Biogen Idec Inc.(NASDAQ:BIIB)
2014 Annual Meeting of Stockholders Conference Call
June 12, 2014 9:00 AM ET
William D. Young – Chairman
Susan H. Alexander – Secretary, Chief Legal Officer & Executive VP
George A. Scangos – Chief Executive Officer & Director
William D. Young
Good morning, everyone, and welcome to Biogen Idec's 2014 Annual Meeting of Stockholders. My name is Bill Young, I'm Chairman of the Board of Biogen Idec and will act as Chairman of the meeting, which is now called to order.
In attendance are Susan Alexander, Executive Vice President, Chief Legal Officer and Secretary of Biogen Idec, who will act as Secretary of the meeting; and George Scangos, Chief Executive and Director, who will make a company presentation following in the conclusion of the formal portion of the meeting. Other members of our Board of Directors who are in attendance today are Alex Denner, Caroline Dorsa, Nancy Leaming, Richard Mulligan, Robert Pangia, Stelios Papadopoulos, Brian Posner, Eric Rowinsky, Lynn Schenk and Stephen Sherwin.
Several of our other executive officers are also in attendance, Paul Clancy, Chief Financial Officer; John Cox, Executive Vice President of Pharmaceutical Operations and Technology; Ken DiPietro, Executive Vice President of Human Resources; Tony Kingsley, Executive Vice President of Global Commercial Operations; Adam Koppel, Chief Strategy officer; Doug Williams, Executive Vice President of Research and Development; Spyros Artavanis, Chief Scientific Officer; and Alfred Sandrock, Group SVP, Chief Medical Officer. Jim Connolly of PricewaterhouseCoopers, our independent auditor is also present and is available to answer any questions you have for him.
A printed program which was provided to you when you came in includes the meeting agenda and rules of procedure. If you do not have a program, please raise your hand and an usher will provide one for you.
Turning to the formal business of today's meeting, I'm able to confirm the following preliminary matters. Our transfer agent, Computershare, is acting as inspector of elections for all matters requiring a shareholder of vote at this meeting. A representative of Computershare is in the attendance and has a certified list of stockholders who are entitled to vote at this meeting as of the meeting record date of April 15, 2014.
The holders of proxies solicited by the Board of Directors for this meeting are George Scangos, Paul Clancy and Susan Alexander. A majority of the shares of common stock entitled to vote at this meeting are present in person or represented by a proxy, and therefore, a quorum is present for purposes of conducting the business of the meeting.
We'll now turn to the meeting proposals. It's now 9:02 on June 12, 2014, and I hereby declare the polls open for voting on all matters of business. If there are any stockholders present who have previously submitted a proxy card and now wish to revoke their proxy or change their vote, or if there are any stockholders present who have not yet submitted a proxy card and wish to vote, they may do so at this time. If you've previously submitted a proxy card and do not wish to change your vote, you do not need to vote by ballot. Please raise your hand, and we'll collect your votes or give you a ballot. I see none.
Thank you. The first proposal to come before the meeting is the election of Directors to our Board of Directors. There are 11 Director Nominees standing for election to serve one-year term, namely: Alex Denner, Caroline Dorsa, Nancy Leaming, Richard Mulligan, Bob Pangia, Stelios Papadopoulos, Brian Posner, Eric Rowinsky, George Scangos, Lynn Schenk and Steve Sherwin.
The second proposal to come before the meeting is the ratification of the finance and audit committee’s selection of PricewaterhouseCoopers as our independent registered public accounting firm for the fiscal year ending December 31, 2014. The third proposal to come before the meeting is an advisory vote on executive compensation as disclosed in our proxy statement.
Our board recommends a vote for the election of each Director nominee and for each of the proposals two and three. There are no other formal matters that have been properly brought before this meeting for a vote of stockholders. If any stockholder wishes to make a brief comments related to any of the matters to be voted on above you may make them now. If there are any questions or comments about the company that are unrelated to the meeting proposals, please save these until later after the company presentation and discussion.
Does any stockholder wish to make a brief comment about the proposals before the meeting? I see none.
All ballots and proxies have been collected and are in the custody of the inspector of election. I hereby declare the polls are closed at 9.05 a.m.
I would like to remind everyone that most of the votes on the matter to be acted upon at the end of meeting have been cast by proxy, which will be tabulated by the inspector of election. A preliminary tabulation of the votes indicates that our 11 Director nominees have been elected to our Board of Directors to serve a one-year term. PricewaterhouseCoopers has been ratified as our independent registered public accounting firm for 2014. And stockholders have approved on an advisory basis our executive compensation, as described in our proxy statement; we’ll final voting results with the SEC within four business days.
