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CONFERENCE PRESENTATION
PARTICIPANTS
Jim Mullen
Biogen Idec President, CEO
Eric Schmidt
Cowen and Company Analyst
Eric Schmidt Cowen and Company
Okay. Good morning, everyone, and welcome back to the Cowen and Company 29th Annual Health
Care Conference. My name is Eric Schmidt. I am one of the biotechnology analysts at the firm, and
its always my pleasure to welcome Biogen Idec to the conference.
We are joined today by several members of management. The Companys Chief Executive Officer, Jim
Mullen, is going to be giving the presentation. But also in the front row are Paul Clancy, the
Companys Chief Financial Officer; Elizabeth Woo, Vice President, Investor Relations; Rob Jacobson,
Director of Investor Relations, is also somewhere in the audience. And the whole team will be here
to answer your questions in the breakout session, which will be next door following Jims talk, in
the Tufts Room. If Jim concludes early, we may have time for a couple of questions here as well. So
let me pass it over.
Jim Mullen Biogen Idec President, CEO
Thanks, Eric. Good morning, everyone. As always, I will start with the fine print, the Safe
Harbor. So I will be making some forward-looking statements. I just have everybody keep updated
with SEC filings and our press releases.
Here is what I want to quickly cover today. This was going to be a duet; I had Cecil Pickett doing
the pipeline, but he has got laryngitis, so you are going to have to put up with me. So just
pretend when I get to the pipeline that I am as smart as Cecil and we will be all set. It may be a
little hard to believe, but we will get there.
So let me get rolling. I think most of the people I see are familiar faces, so you are pretty
familiar with the Company. Strategy is pretty simple. We are working on first-in-class,
best-in-class compounds, taking them to specialty markets with unmet need, and doing that on a
global basis. We now have a global footprint that really gives us a direct presence in virtually
all the important pharmaceutical markets around the world.
Just to expand a little bit on the first-in-class, best-in-class, I have arrayed some of the
compounds. This is by no means exhaustive about our pipeline, but I really want to make a couple of
points.
I have arrayed these late-stage, early-stage, first-in-class and best-in-class, and we focus a lot
of our attention on the first-in-class molecules. You know that gives you the opportunity to create
a new treatment paradigm and real breakthrough therapies. But with that comes all the risk, with
going down unknown pathways and certainly higher technical risk.
We think we have also balanced off that pipeline by going after a number of proven pathways. We all
know the many examples in the pharmaceutical industry where the second, third, or the fourth
product really becomes the market leader. You take advantage of learning everything that has gone
on around that pathway before you and designing around some of the pitfalls of the pathway.
So we think we have got an interesting group of compounds also in the best-in-class. Obviously less
technical risk, but then youve got more competitive risk on that side of the equation.
This is just a snapshot of the key metrics since the merger. You can see revenue has grown 17%.
Compound annual growth rate, EPS at a growth rate higher than that. EBITDA, we have got expansion
on the margins up and down, which is a 22% expansion. And free cash flow stepped up pretty
substantially, particularly last year. So I think we feel pretty good about the trajectory of these
metrics. We certainly look at these and track these pretty closely.
When you get looking at the revenue, it is obviously driven by our three major products. Over the
past five years, the AVONEX business has doubled; the RITUXAN business has also doubled; and you
can see the gold bar on the top, which is TYSABRI, is an important contributor, particularly in
2008. It is obviously the major growth engine here for the next couple of years.
So what I really want to do is take the next 10 minutes or so and focus on what does it take to
reaccelerate the TYSABRI business, and what are we doing around that?
Theres really two major points to focus on. One is we have to continue to tell the story about the
unparalleled efficacy of the product. And the second is to put PML and the PML issue in context for
the medical community and the patient community.
I think this is an interesting slide to start with. So we have gone back and we have taken a look
how did TYSABRI do in the launch relative to three other significant products here Remicade,
Enbrel, and Humira. This is what it looks like, so I think the launch was certainly very strong
through the first two years. You can see when we hit the first two cases of PML in late July, that
that really hit the interrupted the momentum of the business pretty significantly. That is
pretty obvious from the last six months or so of performance.
Now, we have been doing a lot of things here to really regain that momentum. I am going to go
through a few pieces of that, but essentially the challenge is to get back on the curve that we
were on about four or five months ago.
It starts with reminding ourselves and everybody else that MS is really a devastating disease. I
use this screenshot pretty frequently internally. This is from the Advisory Committee meeting in
2005, prior to TYSABRI coming back to the market. This is a screenshot of patients that paid their
own way to come and testify there.
Most of these patients are already at EDSS 6 or above, as you can tell from the fact that they are
in wheelchairs and scooters. So these are very well-advanced patients. They came, they paid their
own money to really plead with the FDA about the need for new therapies and really put the
risk-benefit in balance.
Now TYSABRI is really the first drug where there is any data that it improves multiple sclerosis.
We have for years talked about slowing the disease or halting the disease, so slowing the
progression of disability. But for the first time we have got real data and evidence about
improving the disease.
If you look at what I call the pyramid of data on this product, youve got the 54% reduction in
disease progression, and the 68% reduction in relapse rate. So those are out of the Phase 3 trials.
