Biogen Inc. · NASDAQ:BIIB
Biogen — Biogen Idec — Merger or Acquisition (February 2013)
22 slides from Biogen's merger presentation, Feb 6, 2013
Slide 1: Biogen Idec to Purchase Full Rights to TYSABRI
TITLE OF PRESENTATION FEBRUARY 6, 2013 BIOGEN IDEC TO PURCHASE FULL RIGHTS TO TYSABRI BIOGEN IDEC
Slide 2: Agenda
Agenda INTRODUCTION CLAUDINE PROWSE, Ph.D., VP, Investor Relations OVERVIEW GEORGE SCANGOS, Ph.D., Chief Executive Officer FINANCIAL UPDATE PAUL CLANCY, EVP, Chief Financial Officer CLOSING REMARKS GEORGE SCANGOS Q&A to include TONY KINGSLEY, EVP, Global Commercial Operations 2
Slide 3: Agenda
Agenda INTRODUCTION CLAUDINE PROWSE, Ph.D., VP, Investor Relations OVERVIEW GEORGE SCANGOS, Ph.D., Chief Executive Officer FINANCIAL UPDATE PAUL CLANCY, EVP, Chief Financial Officer CLOSING REMARKS GEORGE SCANGOS Q&A to include TONY KINGSLEY, EVP, Global Commercial Operations 3
Slide 4: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements, including statements about our expected cash generation, our entry into a line of credit, the synergies we expect from the transaction, the expected accretion to earnings per share and the impact of the transaction on
Slide 5: Agenda: Overview
Agenda INTRODUCTION CLAUDINE PROWSE, Ph.D., VP, Investor Relations OVERVIEW GEORGE SCANGOS, Ph.D., Chief Executive Officer FINANCIAL UPDATE PAUL CLANCY, EVP, Chief Financial Officer CLOSING REMARKS GEORGE SCANGOS Q&A to include TONY KINGSLEY, EVP, Global Commercial Operations 5
Slide 6: Clear and Compelling Rationale
Clear and Compelling Rationale Furthers key strategic priority to grow the commercial business and strengthen the Multiple Sclerosis (MS) franchise Consolidates ownership of important MS therapy in the growing high efficacy segment with increasing revenues, expanding margins and potential for use in
Slide 7: Important MS Therapy
Important MS Therapy 7 High Efficacy Therapies Oral Therapies Injectable Therapies
Slide 8: Revenue growth of 37% on a compound annual basis over the past five years
Revenue growth of 37% on a compound annual basis over the past five years Forecasted margin expansion Stable operating expense driving margin expansion Expiring third party royalty obligations that add over a thousand basis points to margin by 2020 Opportunities for growth in Secondary Progressi
Slide 9: From Collaboration to Asset Ownership
From Collaboration to Asset Ownership TYSABRI intellectual property and know- how shared within collaboration 100% of IP and know-how owned by Biogen Idec 50:50 TYSABRI profit split All of TYSABRI sales, operating expense and profit to Biogen Idec Upfront payment to Elan Sales-based contingent p
Slide 10: Agenda: Financial Update
Agenda INTRODUCTION CLAUDINE PROWSE, Ph.D., VP, Investor Relations OVERVIEW GEORGE SCANGOS, Ph.D., Chief Executive Officer FINANCIAL UPDATE PAUL CLANCY, EVP, Chief Financial Officer CLOSING REMARKS GEORGE SCANGOS Q&A to include TONY KINGSLEY, EVP, Global Commercial Operations 10
Slide 11: Terms
Terms 11 11 Biogen Idec acquires full ownership of TYSABRI and all applicable strategic, commercial and decision rights Collaboration agreement between Biogen Idec and Elan, including change of control provision, terminates Biogen Idec pays $3.249B cash upfront to Elan upon closing Biogen Idec makes
Slide 12: Efficient Use of Cash
Efficient Use of Cash 12 12 $3.249B upfront payment to be funded by cash Majority funded using ex-U.S. cash Post-transaction, majority of cash will be in U.S. Expect to open a $500M to $750M line of credit for short-term working capital needs Plan to pay off $450M Notes due in March 2013 Strong
Slide 13: Attractive Operational and Financial Benefits
Attractive Operational and Financial Benefits 13 13 1. Synergies from consolidating collaboration Will range from $20M to $35M annually 2. “Asset purchase” a very appealing structure Known asset Simple and seamless transition Allows for capturing tax-related benefits 3. Tax-related benefits
Slide 14: Changes to Income Statement
Changes to Income Statement 14 14 P&L Item TYSABRI Before TYSABRI After Revenue 50% of Gross Margin 100% of Product COGS 100% of Net Sales COGS 100% of Product COGS 100% of Product COGS 100% of 3rd Party Royalty COGS 100% of Contingent Payment Operating Expenses 50% 100% Revenue 100% of Net Sales 10
Slide 15: Immediate Accretion Expected
Immediate Accretion Expected 15 15 GAAP EPS Accretion $0.20 to $0.30 $0.20 to $0.35 Non-GAAP EPS Accretion $0.50 to $0.60 $0.65 to $0.80 2013* 2014* Full year consolidated 2013 Biogen Idec guidance to be updated upon closing *Range is based on various closing dates between April 1st and June 1st Our
Slide 16: Financial Logic
Financial Logic 16 16 Consolidates ownership of a key strategic asset Provides fair valuation and operational and tax synergies, balancing risk Makes efficient use of offshore cash Delivers immediate and sustainable earnings accretion Subject to Customary Regulatory Approvals
Slide 17: Agenda: Closing Remarks
Agenda INTRODUCTION CLAUDINE PROWSE, Ph.D., VP, Investor Relations OVERVIEW GEORGE SCANGOS, Ph.D., Chief Executive Officer FINANCIAL UPDATE PAUL CLANCY, EVP, Chief Financial Officer CLOSING REMARKS GEORGE SCANGOS Q&A to include TONY KINGSLEY, EVP, Global Commercial Operations 17
Slide 18: Compelling Option for MS Patients
18 YE06 YE07 YE08 YE09 YE10 YE11 YE12 Compelling Option for MS Patients Note: Amounts set forth above are rounded and estimated based on information provided to Biogen Idec through the TOUCH® prescribing program and other third-party sources. Such information includes estimates that are based on rea
Slide 19: Secondary Progressive MS Opportunity
Secondary Progressive MS Opportunity SPMS is a large portion of the MS market: ~35% No effective therapies for SPMS Consistent trends towards improved ambulation in patients with SPMS seen in two prior TYSABRI trials An investigation of whether TYSABRI treatment slows the accumulation of disability
Slide 20: Summary
Summary 20 20 BIIB purchases full ownership of important therapy with positive share and revenue growth trajectory as well as expanding margins Enables operational simplicity that will allow for more nimble and focused execution Offers fair valuation with significant potential operational and tax sy
Slide 21: Questions & Answers
TITLE OF PRESENTATION BIOGEN IDEC QUESTIONS & ANSWERS QUESTIONS AND ANSWERS
Slide 22: Appendix: P&L Example
Appendix: P&L 22 22 Example Based on $200 of End-Market Sales: $100 in the U.S. and $100 ex-U.S. Before After US Ex-US Worldwide BIIB BIIB BIIB Revenue 48 100 Revenue 200 Product COGS 6 6 Product COGS 12 Royalty COGS - - Royalty COGS 20 Contingent Payment (Royalty COGS) X Gross Margin 42 94 Gross Ma