That concludes the formal business of today's meeting, and the meeting is now adjourned. George Scangos will make a brief presentation about the company.
George A. Scangos
Okay. Thank you, Bill. Good morning, everyone. Before I began, I would just like to make a few special comments many of know that Bill is retiring from the Board as of today, after 17-years as a Director, first of Idec and then at Biogen Idec. Bill has been our Chairman since 2010, he steered the Company through some difficult times, he has been a major force in the success of the Company in recent years. And he I think should feel proud and we all should feel grateful for Bill’s accomplishments for the Company, he has helped us get where we are today.
So on behalf of Biogen I would like to thank Bill for all of his great service to the Board and for the Company, to the shareholders. And I would also like welcome Stelios Papadopoulos who will take over as Chairman as of by the end of this meeting.
Okay, with that we’re going to spend 15-minutes to 20-minutes given you the kind of the state of the company where we are, where we think we’re headed anyway. Before I do that I should make it clear, I’m going to make some Forward-Looking Statements, those statements or subjects to the risks and uncertainties and whatever hasn’t happened yet may not. So for a full description of the risks and uncertainties you should take look at our most recent SEC filings.
So the Company is in very good shape right now, 2013 was a very good year for the Company, our existing MS products by TYSABRI, AVONEX, FAMPYRA in the EU had a very good year. We launched TECFIDERA in the U.S. in 2013, we acquired the full rights to TYSABRI, which we were sharing with Elan, we acquired those full rights in 2013. GAZYVA, which is follow-up to a RITUXAN, has actually been carried out by Roche operationally, but we have a substantial financial interest in those products as well. Those products -- RITUXAN originated in Idec and GAZYVA was approved for CLL last year.
We have strengthened our R&D capabilities, we've brought in some key people, Spyros Artavanis, our Chief Scientific Officer joined us among a number of others. We did several interesting business development collaboration last year. And it’s a good year for building the Company. Finally, it was a really good year; revenues were $6.9 billion, which was an increase of 26% over the previous year or 2012. And non-GAAP earnings were $8.96, which represents at 37% increase in 2012. So 2013, was a very good year.
If you look over the past few years, the Company is done very well, since 2007 revenues have grown at an annual rate of 14% and non-GAAP EPS has grown at an annual rate of 22%. So, pretty good sustained growth for the Company. I should point out that the first quarter of 2014 also was a very good quarter; revenues were up 50% over the equivalent quarter in 2013, so 2014 is also off to a very positive start. We think of the business in three ways, we have an existing core business, those are our products that are on the market that have been there for a while AVONEX, TYSABRI, in Europe we have FAMPYRA that’s been our core MS franchise. RITUXAN is out of our CD20 franchise, now with GAZYVA those businesses have done very well.
We have a serious of new products figures that have been launched for soon will be launched, among them TECFIDERA launched last year in the U.S., we had recently ALPROLIX, which is a hemophilia product and ELOCTATE a different hemophilia product approved in the U.S. and PLEGRIDY, which is our new product, we’re bringing out for the treatment of MS recently received the positive opinion from the regulatory body in the EU, CHMP and hopefully will be approved very soon and we are look forward to approval of that product in the U.S. as well.
So those new products provide us with the substantial opportunities for the growth in the near term and then in the long-term the growth will be driven by the products that are currently in our pipeline, we continue to bring new products into the pipeline both from our internal R&D and through external acquisition and so that pipeline we’re hopeful will bring us the long-term value.
So we have a strategy for growth, very kind of simple, which is really the excellent. I think that value comes from excellence in science and medicine and the use of that scientific in medical excellence discover and develop and bring to the market, bring to patients who need the new drugs. Then in itself is not sufficient of course, we need excellence across the company, we need to make those drugs, production of biological drugs is complicated, there aren’t that many companies around the world, who are really greater at this, we are one of them, and we’re very good at that part of our business.
And of course it is a business, and so we have to be good at the commercial aspects, that’s not just marketing or sales of marketing, which is important, but it’s also how do we negotiate with the payers around the world, the insurance companies in the U.S. the governments in the rest of the world. So, that we can maximize the value that we’re generating for our products. As we go through that cycle, we keep patients at the centre of our thought, during many businesses that one can be in to make money, this is one of them, but this is one where we do that if we do the right thing for patients, and if we deliver important meaningful new drugs to patients we will continue to grow. And so that’s the – that’s been the focus of the company.