We also know that at two years, 37% at these patients are free of any disease activity. So that is
a composite endpoint of relapses, of MRI findings of EDSS progression.
And more exciting and you will see more of this data at some of the congresses; it has been
presented fairly recently: for those patients who had EDSS above 2, they showed a 69% improvement
after they had been on product for some time. So this is really the first time that we have seen
patients not only halt the disease progression but actually improve physical function. Critical to
keep reminding people of that.
Now weve got a very comprehensive marketing and sales program put together. Of course we use
different elements of this for different audiences for different purposes, but I am going to work
you around very quickly from about 7 oclock here all the way back around to 5 oclock.
Weve got a lot of customers that are here, a lot of people making the decisions. Clearly the two
most important are the physician and the patient. And the patients are very influential in
treatment decisions.
You know, patients are very savvy now. If they have got a debilitating disease, they are going to
go to a website. We have several hundred thousand people in our direct-mail list. They look at all
of the publications coming out of the Company, the press releases in the lay journals, et cetera.
We have got more than 200 people in the call center. We have more people in our call centers
answering inbound questions and solving problems for patients daily than we have sales reps in the
field calling on doctors. Of course, you have the sales reps, the Advisory Boards, the congresses,
where folks like you may go and you may hear a lot of the top-line information.
But a lot of the real influence goes in these peer-to-peer programs and the live programming. So
peer-to-peer prescribing physicians, working with their peers in a region. So somebody who is
known to their peers working and talking about the product, the advantages of the product, how to
deal with patients that is the most powerful selling tool for physicians and similarly for
patients. Patients hearing from other patients is the most impactful.
So we keep working on that and other live programming. We are using webcasts to allow better access
to the medical personnel. This is for physicians so they can really get detailed answers
around specific medical questions. I think this has all been very helpful to keep turning the tide
here.
You can see that this is a trace of market research on physician confidence. Answer to the question
specifically TYSABRIs benefits outweigh the risk it poses to MS patients. You can see the
fairly we did a great job building that confidence coming out of the launch. You can see the PML
cases really interrupted that. And we are back at the hard work, and it is a nice leading indicator
to see that that is starting to climb up to pre-PML levels.
Also, the neurologists increasingly think that they are going to use more and more drug over the
next six months. So three-quarters of the neurologists think they are going to use significantly
more TYSABRI over the next period of time than in the previous period of time. Now this is the
composite; so a snapshot in Europe, late in the year, and a snapshot in the USA at the end of the
year.
So that is the efficacy story and some of the leading indicators. Now I want to focus a little bit
on putting PML in perspective. When the first PML cases came up in 2005, we were obviously having
extensive meetings with our own neurologists and outside experts. And people were saying we dont
know that much about PML; we really havent treated patients with PML since medical school.
So as we worked with the community it was pretty evident that the level of knowledge about PML, JC
virus, and the whole evolution of PML from JC virus was pretty poorly understood. So the first
thing we had to do was really make sure that the data and what were the supposed effects out there
really were true.
So some of the myths. PML is going to be difficult to diagnose. Well, I think weve demonstrated
that with standard tools in the physicians office and with clinical vigilance, they can in fact
detect PML and detect it quite early.
There were papers at the time that the 5HT2A inhibitors might be helpful in the disease. We were
not able to replicate that data after a number of tries. But in in-vitro assays we screened
hundreds of compounds and mefloquine came up as a hit. So we do have a clinical trial ongoing
around mefloquine. Can mefloquine be helpful in the treatment? And in fact, it has already been
incorporated in the use by physicians.
PML cant be treated or cured. I think we have now given the tools for physicians to diagnose early
and the treatment algorithm to rapidly intervene; and then of course that has changed the outcomes.
And the idea that PML is most often fatal. I think the evidence is going in the other direction
that with vigilance, with rapid intervention, that the outcomes can be certainly not as dire as
everybody had initially thought.
So when you think about redefining that experience, I think about it really around these two axes.
Making sure people know how to manage the disease and really move the outcomes from the perception
of its going to be fatal to something where its a manageable outcome and the residual morbidity
may be similar to one or two exacerbations of MS. And remember, MS is a debilitating disease.
So they can diagnose it early. We have given them the algorithms and the clinical vigilance, how to
read the MRIs, central reading centers to get those to, CSF samples if you have suspicion. And we
can pick up an active infection at very, very low viral counts in CSF, less than 100.
Then what do you do with treatment? They know now if you see a case of a patient on TYSABRI that
has new neurological symptoms, that in and of itself is unusual enough for a TYSABRI patient that
you should work them up and think about do they have PML? Look at the MRIs quickly. If you have
any suspicions, stop TYSABRI.
Probably get the CSF sample. If it is confirmed, yes, you probably want to start on PLEX. And many
of the people have done the PLEX. We have demonstrated that if you plasmapherese these patients you
can get the TYSABRI offboard fairly quickly.
Some have given mefloquine. I dont know that we can demonstrate that mefloquine is helping, but it
surely is not hurting, and there is enough evidence that people are willing to do that. Of course,
it is a product that is on the market.
