but still about 24% above the same period prior-year.

We have yet to see a meaningful change in discontinuation trends.

As of December, we estimate that less than 10% of US neurologists had ever prescribed a TYSABRI drug suspension; and less than 5% of TYSABRI patients were currently on a drug suspension.

For patients with few options other than TYSABRI, the risk of PML even after 24 months remains low, while the risk of debilitating MS progression without TYSABRI is high.

Potential competitors to TYSABRI are on the horizon; and for competitive reasons I am not going to go into detail on our commercial preparation for these nascent therapies.

But I can say this -- we are quite confident in the appeal TYSABRI's benefit-risk equation has for many MS patients.

In fact, advances in MS therapy such as TYSABRI are changing the way that many patients view and manage their disease.

In January, we launched a customized yoga program called My MS Yoga for people with MS.

This program was developed with a top MS specialist, Dr.

Elliot Frohman, and a world-renowned yoga instructor, Baron Baptiste.

The video features TYSABRI patients who are all proactively managing their disease through exercise and treatment.

This program has had a significant pickup in the national and local media, including a high-profile piece on Good Morning America Health.

In the first three weeks since launch, over 4,600 patients have visited My MS Yoga.com to learn more about the program; and over 1,200 patients have taken advantage of the free My MS Yoga DVD.

Now an update on AVONEX.

The franchise generated $596 million in global revenue during the fourth quarter of 2009 and $2.3 billion for the year, both an increase of 5% year-over-year.

With approximately 137,000 patients on therapy worldwide and 16 years of remaining patent life, AVONEX continues on as a strong and durable foundation to our market-leading franchise in neurology.

RITUXAN Q4 revenues to Biogen Idec were $257 million, down 15% year-over-year.

This decline was driven primarily by the continued expiration of royalties on revenues outside of the United States, off 44% versus 2008.

Also in the US, our Q4 profit share declined by 7%.

As Roche reported last week, this was due to reduction in wholesaler inventory.

For the year, RITUXAN revenues to Biogen Idec were $1.1 billion, down 3% year-over-year due to a 24% decline in royalties on sale (technical difficulty) US.

Now looking toward the future, let's turn to our next anticipated product launch in MS.

As Jim mentioned, we filed for regulatory approval of Fampridine in December, ahead of schedule, in Europe and Canada.

In the US, where Fampridine is developed and commercialized by Acorda Therapeutics, the FDA recently approved the drug as AMPYRA extended release tablets.

It is the first therapy indicated in the US to improve walking in patients with MS.

This was demonstrated by an increase in walking speed.

Biogen has established a focused team that has initiated launch preparations for expected approval outside the US in the first half of 2011.

Much of our neurology sales and marketing infrastructure is already in place, given our market-leading position in most countries outside the US.

Fampridine will fit very nicely into that infrastructure.

Our commercial efforts are primarily focused on pharmacoeconomic research at this stage.

In parallel, our supply chain team is preparing to enable appropriate compassionate-use programs and named patient supply.

Biogen Idec is excited to bring this new therapy to MS patients outside of the US.

Fampridine demonstrated efficacy in people with all four major type of MS -- relapsing-remitting; secondary progressive; progressive-relapsing; and primary progressive.

And it can be used alone or with existing MS therapies.

In short, Fampridine's launch outside the US provides us an opportunity to offer therapies to an even broader community of MS patients, a goal that fits wholly with our mission to create new standards of care in neurology through our global commercial and medical capabilities.

With that, I will now turn the call over to Mr.

Paul Clancy, our Chief Financial Officer.

Thanks, Bob.

Our viewer 2009 fourth-quarter and full-year financial performance.

Additionally I will provide our 2010 financial guidance.

Our GAAP financials are provided in Tables 1 and 2 of the earnings release.

Table 3 includes a reconciliation of the GAAP to non-GAAP results.

The primary differences between the GAAP and non-GAAP results for the quarter were $56 million related to the amortization of acquired intangibles and $7 million for employee stock options, offset by a $24 million tax impact on these items.

Our GAAP diluted earnings per share was $1.06 in Q4, and $3.35 for the full year.

Now I'll move on to the non-GAAP P&L operating performance for Biogen Idec, which we believe better represents the ongoing economics of the business and reflects how we manage the business internally.

Our non-GAAP diluted EPS was $1.20 for Q4, and $4.12 for full-year 2009.