If we turn to MS, we think about this business as in been three segments, there is the what we call the injectable segment, and these are really products that have been on the market for quite a while, they are all injectable and there is now an oral segment, there are number of oral drugs on the market now, TECFIDERA is ours, there are others from some of our competitors, And there is what we call a high efficacy segment, which is really for patients who’s disease is aggressive, or failed other therapies and who need a much more potent kind of therapy. Our goal and I think our reality is that we have a leading compound in each one of those segments. The compounds you see here in blue are currently marketed; the ones you see in lighter color are compounds that are in development, so those are experimental compounds for now.
So, let’s go through one of those segments just quickly. In the injectable segment, our entry there has been AVONEX, it is a leading – it is re-leading in the beta interferon for the treatment of the MS, it’s a leading compound, last year it exceeded $3 billion in sales. This class, this injectable class increasingly is differentiated by convenience, the minor differences in efficacy that have been reported and that we and others have been talking about over the years, are not so meaningful of these days, in the context of other drugs, the oral drugs and high efficacy drugs that are on the market.
And so, we have done a lot of work to increase the convenience of our drugs. We introduced an auto injector for AVONEX, this is injected once a week intramuscularly, this auto injector doesn’t change the frequency it just makes those injections easier, less scary, less painful for the patients that has resulted in a remarkable increase in uptake of AVONEX, wherever we’ve introduced that PEN.
We have a product now in waiting for regulatory approval called PLEGRIDY, which is a longer-acting version of beta interferon that can be injected once every two-weeks subcutaneously, again with a very convenient auto-injector. And, so we believe that within this segment, we will get an increasing market share. This segment is shrinking, because of the introduction of the oral compounds, it will shrink over some years, its not going to fall off a cliff, but as such and as this segment of the MS market shrinks, we expect to get an increasing share of this segment as a result of the patient convenience, innovations that we brought to it.
If we look at the high efficacy segment, we have TYSABRI, which is a remarkably efficacious drug and this drug really does transform the lives of many patients who take it. We have also TYSABRI in a Phase III for a form of MS called secondary progressive. When we talk about multiple sclerosis to MS, we typically referred to a form of a disease called relapse and remitting MS that’s most of the patients, but maybe 25% or 30% of the patients fall into a category that’s called secondary progressive, it has different characteristics, most of the drugs that are on the market for relapse and remitting MS do not work in secondary progressive, there is no approved drug for secondary progressive MS, we believe TYSABRI has the potential to work for these patients. And, so we have it in a Phase III trial, and we’ll get the answer to that trail in next year in 2015.
And then, finally we have the oral segment, we launched TECFIDERA in the U.S. last year, within six months of it’s launch it became the number one prescribed oral medication for the treatment of multiple sclerosis, you can see the numbers here, so over 65,000 patients have taken this drug so far, earlier this year it was approved in the EU, it’s been launched in Germany, Sweden, Norway, Scotland, it will be launched in other European countries over the course of this year and into next year as we reach price negotiations with the governments in each of those countries, and it’s had a very good launch in Germany and other countries in Europe as well. So, we have I believe a drug that provides meaningful benefit to patients, it’s oral, they don’t have to inject themselves anymore and it has good efficacy and patients seem to like it, and it seems to be doing a good job for them.
Let’s turn for a minute to HEMOPHILIA, HEMOPHILIA is a serious disease, it’s a clotting disorder, patients with HEMOPHILIA don’t clot, this is not a trivial disease where if you cut your finger it doesn’t stop bleeding, patients with HEMOPHILIA have significant more abilities, they have a shortened life expectancy, they would bleeding into their joints, they bleeding into their skull, sometime if you go to meeting of people with HEMOPHILIA you see many people walking around on crouches or with a limb and a cane because of the chronic join damage that occurs as the result out of the disease.
It’s actually conceptually straight forward to treat the disease, right, these people are missing one of two factors called Factor VIII or Factor IX that are necessary blood clotting, it’s conceptually simple, you replace the factors. And since the early 1990s there have been recombinant factors available, patients can inject them and treat themselves. The problem is that these factors have to be injected intravenously and they have to be injected every other day or for some patients even more frequent than that.
And so, over time that becomes an incredible burden on the quality of life, who would like to inject themselves intravenously every other day. And this is a chronic disease, these are kids, these are younger adults, they have families, they have careers, I mean think about getting your kids off in the morning with all the kiosk that that insults and at the time hop about having to inject either one of them or yourself intravenously, you can understand the burden, plus overtime their veins collapse before they go out and so it’s gets harder and harder to find good veins into which to inject it.