Lastly, youve got to manage the immune reconstitution inflammatory syndrome. Right? So you have
got to manage it aggressively. It is managed with steroids, but it is going to reemerge in six or
eight weeks after you get the TYSABRI offboard. And if you manage that aggressively the patients
will emerge on the other side of that without PML, and then you can start working on the recovery.
So now looking at the rate, certainly the rate in the label looks like about 1 in 1,000. The
experience to date for people with over 12 months of exposure is about 1 in 4,000. And that number
will get harder and harder as we just get more experience here with commercial product.
We are doing a lot of work on making sure we can quantify precisely what that risk is with the
clinical vigilance. In the US the TOUCH program, which is the risk management program that we are
required to run here in the US, gives us visibility down to the dose level on a patient-by-patient
basis. So we have got near-perfect visibility of what are all the issues going on with patients in
the US.
We did some stuff with the label, initially coming back out to try to reduce the rate. One was
patient selection; so we contraindicated patients that have any evidence of immune dysfunction or
immune suppression and recommended monotherapy.
Theres a few other things that have come up and bubbled up as theories and ideas over the last
couple years. One is, would drug holidays be helpful? Im going to address that on the next slide.
The other one is, are there further ways to stratify patients by risk level and thereby lower the
overall rate?
So let me hit first the drug holidays. I think there is an emerging consensus that drug holidays
arent recommended. So the first is, there is data that says once you take patients off TYSABRI,
disease reemerges fairly quickly. So there is a consequence to these drug holidays, and you need to
get far enough out with patients that TYSABRI is offboard if you have any idea that youre going to
somehow improve their outcome on PML.
The second is while it sounds great to talk about the drug holiday, the fact is the rate is so low
that when you run the statistics of what does it take to actually test this theory, it turns out
you need at least as many patients as we have on product today or three times that. So its really
not a testable hypothesis, and you would have to run it for a couple of years to see it.
So we dont think that that is going to be a very promising avenue at this point. Those physicians
that have tried it are starting to go away from it because they are seeing the patients start to
have exacerbations and new MRI lesions fairly quickly after stopping the therapy.
This is some of the data. Weve got a lot of different cuts of data, but this is probably the
simplest one to visualize. So this was a cohort of a little over 100 patients. This is looking at
number of
enhancing lesions that they had pre-study. When they were on study, they had zero, as you can see.
Then they came back in after stopping treatment, somewhere after two months, anywhere up to after
six months. If you just look and drop those in different buckets of two to three months, three to
four, four to six, et cetera, you can see they have a fairly rapid rise. Essentially a return to
baseline of disease activity for patients that have been off by more than six months. So this goes
to there is going to be a real consequence to interrupting the therapy.
We also know that unfortunately we became the tip of the spear on PML, but PML has taken more of a
spotlight. It is now starting to show up in a number of other drugs. These are the drugs that have
PML on the label today. I suspect more of them will pick that up in the future. These are also some
of the other immunomodulatory immunosuppressants that are used by physicians. So this is going to
be a characteristic of patients that have immune suppression in the MS market really across drug
classes. How it varies class by class I think is impossible to say at this point in time.
It is also clear that we are going to have to do on the risk stratification more and more work on
the basic science. Right? You have got to have three things that come together for JC virus to get
into an active replication cycle. So youve got to have significant immunosuppression or immune
dysfunction. You obviously have to have the JC virus. But those two in and of themselves are not
sufficient, because that is true for at least 50% of the patients. And certainly if you look in the
HIV-AIDS area, all the patients have immunosuppression; many of them have JC virus; but still the
event is fairly rare there.
So there has got to be some other things host genetics, viral genetics, or some other unknown
factors. And thats where we have focused our attention. We have brought together a research
consortium of the companies. You will notice that those companies, if you attach them to the drugs
I showed you two slides ago, they all have an interest because they are all working with drugs that
have PML in their label as well. So we are pooling the data on the patient profiles, the background
characteristics, and how PML evolved for those patients. Hopefully, as time goes on this will yield
some interesting results for us.
So the finish on TYSABRI. We are continuing to focus on the efficacy. We have got to put we are
putting PML in context and getting people comfortable with how to look for PML, what the real risk
is. And certainly the leading indicators are turning positive now.
So I am going to quickly go through the pipeline. So this is where you have to pretend for a minute
that I am Cecil Pickett. So this will all sound smarter if you believe that I am Cecil. If not,
well, it is going to sound like it is going to sound. Okay.
This is a snapshot of the pipeline in 2007. I like to pick that point because it roughly coincides
with when Cecil came on board. I think Cecil took a lot of great raw material, recruited in some
additional folks, put some good discipline in place. And through a combination of organic
development so discoveries out of our own labs put into the clinic licensing, and acquisition
programs that we did on the business development side, and then execution on the pipeline, the
pipeline looks much broader, deeper and much more advanced two years later. So at this point, I
feel like weve got a broad, deep, and significant pipeline.
This is just a quick illustration of how quickly the Phase 3 registration programs have grown. We
had four starting in the first half of 08. We added ADENTRI, the IV program, in the second half.