In the fourth quarter, we benefited by $0.12 earnings per share due to one-time discrete tax benefits that I will detail later in the call.

Now let's move through the fourth quarter and full-year results in a bit more detail.

Total revenue for the fourth-quarter 2009 was $1.1 billion, 5% growth over fourth-quarter 2008.

Revenue for the full-year 2009 totaled approximately $4.4 billion, which represents a 7% growth over full-year 2008.

Q4 2009 product revenue was $827 million, a 13% growth over Q4 2008.

And full-year 2009 product revenue totaled $3.2 billion, an 11% growth over full-year 2008.

Going through our product revenues, I'll begin with AVONEX.

Q4 AVONEX worldwide product revenue was $596 million, a 5% increase over Q4 2008.

Worldwide AVONEX revenue for full-year 2009 totaled approximately $2.3 billion, also a 5% growth.

US AVONEX product revenue in the fourth quarter was $352 million, a 3% increase over Q4 2008.

US AVONEX revenue for the full year totaled $1.4 billion, which represents a 10% growth over full-year 2008.

US AVONEX inventory ended at just over two weeks in the fourth quarter, unchanged from the third quarter.

In Q4 2009 units sold in the US declined approximately 7% as compared to Q4 2008.

This was offset by price increases.

On a sequential basis, Q3 to Q4, US AVONEX units declined by approximately 1%.

Q4 international AVONEX product revenue was $244 million, a 9% increase over Q4 2008.

On a sequential basis, AVONEX international revenues increased by 6% as compared to Q3, driven by higher volume.

Foreign exchange net of hedge accounted for 2% of the increase.

International AVONEX revenue for the full-year 2009 totaled $917 million, a 1% year-over-year decline.

The full-year international AVONEX revenue was unfavorably impacted by foreign exchange and hedging, which reduced revenue by $88 million or approximately 10%.

This was offset by unit increases of approximately 6% and favorable price and mix impact of 2%.

Q4 TYSABRI worldwide product sales were $216 million for Biogen Idec, a 39% increase over Q4 of 2008.

TYSABRI worldwide revenue for full-year 2009 totaled $776 million for Biogen Idec, a 32% increase over full-year 2008.

In the US, in-market TYSABRI sales totaled $137 million for the fourth quarter.

Q4 US TYSABRI product revenue for Biogen Idec was $62 million.

US end-user in-market TYSABRI sales for the full-year 2009 totaled $509 million, a 21% increase over 2008.

Biogen Idec booked $232 million for full-year 2009.

Q4 international TYSABRI product revenue was $154 million, a 49% increase over Q4 2008.

International TYSABRI revenue for full-year 2009 totaled $544 million, a 39% year-over-year increase.

Foreign exchange reduced international TYSABRI revenue by approximately $29 million for full-year 2009, or 5%.

Q4 revenue FUMADERM was $14 million.

Now I will move on to the RITUXAN collaboration revenues referred to as revenue from unconsolidated joint business.

We recorded $257 million in revenue for the quarter, representing a decrease of 15% on a year-over-year basis.

Revenue for the full year decreased 3% to $1.1 billion as compared to full-year 2008.

Our RITUXAN revenues are broken down into three components.

First, our share of the net US RITUXAN profits.

Net US RITUXAN sales were $658 million in the fourth quarter, down 3% versus prior year and as Bob noted was owing partly to de-stocking in the channel.

Our Q4 2009 profit share from that business was $192 million, down 7% versus prior year.

Full-year 2009 US RITUXAN sales were $2.666 billion, up 3% as compared to full-year 2008.

And our profit share from that business was $774 million, up 5% as compared to full-year 2008.

Year-over-year profit share benefited from price increases and lower operating expenses in the collaboration.

Second, we receive revenue on sales of rituximab outside the US.

In Q4 this was $46 million, down 44% versus Q4 2008, as royalties from individual countries have expired.

Revenue on sales of rituximab outside the US for the full year was $256 million, down 24% as compared to full-year 2008.

We expect for 2010 rest of world revenues from rituximab to be approximately $120 million to $130 million, dependent on exchange rates.

Third, in the fourth quarter we were reimbursed $18 million for selling and development costs incurred related to RITUXAN.

For the full-year 2009, we were reimbursed $66 million.

Royalty revenue were $41 million for fourth quarter of 2009 and $124 million for the year.

Now turning to the expense line on the non-GAAP P&L.