So the number one unmet need for this patient population is our factors that will last longer and reduce the frequency of injections that a necessary for these people. And we feel great that we have been able to do that as a company. So, ALPROLIX which is a treatments of Factor IX, which approved in the U.S. earlier this year, extends the interval between those infusion, almost all patients can take it once a week or less frequently, some patients might go even 10-days and maybe even longer than that for some patients, its variability in the population, but, once a week at least, so that’s a significant improvement in the quality of life for those patients over the course of the life time, so many fewer infusion that are necessary.
Factor VIII, which was approved by the FDA, last Friday, so very recently, also extends the interval not quite as dramatically as Factor IX, but it still provides a substantial benefit for these patients. So, we feel very good about having brought these to the market, these are really the first meaningful innovations in the treatment of HEMOPHILIA in about 18-years or so. We feel very good about those.
We’re not stopping with those; we have a commitment to this community to bring them even better treatments in the future. And so we are working now in preclinical models in our laboratories on molecules that will provide even longer half-life and extend the interval between injections even to a greater extent, you see I mean schematic I’m not going to explain that schematic there, but it is schematic of a molecule that might last even two or three times longer than our long-acting factors. And so, we hope to bring those molecules into clinical development next year.
So, if you think about the company we have three real areas of focus, neurology, we are certainly the leading company for the treatment of MS, we’re now working on different types of MS, secondary progressive, primary progressive, we used our expertise in neurodegenerative diseases, because multiple sclerosis is a neurodegenerative disease to now expand into other neurodegenerative diseases, where there is a real unmet need, so Alzheimer’s, neuropathic pain, neuromuscular diseases like spinal muscular atrophy or ALS and then boom into sort of this Huntington’s, Parkinson’s. So, that’s a real area of focus, it’s an area where we have real expertise, where we can compete very effectively.
Multiple sclerosis is a neurodegenerative disease, but it results from an immune tack on some of the cells in the brain. And so, we also have developed over the years, considerable expertise in immunology, and we’re using that expertise then to work on adjacent areas in autoimmune disease. So, with this inflammatory bowel disease, sjogren's disease and others that you see listed here. Fibrosis is a sequelae for chronic information and that’s a very serious condition, it affects millions of people, different organs, fibrosis in different organs, but we're focused on that and then in Hematology things and that just talk about. So those are the focus areas of the company.
So we are continuing to focus I think to drive innovation by exploring additional indications for our existing products, talked about TYSABRI and secondary progressive MS, we are also taking TYSABRI forward in stroke as a possible premium for stroke. We are working on diseases where there is no therapy at all and where there is a huge need for therapy like ALS, devastating diseases, I mean from diagnosis to deck is about three years and the patients is progressive, we lose neuromuscular control and then they can breath and they die.
The biology of ALS is very poorly understood and so we have put together a consortium of academicians from some of the leading universities in the country who are working with each other and with our scientists to really try and understand the biology of this horrible disease so that we can bring new therapies for the patients who really need them.
And then we are also exploring new therapeutic modalities, RNA base therapeutics is a new form of drugs that are showing promise now, we have a collaboration with accounts that are showing promise now, we have a collaboration with a company called Isis in San Diego to bring forward some RNA based therapeutics. There are new technologies around gene therapy and gene editing that potentially is treatments and potentially even cures for some diseases and we have initiated activities there, we’ll certainly have some more activities as we go forward.
So all that results in a quite interesting pipeline now, this is a way better picture than it was a couple of years ago and you can see in the early stage part of this pipeline compounds not only for MS but for Alzheimer's disease for glucose for stroke for fibrosis. So we have number of compounds coming for with the potential to treat other diseases. We’ll have data for many of these from the early to mid-stage trials for many of these either later next year – into next year and so we’ll learn a lot more about the potential of this pipeline over the next months.
All right, we really have been focused on execution that this is a competitive business, the best strategy in the world does put anything if you don’t execute it and so we have really focused on getting things done, we have expanded our leadership in MS we have multiple products to launch, I think our R&D in areas of high need is going forward and we are continuing to drive innovation. So I’ll stop there. I thank everybody for your attention and I’ll take a few questions if there are any.
William D. Young
Thanks George. Great any question from the audience for George. For any of us? I see none. Thanks very much. Thanks for attending the annual meeting.
[No Q&A session for this event].
Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.
THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.
If you have any additional questions about our online transcripts, please contact us at: email@example.com. Thank you!