Biogen Idec Reports Second Quarter 2006 Results

Second Quarter 2006 Highlights

-- Total revenues for the second quarter were $660 million vs. prior year $606 million, an increase of 9%, driven primarily by AVONEX(R) (Interferon beta-1a) worldwide sales up 12% to $429 million and RITUXAN(R) (rituximab) revenues from the unconsolidated joint business arrangement up 11% to $206 million.

-- On a reported basis, calculated in accordance with U.S. generally accepted accounting principles (GAAP), the loss per share was $0.50 for the second quarter. The GAAP earnings loss reflects a $331 million write-off of acquired in-process R&D, an accounting implication of the two successful acquisitions in the quarter (Conforma Therapeutics Corporation and Fumapharm AG), as well as other acquisition related adjustments, and the impact of share-based payment expense in accordance with FAS 123R, primarily employee stock options.

-- Biogen Idec's second quarter 2006 non-GAAP earnings per share (EPS) increased to $0.57, up 33% from the same period last year.

-- TYSABRI(R) (natalizumab) has been approved for reintroduction by the U.S. Food and Drug Administration (FDA), and for marketing by the European Commission, as a treatment for relapsing forms of multiple sclerosis (MS) to slow the progression of disability and reduce the frequency of clinical relapses. Recently, patient dosing has begun in both Europe and the U.S.

James Mullen, Biogen Idec's Chief Executive Officer, commented,"The core businesses demonstrated double-digit growth in the secondquarter, driven by strong AVONEX and RITUXAN performance. With TYSABRIrecently approved in both the US and Europe, this importanttherapeutic option is now available to the multiple sclerosiscommunity. We expect TYSABRI will enhance our neurology business andbegin to accelerate top-line growth over the coming quarters.Additionally, we completed two acquisitions of private companies thisquarter and continue to focus on business development opportunities."

Financial Performance

On a reported basis, calculated in accordance with GAAP, BiogenIdec reported a net loss of $171 million (or loss per share of $0.50)in the second quarter of 2006 (Q2 2005: net income of $35 million, orEPS of $0.10).

On a non-GAAP basis, Biogen Idec reported non-GAAP EPS of $0.57for the second quarter of 2006 (Q2 2005 non-GAAP EPS: $0.43). Non-GAAPnet income was $197 million in the second quarter of 2006 (Q2 2005non-GAAP net income: $149 million).

The differences between non-GAAP net income and EPS and GAAP netincome and EPS in the second quarter are itemized in Table 3 and areprimarily due to:

-- pre-tax charges related to the acquisitions of Conforma and Fumapharm, including a $331 million write-off of acquired in-process R&D, offset by a $34 million gain on settlement of the license agreement with Fumapharm,

-- pre-tax charges related to the Biogen and Idec merger, consisting of $76 million amortization of intangibles and $1 million inventory step-up,

-- pre-tax share-based payment expense under FAS 123R of $15 million (or $0.03 per share), primarily employee stock option expense.

Revenue Performance for the 3 Months ended June 30, 2006

-- Revenues from AVONEX increased 12% to $429 million (Q2 2005: $382 million).
-- U.S. sales increased 14% to $261 million (Q2 2005: $230
million)
-- International sales increased 11% to $169 million. (Q2
2005: $152 million)

-- Revenues from Biogen Idec's joint business arrangement with Genentech, Inc. related to RITUXAN were up 11% to $206 million (Q2 2005: $185 million). All U.S. sales of RITUXAN are recognized by Genentech and Biogen Idec records its share of the pretax co-promotion profits on a quarterly basis.
-- U.S. net sales of RITUXAN increased 17% to $526 million
in the second quarter of 2006 (Q2 2005: $450 million), as
reported by Genentech.

-- Revenues from other products were $7 million (Q2 2005: $17 million). Details are provided in Table 4.

-- Royalties were $18 million (Q2 2005: $22 million).