Q4 COGS were $100 million or 9% of revenues.

Q4 R&D expense was $279 million, 24% of revenues.

R&D spend for the full year totaled $1.3 billion, approximately 29% of revenues and an increase of 20% on a year-over-year basis.

This was owed largely to the $110 million payment we made to Acorda Therapeutics in the first half of 2009.

Q4 SG&A expense was $236 million, a 5% increase year-over-year.

This represents 21% of revenues.

Drivers of the year-over-year increase included investments to support the MS franchise and the ongoing geographic expansion of our commercial operations.

Continuing down the P&L, our collaboration profit-sharing line totaled $63 million in expense for the quarter.

Other income and expense for the quarter was a gain of $6 million, driven by net interest income and realized gains on strategic investments.

Let me now share the progress we've made with respect to our share repurchase program.

On our last earnings call we announced that in October 2009 the Board of Directors had authorized a share repurchase program of up to $1 billion of common stock, intended to reduce our shares outstanding, with the objective of returning cash to shareholders.

This program was in addition to the previously approved $20 million share repurchase program authorized in October 2006, which has always been earmarked for share stabilization.

In the fourth quarter of 2009, we made solid progress on our share repurchase programs, purchasing 14.8 million shares of stock at a total cost of approximately $694 million.

Repurchases have continued in the first quarter of 2010 through February 5, whereby we've repurchased an additional 5.4 million shares for a total cost of $289 million.

Net-net since October 2009 through February 5, 2010, we've purchased approximately 20.2 million shares for a total cost of $983 million.

Our cash and marketable securities position remained strong.

We ended the year at $2.5 billion of cash and marketable securities.

Our Q4 non-GAAP tax rate was approximately 24%, which benefited from multiple discrete events.

Specifically, in the fourth quarter we effectively resolved previously outstanding tax audits across multiple years on both the federal and state level.

For the full-year 2009 our tax rate was approximately 27%, reflecting these benefits offset by the negative impact from the Acorda transaction being entered into by an ex-US affiliate.

As we look into 2010, I expect the non-GAAP tax rate to be in the 28% to 29% range.

This does not include the R&D tax credit which currently has not been reinstated.

This brings us to our Q4 non-GAAP diluted earnings per share, which were $1.20, and our full-year non-GAAP EPS, $4.12, representing a 13% increase over full-year 2008.

Now I would like to provide our 2010 guidance.

Revenue growth in 2010 is expected to be in the mid-single digits; and this includes the expected decline in rituximab rest of world revenues.

Core operating expense growth is expected to be in the low single digits.

R&D expense is expected to be approximately 24% to 27% of revenue excluding any new business development expense.

SG&A expense is expected to be approximately 20% to 22% of revenue.

The high end of this range reflects investments we may be making in our brands in light of the competitive landscape.

GAAP earnings-per-share is expected to be above $3.71.

Non-GAAP diluted EPS is expected to be above $4.55, striving towards another double-digit earnings growth year.

We expect capital expenditures in the range of $170 million to $200 million.

So in conclusion, 2009 was a solid top- and bottom-line result.

Our total revenue grew by 7% for the full year.

Product revenue grew by 11%.

TYSABRI surpassed $1 billion in sales.

Our non-GAAP earnings-per-share grew by 13%.

Our cash flow was strong and we made solid progress against our $1 billion share repurchase plan, returning cash to shareholders.

Now I will hand the call over to Jim for his closing comments.

Thank you, Paul.

In summary, 2009 business and pipeline performance position the Company for continued success in 2010 and beyond.

The organization delivered midteens non-GAAP earnings growth; drove the ongoing growth of TYSABRI patients and revenues; filed a new product for regulatory approval; advanced two programs into registrational trial; and broadly drove what is an increasingly exciting pipeline.

We have consistently delivered double-digit earnings growth since the merger between Biogen and Idec in 2003, and we've positioned the Company to remain competitive well into the future.

With that, Eric, let's now open it up to Q&A.

Thanks, Jim.

Sean, we are ready to open up the call for Q&A.

We will ask that you please limit yourself to one question then reenter the queue for follow-up.

Please state your name and company affiliation.

We are ready for the first question.

(Operator Instructions) Rachel McMinn.

I am wondering if you can comment a little bit on your R&D choice.

Particularly on SURPASS and how we should be thinking about the $1.2 billion expense for next year, if I have the math in the right ballpark.