We will add the peg interferon program in the first half of 09. And we should add the lixivaptan
heart failure, the broader indication, as well as the daclizumab MS program in Phase 3 by the end
of the year.
So we will have quite a number of programs in Phase 3, and this does not include the programs we
have in the CD20 space in partnership with Genentech. I am going to dance pretty quickly across a
couple of these programs and just give you a quick snapshot.
RITUXAN in early RA. We have got the Phase 3 IMAGE results, a couple obviously important outcomes
around RITUXAN in RA over the last year. So weve got joint data finally. Weve got the early RA
data, so the DMARD failures. So this is going to allow really RITUXAN to move up front and expand
the label and have a label that is competitive with the rest of the products in this space.
This also gives you really a good demonstration of dose-response and the fact that the
1,000-milligram dose is more efficacious over time. So we are pleased with this. We will see more
of this data at EULAR in June.
I will turn to BG-12. Some of you are familiar with that program, so this is dimethyl fumerate
delivered orally with an enterically coated capsule. Activates the Nrf2 signaling pathway which
interrupts the NFkB and pro-inflammatory cytokine signaling.
We have got Phase 2 MS data that shows 69% reduction in gad legions; and so we started Phase 3
programs in MS and we have Phase 2 program in RA as well.
The two Phase 3 programs. The first defined as a pretty classical placebo-controlled trial against
two doses; primary endpoint is proportion of patients relapsing over two years. That will finish
enrollment first half of this year. The second is two doses of BG-12 against glatiramer acetate
also known as Copaxone to you guys and placebo. Primary endpoint there is annualized relapse
rate at two years. This is important. Not only the head to head, but also it is going to allow you
to have a data set that can get you an approval in Europe, where you are going to have to have an
active comparator arm in one of the trials.
Then lastly, we have got a Phase 2 ongoing in rheumatoid arthritis.
The PEGgylated interferon, that is a program that we have had going on for the last couple of
years. We didnt start talking about that program until really JPMorgan early this year. Eric,
sorry about that; I had to say that. Youre not mad at me are you, Eric? Okay.
We wanted to make sure we were finished with the Phase 1; we had good understanding of the PK and
the PD of that product; and also that we had met with the FDA and the European regulators and had a
defined and agreed-to path forward for registration. And indeed we do.
So this is a PEGylated version of the beta interferon 1a that we market today as AVONEX. We think
this could improve convenience and compliance for the patient.
We have started the Phase 3 program or we are starting the Phase 3 program. We intend to
initiate that in the middle of this year. It will be a placebo-controlled trial; primary endpoint
is annualized relapse rate at one year.
Again, that is agreed to by the US and European regulators.
We are going to test two doses of biweekly and a monthly subcutaneous dose. I think the
subcutaneous dose will certainly be received fairly positively by patients.
Lumiliximab is a CD23 monoclonal antibody headed for CLL. The primary mode of action is apoptotic
cell death. So we are in a Phase 2/3 for relapsed refractory CLL.
The clinical data on that. A relatively modestly sized clinical trial, Phase 1/2, of lumiliximab
plus fludarabine cyclophosphamide and RITUXAN in relapsed patients. It doubled the complete
response rate versus historical control; and importantly there was no evidence of additional
toxicity or safety or tolerability issues there.
So we are in that Phase 2/3, similar design, FCR plus or minus lumiliximab in relapsed CLL. 390
patients in the Phase 2; 900 in the Phase 3. The primary endpoints in Phase 2 are complete
response. In Phase 3 itll be progression-free survival, and that one is moving along fairly
rapidly.
Now I am going to switch gears, go to actually two programs. I just want to set these two programs
up and how they fit together here. This is the lixivaptan and the ADENTRI program. There are a huge
population of patients in the US and Europe that suffer from heart failure. The one-year mortality
is very high from diagnosis, 25%; five-year is 50%. Its a segment that is growing 2.5% per year.
In fact, it is really the only cardiovascular segment that really is growing.
Hyponatremia and renal insufficiency are common comorbidities in heart failure. You can see
hyponatremia is about 25% of the folks, a quarter of the folks have hyponatremia; and roughly
two-thirds have renal insufficiency. So lixivaptan addresses the first. ADENTRI really addresses
the second.
ADENTRI is a small molecule adenosine A1 receptor antagonist. It disrupts receptors in three
different places in the kidney, which disrupts the tubular glomerular feedback and preserves renal
function. So you get water off, you retain the salt, and you retain renal function.
Phase 2 study tested that with furosemide plus ADENTRI and furosemide alone. We were quite pleased
with those results. I dont have them here today. We will have them at the R&D day next week.
We have a couple of large trials ongoing. The first is TRIDENT, which is the IV formulation with
900 acute decompensated heart failure patients. Primary endpoint is change in body weight; and a
whole range of secondary endpoints as you can see here. First patient in was August of last year.
And then we started the Phase 2, POSEIDON. We have a real Greek water thing here going. Randomized,
placebo-controlled, double-blind. Again, this is the oral formulation. Primary endpoint here is
safety and tolerability; secondary endpoints quality of life, exercise capacity, renal function,
and concomitant meds. That one is planned for first patient in the middle of the year.