How much of that is related to SURPASS and TYSABRI investment versus other programs in the pipeline?

Rachel, this is Paul.

You've got the math, plus or minus, pretty close.

SURPASS is a very meaningful investment as well as a number of the other TYSABRI investments that we have planned for 2010.

That, of course, is shared with Elon from a collaboration standpoint.

So I think the way we think about R&D broadly is that there are a number of activities that are putting upward pressure on the R&D line.

TYSABRI lifecycle initiatives; certainly moving PEG along in the registration trial; a number of the other late-stage programs.

And that kind of being offset by some of the program decisions we've made over the last few months that have been noted on the third-quarter call and the fourth-quarter call.

So I hope that gives you a little bit of a ballpark to work with.

So I am just wondering if you can clarify at all.

It's a big investment, but you're not willing to really put percentages around it?

You are saying the specific amount on SURPASS?

No.

The other thing I would just point out also is that, as Al had noted, that is a multiyear investment with the trial concluding in the 2013 time period.

Okay.

All right.

Thank you.

Eric Schmidt.

Thanks for taking the question.

Just looking for an update on ocrelizumab in MS.

I guess you recently got the Phase 2 data in-house.

Maybe you could characterize what you've seen there and what your plans are for a Phase 3 or potential pivotal trial.

Hey, Eric.

I will take the first crack at that; and Al is here with me.

This is Jim.

So I guess what we would do is characterize the MS results on ocrelizumab similar to the RITUXAN and ocrelizumab at the same stage.

Certainly interesting results, worthy to continue to progress this trial into Phase 3.

I think the specifics of that program are yet to be determined with our partner.

I don't know, Al, if you've got any additional comments.

I don't have much to say.

We're going to be presenting the results this year at a major medical meeting.

Could I ask if you could quantitate the de-stocking that you saw in RITUXAN in Q4?

Eric, our best estimate is that the business, which generally has about 15 days of inventory destocked about down to -- in the range of 12 to 13 days of inventory.

So our estimate is that on the top line for the collaboration that had an impact of $10 million or $15 million.

Thanks, Paul.

Yaron Werber.

This is actually Karim De Felipe dialing in for Yaron.

I have a question about your guidance.

Can you elaborate a little bit on what your assumptions are for competitive threats in the MS space, and how that factors into your guidance, and what could be upside and downside scenarios for that?

Thank you.

This is Paul.

I will tagteam this a little bit with Bob.

We absolutely, as we've described in the past, fully expect the two oral products to be moving along and get approved.

Pragmatically speaking, the impact of that is a little bit more potentially on the sales and marketing for the given 2010 as opposed to the revenue line.

As I had noted in our guidance, we are contemplating investments in sales and marketing.

Plans are under way.

Plans are little bit ahead of activities right now, to defend our MS franchise, which is extremely important over the long haul.

So I would say it is embedded in our guidance for 2010; and plans are underway both to defend the product as well as make smart investments in the sales and marketing front.

I would just add that for a patient with MS unfortunately it is not just about route of administration; it is about the course of their disease and the safety profiles of the individual drugs.

So much has yet to be learned about that.

But it's really outcomes that the patients are looking for.

Got it.

Thank you.

Josh Schimmer.

Great, thanks for taking the question.

On TYSABRI, just wondering what the design of the studies you are considering to analyze the various predictors of PML.

And in those studies, how do you plan to control for any potential drop-out of patients who turn out to be -- or turn out to have a high risk factor?

Thanks.

Well, I mean -- as you point out, the denominator may change in terms of these two strata.

But if the risk decreases then we should see -- if the risk -- if most of the people are in a lower risk category, then the overall risk of PML should go down and the number of cases should go away or diminish.

So if that's the case, then we will have answered the question.

I think the denominator will need to be adjusted according to the number of people who stay in the strata that we are studying.

What is the design of the study, and what will you specifically be measuring or following?

If we're talking about the serological assay studies, basically simply a blood draw where we take the blood, store it.

We actually have a couple of studies.

In one study we will verify that the findings we got from our strata samples is the same.

We will match it up with urine JC virus.

In the other study we will collect blood and see whether or not when people patients develop PML they were antibody positive at that prior time point or not.

Is it just the antibody?

Or what are the JC virus specific T-cell function assays or the viral coat protein assays that you will also be monitoring?

And do you only check those if patients are positive?

Or do you test everyone and then see who gets PML?

Those will be separate studies done in a focused way, in conjunction with some registries and other studies going on in Europe and elsewhere, where we will look for additional biomarkers.

They will include cellular assays such as you indicate that test immune response.

They will also look for mutations in JC virus, if we get a technology that we can use to measure mutations and so forth.

But there are some studies that are going to be underway, for example in Germany.

And we intend to collaborate with the investigators who are doing those studies.

Okay, great.

Thanks very much.

Mark Schoenebaum.

Hey, guys.

I would just like to nominate Eric Hoffman for the CEO role.

Thanks, Mark.

I realize he is going to kill me for that, but anyway.

He is turning red in the face.

Hey, I was just wondering actually maybe to build on Josh's question, this is more of a question maybe for Bob -- or I'm not sure who it's appropriate for.

But on this whole topic of the JCV serologic assay, do you guys expect this assay to materially affect TYSABRI prescribing behavior in 2010 or 2011?

Can you help set expectations for those of us in the investment and analyst community, please?

Well, I think the simple answer is what kind of industry are we in?

We run experiments and outcomes can be pro, con, or neutral.

And with that information treating physicians will make further decisions.

So to pre-judge an outcome or think that that is going to mean something is premature.

Okay.

That's fair.

Then maybe I will hop back in the queue.

Can you just give an update on PEG enrollment and timelines for the hemophilia program?

And then for Paul, why is CapEx up so much year-on-year for next year -- or for 2010?

Thanks a lot.

That's a lot of questions you got in there at the end.

I withdraw my nomination.

Al, do you want to --

So PEG enrollment is on track.

We expect to complete enrollment in approximately a year or so, plus or minus a few months.

It's always difficult to get enrollment exactly right, but it's going very well so far.

I forgot the other part.

The hemophilia program -- Mark, this is Jim.

Obviously the Factor VIII program just got started.

That is a Phase 1 program.

So those predictably -- in this disease area those go relatively slowly as you go through a bunch of up-dosing cohorts.

You need to finish each cohort before going to the next.

So think of that as going on for the remainder of the year to get to certain Phase 1 results.

The Factor IX program, we have a multicenter international trial ongoing.

It's not lots and lots of patients, because it will be less than 100 patients required for that registration trial.

Nevertheless, it's a pretty competitive area for recruiting patients.

On the optimistic side, maybe we can be done sometime this year or early next year.

So that's probably as good as we can peg it right now -- no pun intended on the PEG interferon.

I'm sorry.

On CapEx, CapEx is up just because Paul is usually conservative on the upside; and then I grind it down through the remainder of the year.

Yes, Mark, it also is -- we in the last 12 months have made significant organizational changes in our IT leadership.

That resulted in a little bit lighter spending in 2009 as that organization was getting geared up in the organization.

And we expect that very good investments around IT are going to be made in 2010.

It's almost like a little bit of a catch-up here.

Right.

Okay, thanks.

Michael Aberman.

Hey, guys.

Thanks for taking the question.

Can you just give us your guidance for 2010, what share count you assume for that?

If also I could ask to update the RA or ocrelizumab readout plans.

Yes, with respect to share count, Michael, as we've talked in the past, the progress as it relates to the share repurchase program -- we will kind of pace that and communicate that on each of the earnings calls.

But certainly as I noted today, we brought in 20 million shares over the last, call it, two to three months.

But where are you now in terms of share count?

270?

We ended the year around 276, in terms of December 31, 2009.

Then with respect to authorization, we actually will tap out of the authorization once we complete the $1 billion share repurchase program.

In terms of the ocrelizumab RA trials, there's two trials that remain to be read out, both in the first half of this year.

One trial is called SCRIPT; it's an 800-patient trial in TNF-inadequate responders.

The other one is a trial called FILM in which enrollment had to be halted, but the patients that were enrolled prior to the halt will be evaluated.

That trial is called FILM.

It's a methotrexate-naive trial.

So both of those will be read out in the first half of this year.

Can you remind us why it was halted?

Because of the opportunistic infections that occurred, predominantly in Asia.

Thanks.

Geoff Meacham.

Hey, guys.

Thanks for taking the question.

I guess more of a strategic question.

You guys are putting cash flow to work obviously with the buyback.

But your pipeline could take a few years to play out.

So my question is, are you guys content with single-digit revenue growth?

Or are you more willing to do marketed product kind of deals going forward?