I will just finish with sort of the teaser on the HSP90 program. So we have several HSP90 programs.
We have two oral molecules in the clinic today. They are both small molecule synthetic HSP90
inhibitors delivered via capsule. Those of you familiar with the HSP90, it is pretty exciting, also
a very competitive space. It is a chaperone for client proteins involved in tumor cell signaling.
We have data from a Phase 2 GI stromal tumor trial which looks quite positive, and we are now
expanding those trials out into other solid tumors during the course of this year. So we are pretty
excited about the HSP90 space, not only in oncology but potential applications in the
neurodegenerative area.
I will finish by just reminding folks that we have an extensive review of not only some of the
programs I just mentioned but really many, many more, as well as some of our early programs and
some of our platform technologies, next week on March 25. I hope many of you can make that review.
I think you will come away with a lot more information and quite hopefully as excited about the
pipeline as I am.
So, with that, I think we have do we have a few minutes for ? Six minutes? Okay. If I can
answer them in two minutes each, I can do three questions. Okay.
QUESTION AND ANSWER PERIOD
Eric Schmidt Cowen and Company
It is early in the year still, but (inaudible)?
Jim Mullen Biogen Idec President, CEO
I only control half of that equation, and that is the half I never comment on. Okay, that was
okay. Weve got still time for three questions. Okay?
Unidentified Audience Member
(Inaudible question microphone inaccessible)
Jim Mullen Biogen Idec President, CEO
Well, I think that has been presented in congresses. I dont know Elizabeth, it is not on
the label yet; so it is something that would really be part of the medical information if you went
back to I dont think that is not going to be part of the sales aid for the sales reps. But
when you get into the peer-to-peer and you get into the medical information or with the medical
affairs folks, they can and do talk about it.
So we are going to have a quiet breakout next door. Yes, sir?
Unidentified Audience Member
(Inaudible question microphone inaccessible)
Jim Mullen Biogen Idec President, CEO
Yes, Im going to repeat the question because we are doing the thing webcast. I should have
repeated yours too, Eric. So, the question is, from us looking at business development, what would
we like to add to the stable, if you will.
If I stepped back from weve got three or four areas where we are focused from a product point
of view, obviously. Weve got quite a bit in neurology. We have got an interesting pipeline in
oncology. We have a number of things in, call the autoimmune disease area, rheumatology, RA, et
cetera. Then weve got this what we call an acute in-hospital setting, which captures the
cardiovascular products and probably Factor IX and Factor VIII.
So I would like to see, if we are going to do things that fit in around those categories, I dont
think we need any more categories than we already have. If we had things that obviously, were a
company with big powerful products; but that also means it doesnt have as much
diversity as you might like. So when we have a hiccup on TYSABRI we have got a ton of volatility
around the stock.
So if we had a way to build out, add to any one of these franchises, and bring in products that
either have revenues today or are going to shortly have revenues in the next few years, which would
help diversify the revenue base, I think that would be quite interesting.
Philosophically, you know, we always look at all these products and we say can you create a
shareholder return here? What is the story that makes us believe that in our hands that we can turn
one dollar into two? That is the first economic test, and then we look at all the rest of the
things like accretion, dilution, and all the rest of the typical analysis. But I think we have been
pretty conservative and disciplined.
Having said that, we all know we are going into a marketplace or we are in a marketplace, we
have been there for a while where equity values are at a place where we havent seen for 10
years or so. So I think there are some attractive assets out there potentially. But we will
continue to apply a very disciplined approach to that of can we create a story that not only
fits to our strategy, but will create incremental return for the shareholders, add to our growth
rate? Yes?
Unidentified Audience Member
(Inaudible question microphone inaccessible)
Jim Mullen Biogen Idec President, CEO
Yes, would I prefer something like late? Id prefer something late-stage or in-market. I think
at this point not only do we have a lot of early-stage, but one of the things that is not really
even evident from the pipeline chart is just one of the things that Cecil has done a fabulous
job, we did two things.
We realigned our research organization around therapeutic areas. So people like and Evan Beckman
is sitting right here. He is one of the therapeutic area heads, and he has got responsibility for
that therapeutic area from the bench to the bedside. That has really accelerated moving exciting
products from discovery into research.
So we actually have probably more ideas bubbling forward than we have the infrastructure
people-wise or the financial capability to advance. So I think we are in great shape on the early
side. So I am much more interested in late or in-market products. Okay.
Eric Schmidt Cowen and Company
Last year at the conference, you downplayed the potential for (inaudible).
Jim Mullen - Biogen Idec President, CEO
Yes, what is the outlook for future pricing? Well, I never I hate to talk about the outlook
because Im usually wrong, as you just indicated, Eric. Thank you for pointing that out. I guess
that is payback for the JPMorgan comment, isnt it?
Philosophically, that whole well, look. If there is shareholder value to be gained by getting
that, we will do that. I think that has to be balanced off against what does this do to the overall
market dynamics.
We are going to have over the next few years more competitors in the marketplace. I think that will
again change the dynamics in that marketplace.
From a business planning point of view, we dont plan on these. All right? So we dont build them
into our models, we dont build them into our plans. Where we believe that we can get leverage on
pricing we do so whether its in the US or outside the US.
Thanks. Appreciate it.
BREAKOUT SESSION
PARTICIPANTS
Jim Mullen
Biogen Idec President, CEO
Evan Beckman
Biogen Idec SVP Immunology R&D
Elizabeth Woo
Biogen Idec VP Investor Relations
Paul Clancy
Biogen Idec EVP, CFO
Jim Mullen Biogen Idec President, CEO
All right. Should we get started? So hopefully you are here for the Biogen Idec Q&A. If you
are not, you can stay; but youre at the wrong place.
Ive got Paul Clancy who is our CFO. Ive got Evan Beckman, who is the SVP of the immunology and
the cardiovascular therapeutic areas, so we can try to field whatever questions you might have. As
well as Elizabeth Woo, who usually bails me out when I miss a detail here.
I will be repeating the questions because this is webcast. So I am not playing for time, although
this does help. Who wants to start? Yes, sir.
Unidentified Audience Member
I wasnt able to sit in on your (inaudible) but I understand that youve got a clinical
program underway now in collaboration with Cardiokine and lixivaptan.
Historically, research of the vaptans in heart failure has not led to promising results. I am kind
of curious as to why you feel as though this particular molecule in this disease state is going to
provide benefit(inaudible)?
Jim Mullen Biogen Idec President, CEO
Sure. Evan, do you want to take that one? Thats right up your alley.
Evan Beckman Biogen Idec SVP Immunology R&D
Good morning, everyone. My name is Evan Beckman. The question for those on the webcast was
we have a collaboration with Cardiokine on a class of molecules called vaptans. The drug that we
are in clinical trials with is lixivaptan. The question was, since there have been some other
molecules in the space, how do we feel that we are going to be successful with our molecule?
So I think first of all, it plays into a strength of ours. As we have gone into the cardiovascular
area, gone into heart failure, we have really focused on both our programs, ADENTRI and lixivaptan,
work in the kidneys. They have a strong interaction, the kidney and the heart. Its kind of
cardio-renal syndrome. Physicians continue to tell us that these are just the most toughest
patients to treat in heart failure, and this is where the unmet need is.
The vaptans are well validated in terms of the clinical pharmacology. Have a brisk output in terms
of urine volume. Can clearly get patients who have low sodiums, who have too much free water
which is part of the disease and that interaction with the heart and kidney and get that water
off.
We can raise serum sodiums in those patients who are hyponatremic; those patients who have heart
failure who have low sodiums; and those patients who have other diseases which cause low sodium,
such as liver failure and some tumors and others.
In terms of the early indications for hyponatremia, we actually think that is very straightforward.
We have plans to include additional endpoints to hopefully give us some evidence of clinical
improvement in addition to the serum sodium.
So we think that is going to be very important and we hope we can produce that information in our
trials. Other trials have not been able to take advantage of some of the insights that we have.
In addition, in terms of them going after the heart failure indication, again we have a lot of
insights into the trials that were done by some of the other folks. And we think in the combination
of really choosing the patients well, focusing on the endpoint, and also maximizing the dose of the
drug and allowing titration to really show the benefit of using lixivaptan as opposed to commonly
used diuretics.
So our vision of the future and this is several years out but really we know that furosemide
causes a lot of problems in its use in heart failure. We think this next generation of products,
lixivaptan for the vaptan and ADENTRI, are really the drugs that should be used in this space and
probably not loop diuretics. And hopefully we can show that.
Jim Mullen Biogen Idec President, CEO
Yes?
Unidentified Audience Member
(Inaudible question microphone inaccessible)
Jim Mullen Biogen Idec President, CEO
Have there been changes in the marketing resources dedicated to AVONEX?
Not substantial. Obviously, we are focused both with TYSABRI and AVONEX; but AVONEX is clearly a
very important product and still at a number-one used product.
So no, we continue to focus on that both at the marketing level and at the sales level.
This is a tame group. Any more questions?
Unidentified Audience Member
(Inaudible question microphone inaccessible)
Jim Mullen Biogen Idec President, CEO
Yes, so the question is about Phase 3 PEGylated interferon program. So we have been working on
that program for a few years. We have not really talked about it until early this year, because I
wanted to make sufficient progress that we actually knew it was a real program.
So the PEGylation technology was developed internally, so we dont believe that bears on any of the
other patents that are out there at this point.
We have taken it through Phase 1 programs and we think we understand pretty well the
pharmacokinetics and pharmacodynamics of the product. It is well behaved. It behaved as we expected
it to behave.
We took those packages to the regulators in the US and Europe to ensure that we had agreement on a
registration pathway. So we have agreement with the US and the European regulators.
So we will go into a fairly classically designed placebo-controlled registration trial. The
endpoint is annualized relapse rate at one year. Did I get that right? Yes, okay.
Now it will take we have got to acrue, and all the patients have to be on a year. But that is
what it is.
We are going to take two dose regimens in the trial. So we took three dose groups into the Phase
1s. We chose a dose out of there, and we are going to use that dose both as a biweekly and a
once-a-month.