Geoff, I think the way we've described is not terribly different in the past in terms of capital deployment.

We absolutely would love to capture opportunities to create value through product (technical difficulty) both pipeline products as well as ideally marketed products.

But we would be disciplined that really what we are trying to solve for is creating shareholder value, not simply moving the revenue growth numbers a little bit up or down.

So we are in an enviable position that we ended the year with $2.5 billion of cash.

2010 looks like another robust year with respect to cash flow generation.

And we will continue to be challenged with this strategic question of looking for opportunities to create value and doing that in a disciplined way; and if not, returning cash to shareholders in a disciplined way as well.

That's helpful.

Then a follow-up on the AVONEX IP, what is the strategy to monetize going forward?

To the extent that you can comment.

Actually, no comments to really make on that right now.

The patent takes us out to 2026.

It covers interferon beta.

But nothing really to report; and when we do have something we will obviously update the community.

Okay, great.

Thanks.

Geoff Porges.

Thanks very much for taking the question and also appreciation for the increasing transparency of all the information you are giving us.

Just to that end, a quick question on the PML cases, Al.

Could you just give us a sense, the last three cases I think, from 28 to 31, what the duration of exposure was?

And I just want to quickly throw out another one on ocrelizumab.

Could you remind us of the step-down in royalty, when that actually kicks in from RITUXAN?

And what proportion of the RITUXAN revenue will kick in?

Is it going to be across-the-board, or is it just for the autoimmune use we have to carve that out?

Thanks.

In terms of the duration of treatment, I actually don't know the exact numbers; but my recollection is they were on the upper end.

You know, the two- to three-year time frame for these three additional cases.

And the second part of the question?

Hey, Geoff, this is Jim.

I think we're going to have a formal update on it in the middle of the month.

Yes.

On that.

So you will be able to get that.

But I think the simplest way to think about it is it's no real change in the profile.

But you will have that information.

On ocrelizumab, the step-down occurs at said certain in-market revenue numbers; and it's all revenues.

It's not cut by indication.

So I think the first tranche -- do you have that detailed right in front of you right now?

I don't.

I apologize, Geoff, it's one of the things I don't have.

But it's itemized in our Qs and Ks.

But essentially it's a step-down from -- it triggers at approximately for our call $150 million and then $350 million, stepping down first to 38%, then to 35%, then down to 30% profit share.

It, as Jim said, affects the whole franchise.

The other thing I would just note, and we can have the IR team work with everybody.

Ocrelizumab right now is embedded in our R&D expense just because it is a new product.

That will upon approval, we envision, that could actually flip back into the unconsolidated joint business.

Okay.

Thanks very much.

Jim Birchenough.

Hi, guys.

It may be a little early, but just wondering if you can characterize the impact of the label amendment in terms of TYSABRI new patient starts into the new year.

Is it stable, declining still, starting to reverse itself?

And just as a follow-up, in terms of patients where you are seeing drug holidays, can you characterize those patients?

Do they tend to be beyond three years?

And how long are they typically off therapy?

This is Bob.

I guess, Jim, the best way to think about it is it is too early to tell on your first question.

Your second question really varies by treating physicians; and again it's a little too early to tell.

The label information really is not new, Al, is it?

No, I mean we announced that the last earnings call, that the US label was going to indicate that the risk goes up with duration of treatment; and that at the 24- to 36-month mark that it was roughly similar to what was seen in the clinical trials.

And there is nothing new.

The FDA announcement last Friday reiterated the benefits outweigh the risks; and there is no further label change anticipated.

I think a lot of physicians, as we said, are taking a measured approach because there is trepidation about taking people directly off therapy and not having other options for them.

So I think increased vigilance and the drug suspensions are mostly physicians taking a very thoughtful approach towards their patients' outcomes.

So I guess what I'm trying to get at is, as we look at the back half of the fourth quarter and the first part of the first quarter, whether TYSABRI new patient starts are stable or if we should expect a further decline based on what you are seeing right now.

Too early to tell, I would say.

Okay, thanks.

Jim, it's always hard to say because the back half of December is always -- there is nothing much happening because people just don't start a lot of new patients in that holiday season.

So I think we will have a better read as we come to the end of Q1.

Okay, thanks, guys.

May-Kin Ho.

Hi.

First, a follow on the Factor IX question.

Jim, you indicated that it will be done late this year, early next year.

When you say done, do you mean enrollment or actually the entire study?