It will be delivered subcutaneously, which is, we think, going to be an important convenience
improvement for patients as well. Okay?
Unidentified Audience Member
(Inaudible question microphone inaccessible)
Jim Mullen Biogen Idec President, CEO
Well, the question is around enrollment of placebo-controlled trials. You are absolutely
right; enrollment in placebo-controlled trials in MS is getting tougher.
We have got several of them ongoing today. The BG-12 are enrolling placebo patients. We have the
ability to do these trials in probably 30 or 40 different countries now, so we know where to go to
get placebo patients to run these kind of trials.
Its also important that the duration helps, because its a year and then theyre going to get
flipped onto active therapy. So it is not a forever for the placebo patients either.
But I think we know how to get those done. Were spending a lot of time right now doing doing the
feasibility studies and the site selection, to make sure we can get the patient flow we need to
actually accrue these trials relatively quickly.
Unidentified Audience Member
(Inaudible question microphone inaccessible)
Jim Mullen Biogen Idec President, CEO
Yes, okay, so the question well, Im going to repeat it, too. So the question is really
about our views on healthcare reform, follow-on biologics in the US, and potential tax policy
changes on corporate taxes. Did I get that right? Okay.
So you know follow-on biologics, I have been very active in that. There has got to be a pathway. It
is important that it be a well-structured and well-thought-through pathway.
I think the European pathway is a pretty good model for that from a regulatory point of view. And I
think that is where most of the bills in the US are going, whether it is Waxmans or Eshoos or any
of the other bills.
There was a building consensus probably in the middle of last year around really all the elements
to the bill, inclusive of the date of exclusivity, which was in the 12- to 14-year time frame.
Waxman has come out with an opening bid of five. I dont think it is going to get done at five. I
dont know where it gets done at, but it will be a bunch of horse trading.
Interestingly, when Waxman put together the Hatch-Waxman in 84, they picked seven years of
exclusivity for orphan drugs. So I think that is just going to get there will be a lot of horse
trading behind the scenes and we will come up with a regulatory pathway. I dont know if that gets
done this year or next year, but it will get done.
Frankly, I have always viewed it as, look, this is just something that is part of the landscape. It
has got to happen biologics as it happened in small molecules. Biologics are more complex. There is
going to have to be a little bit more clinical trial data to support it. And it will have to be
determined almost on a case-by-case basis as the Europeans have done and I think as the FDA will
do. So that is one.
Healthcare reform, you guys are reading all that we are reading. If we are going to go to it
sounds like we are going to move more to the European system, frankly, with some version of
comparative effectiveness. And then that will be met with access controls to the government
programs, and then you can layer on top of that some kind of price controls and some either overt
or less than overt or covert format here.
So I think we are just going to end up with a European-style system eventually. Maybe it wont get
all the way to the European-style, but thats our outlook.
In terms of tax reform, believe it when I see it. It will be great if they lower the corporate tax
rates. I think they are going to need to do that. The corporate tax rates in the US are clearly out
of sync with everybody else in the world. It is causing people to shift more and more jobs and
everything else offshore. So if they want to bring jobs on shore theyre going to have to change
the tax rate. I dont know if they will.
Unidentified Audience Member
Can you give your latest thoughts on (inaudible) relationship with Elan and any potential
(inaudible)?
Jim Mullen Biogen Idec President, CEO
The TYSABRI sharing relation? So the thoughts on TYSABRI sharing relation. So let me just
summarize what it is.
We have always had from an economics and development decision point of view it has always been
50-50. We are the marketing and sales company on the MS product in the US and outside the US,
everywhere. They have represented the Crohns business in the US.
We decided to sort of cleanly have lines like that because it made the operating issues much
clearer. If there is an opportunity to continue to clarify things, of course we would look to that.
But at this point, we dont really have anything that we can report on it.
Any last questions?
Unidentified Audience Member
(Inaudible question microphone inaccessible)
Jim Mullen Biogen Idec President, CEO
Yes, so the oral the question is really about the oral compounds coming in MS. FTY720 is
what people talked about; cladribine and laquinimod being the other two.
I think there is a question with the side-effect profile on FTY720 exactly. Is it approvable, and
under what conditions, and how will it be used? I suspect given the safety liabilities that are
apparent on that product, it is probably going to get pushed down the treatment paradigm some.
The other products interesting products. The efficacy is so-so. They have some of their own
safety liabilities. We have never been particularly excited about those products.
We took passes on those products during the 90s and I dont know that our view has changed a lot.
They may come to the market. I am not particularly we are not overly concerned about that.
Obviously, we have got two of our molecules in development, one in Phase 3, BG-12. The predecessor
product to that one, which is a combination product of monomethyl fumarate, dimethyl fumarate, is
the number-one product prescribed for psoriasis in Germany.
The major component of that is dimethyl fumarate. We have got a ton of safety experience with that
product, so we know that that is safe and tolerable, probably more so than these other products.
And we will see what the efficacy profile looks like in Phase 3.
Then the other one is we have the Phase 2 program in conjunction with UCB on the VLA-4 pathway. So
that is sort of the oral version of TYSABRI, if you will. You know, I think certainly the VLA-4
pathway is the bar people are going to have to jump over in terms of the efficacy profile of
TYSABRI. Yes?