What kind of safety follow-up would you need for that?

I'm going to ask Al if he has got the answer on the safety follow-up.

Presumably they're going to want a year; they're going to want to see people on dosing for a year, like they do every other biologic.

Of course, it's not going to be the typical patient numbers.

So my guess is we need, once you finish we will end up with the usual file of the safety update during the review; and that will wrap around the one-year follow-up on the remainder of the patients.

Exactly how quickly that accrual goes, I think it is just too early to say.

I can say that the very early accruals in the Factor in the Phase 1 trials were difficult.

But of course, now you actually have real data and people get excited about it, so I hope that really influences the accrual rate.

Plus we are in just a lot more centers internationally for the registration trial.

So when you just said it will be done by later 2010 or early 2011, is that enrollment?

That's enrollment.

That's enrollment we were talking about.

And I will ask Eric and the IR team to maybe pull together some more specific information on that so that we can get that back out to you.

I'm not trying to be evasive.

I just don't know what it is off the top of my head.

That's no problem.

Then another question that is on Fampridine.

Now that we know the pricing in the US, can we assume that it is a basically global pricing strategy?

Obviously, the patient population is pretty broad.

I'm not trying to ask you for a forecast, but thinking about the patient population and knowing the pricing, could this be a product that is the size of an AVONEX?

Well, you know, good question.

We will all be anxiously watching how the launch goes here in the US.

The pricing in the US is of course set by Acorda.

the pricing outside the US is our responsibility, and we are doing all the pharmacokinetic research and preliminary discussions to figure out where is the right price point in the EU.

We are not going to really talk about that in any detail because, frankly, there is nothing good that can happen with regulators and pricing authorities by talking about price before you are ready.

Now having -- the other part of your question is, well, what is the population?

Certainly one of the things that eventually -- I was probably the internal skeptic, and I kept looking at this data and looking at this data.

But it became clear that the impact appreciated by patients goes beyond the primary endpoint.

That is not one what is going to be in a label; but I think as Acorda and we expand out the trials and additional things, hopefully we can tease that kind of clinically relative data.

Then the last point is, there is certainly I think strong technical rationales to consider this product in other disease areas where nerve conduction is also a problem; and there is a fair number of those.

So I think you've got a big opportunity in MS and a bigger opportunity potentially in some other similar diseases.

Al, got any thoughts on that?

No, I agree.

I mean if you look at how neurologists are using the compounded version, people are using it for other things besides walking ability.

There is nothing about the biology of this drug that suggests it should only work on ambulation, because any [1b-motive] nerve fiber tract should respond -- or at least has a theoretical chance of responding to Fampridine.

So not just the pathways involved in ambulation, but other pathways as well.

Sean, in the interest of time can we take just one more question?

Joel Sendek.

Thanks a lot.

Jim, one thing you mentioned is that since the merger of Biogen and Idec you've grown EPS by 10% or least 10% every year.

I know you don't like to give long-term guidance, but can you give us some sense of your confidence of your ability to do that beyond 2010?

Well, good question, and I would love to make promises for the next CEO so that he can throw me out of the bus as the previous administration.

But let's go back to some of the rationale for the merger at the time.

It was, I think, evident to Bill Rastetter on the one side and me on the other side that neither one of us had pipeline that could really deliver unless we just got lucky, and we needed to broaden and build the pipeline fairly quickly.

With the merger, obviously we expanded out our therapeutic area expertise as well as we became much more competitive on BD.

And half this pipeline that you look today came through some kind of BD, whether it's a collaboration, an in-licensing, or an all-out acquisition.

What happens over the next one year or so, as Fampridine comes to the market, as we see the oral competitors, I guess we will all see that play out.

But I personally would be pretty optimistic that the pipeline that we've assembled -- and we have a lot of compounds in Phase 2 and registration trials -- are really going to deliver a new leg of growth here starting in the next couple of years.

So exactly what the next one or two years, I think matters a lot less than watching how that pipeline progresses as well as frankly the competitive environment.

And of course that is what we have always been focused on.

So I don't want to commit the next guy to exactly what it should look like, but I think we've got things that can certainly drive revenue growth, continue to drive shareholder value, and that will show up on the earnings line as well.

Thanks.

Okay.

Thank you very much, everybody.

Appreciate it, and sorry that we ran over our slot a little bit.

This concludes today's conference.

You may now disconnect.