Unidentified Audience Member
(Inaudible question microphone inaccessible)
Jim Mullen Biogen Idec President, CEO
Yes, the question is on the pricing environment here in the US for products.
Well, I think as the healthcare reform comes, we get comparative effectiveness, we get all these
other government programs. It looks like it marches down the lines of the Europeans, so we are
going to see versions of access controls and price controls certainly through all the government
programs.
It depends on how big a piece of the pie the government programs are. They are not a huge piece of
our business in the MS space. Theyre bigger pieces of our business obviously in the oncology
space.
We generally would say there is going to be more pricing pressure, more access control pressure in
the future the way things are going. We never really plan on trying to take price increases as part
of our base business plan. We build the business around running the business as it is.
But if we have the ability to take price increases, we will. We will try to do that, if we dont
think it is going to be harmful to the business long-term.
I think the other thing you will see as the environment gets more competitive is what is the list
price and what is the discounting strategies? And contracting strategies may start to evolve and
change over time as well. Im not predicting anything on that, but that will be the other what
typically happens in these different categories. Yes?
Unidentified Audience Member
(Inaudible question microphone inaccessible)
Jim Mullen Biogen Idec President, CEO
Yes, Cecils retirement. Lets go back to what was when Cecil was recruited in, it was with
the understanding that it was a limited period of time. We asked him to do a number of things,
right?
One was help build out the R&D organization, recruit some new folks, and he has done that. Help
develop the folks we have in the organization that were very talented; he has done that. Really
improve the thinking, the discipline around the programs and the execution; and he has done that.
So now is a good time and so we will start looking both internally and externally. We just decided
we are going to look broadly.
What are we looking for? Somebody that is a high-impact R&D leader that also can integrate the
business elements into the R&D.
In the highlight, now how long might it take? I dont know. It will take as long as it needs to. So
Cecil is going to remain on board. There is no definitive endpoint, other than we needed to
announce publicly both for external reasons and internal reasons that we were going to do that.
We are going to look and evaluate the internal candidates and the external folks. Yes?
Unidentified Audience Member
(Inaudible question microphone inaccessible)
Jim Mullen Biogen Idec President, CEO
Well, yes, the pitch for coming back to town for the R&D day is not this hotel. Its the R&D.
We havent gone through a detailed R&D pipeline discussion in a couple of years. It is an
opportunity to not only get into some of the products in the pipeline that you have heard around
before, but to talk to people like Evan and Al Sandrock and Greg Reyes, who lead those programs, as
well as some scientists underneath that, and some of the early programs.
I think it allows you guys to get not only a lot more data and insight into specific programs, but
really to walk away with a touch and feel about what is the culture, what is the enthusiasm, what
is the excitement within the R&D organization.
And I think youll be impressed. Frankly, there is a lot more stuff to talk about than there is
going to be time to talk about it. As we prepare for that, we are doing a lot of how do we make
sure we go in depth enough on the important things, but make sure people get a good feel of the
breadth of things? And we are going to have a lot of scientists there.
Elizabeth Woo Biogen Idec VP Investor Relations
But we will webcast (inaudible).
Jim Mullen Biogen Idec President, CEO
Yes, we are webcasting.
Unidentified Audience Member
(Inaudible question microphone inaccessible)
Unidentified Company Representative
We havent, but we dont intend to. That would be (inaudible) which I think has been pretty
consistent with what weve done for, gosh, 10 quarters.
Jim Mullen Biogen Idec President, CEO
Yes.
Unidentified Audience Member
(Inaudible question microphone inaccessible)
Jim Mullen Biogen Idec President, CEO
Back to the mic. Repeat the question.
Unidentified Company Representative
Chris asked if I could reconcile leap year to leap year and number of holidays, et cetera, et
cetera, but just for the first quarter.
I think the only thing I would point everyone to is what Genentech said at their Monday R&D day.
They kind of itemized the RITUXAN shipping dates, which will have a meaningful effect.
If you looked at that slide that they did, it probably lines up with the way we are thinking about
the business, which will have an impact unfavorable in the first quarter.
We dont see it on RITUXAN. We dont see it as any kind of an issue as it relates to the full year.
So that is the closest thing I can give you.
Jim Mullen Biogen Idec President, CEO
I think we are running out of time here. Do we have are we? What do we have? Got a couple
minutes. Any last questions? No. Going once okay. See, you got to put the pressure on people.
Okay.
Unidentified Audience Member
(Inaudible question microphone inaccessible)
Paul Clancy Biogen Idec EVP, CFO
Those were two milestone payments. The question was, there were two milestone payments that
Elan paid to Biogen Idec as part of the collaboration agreement. One was sometime in 2008, one was
in the first quarter of 2009.
We are taking those and amortizing those over the life of the asset essentially. So I think what
you will end up seeing is a favorable impact that is relatively minimal of that combined $125
million that gets spread over our estimation of the life of the asset.
Jim Mullen Biogen Idec President, CEO
Any more? Once, twice, okay. Thanks. Thanks for coming. Hopefully we will see a lot of you
next week at the R&D day