Financial Guidance

Biogen Idec continues to expect that its 2006 non-GAAP earningsper share will be in the range of $1.95 - $2.10.

Guidance for full year 2006 reported earnings per share(GAAP-based financial measure) is not currently known, as the Companycannot predict with any certainty the nature or the amount ofnon-operating or unusual charges for subsequent quarters. The Companydoes anticipate that certain charges related to purchase accountingwill be included in the GAAP financials, such as the write-off ofacquired in-process R&D ($331 million recorded in the current quarter)and amortization of intangibles of approximately $250 - $330 million,primarily related to the AVONEX intangibles. Separately, the impact ofstock options being expensed due to FAS 123R in 2006 continues to beestimated to be in the range of $0.08 - $0.12. Additionally, theCompany anticipates that it may have to take other charges insubsequent quarters and that such charges, if material, would causereported earnings per share to further differ from non-GAAP earningsper share.

The Company continues to anticipate that 2006 capital expenditureswill be in the range of $190 - $275 million.

Recent Highlights

-- In May 2006, Biogen Idec acquired Conforma, a privately held biopharmaceutical company focused on the design and development of novel drugs for the treatment of cancer. Conforma focused on the discovery and development of drugs that inhibit heat shock protein 90 (HSP90) molecules, which are involved in protecting and supporting the growth of cancer cells across a range of tumor types, and play a role in tumor resistance to a number of leading cancer therapies. Biogen Idec acquired two compounds in Phase I clinical trials: CNF1010, a proprietary form of the geldanamycin derivative 17-AAG; and CNF2024, a totally synthetic, orally bioavailable HSP90 inhibitor.

-- On May 30, 2006, Biogen Idec and Fumapharm announced positive results from a Phase II study designed to evaluate the efficacy and safety of BG-12, an oral fumarate, in patients with relapsing-remitting MS. The study achieved its primary endpoint, demonstrating that treatment with BG-12 led to a statistically significant reduction in the total number of gadolinium-enhancing brain lesions as measured by MRI with six months of treatment versus placebo. These data were presented at the annual meeting of the European Neurological Society in Lausanne, Switzerland. In June 2006, Biogen Idec acquired privately held Fumapharm. Fumapharm developed therapeutics derived from fumaric acid esters for patients with high unmet medical need and had FUMADERM, a commercial product available in Germany for the treatment of psoriasis, and BG-12, a clinical-stage compound that has been jointly developed with Biogen Idec.

-- On June 5, 2006, Biogen Idec and Elan Corporation, plc announced the approval of a supplemental Biologics License Application (sBLA) by the FDA for the reintroduction of TYSABRI as a monotherapy treatment for relapsing forms of MS to slow the progression of disability and reduce the frequency of clinical relapses. On June 29, 2006, Biogen Idec and Elan announced that they had received approval from the European Commission to market TYSABRI as a treatment for relapsing remitting MS to delay the progression of disability and reduce the frequency of relapses.

-- On June 22, 2006, Genentech and Biogen Idec announced positive results from an analysis of REFLEX, a Phase III clinical study of RITUXAN in patients with rheumatoid arthritis (RA) who have had an inadequate response to previous treatment with one or more tumor necrosis factor (TNF) antagonist therapies. The findings showed that treatment with RITUXAN in combination with a stable dose of methotrexate (MTX) reduced joint erosion and joint space narrowing at 56 weeks, compared to placebo and MTX. These were the first data to measure the progression of joint damage in this difficult-to-treat patient population. Results were presented for the first time at the European League Against Rheumatism (EULAR) meeting in Amsterdam, Netherlands.

-- On July 12, 2006, Biogen Idec announced that Cecil B. Pickett, Ph.D., has been named President, Research & Development (R&D). In September Dr. Pickett will join the Biogen Idec Board of Directors, and will report to James C. Mullen, Biogen Idec's President and Chief Executive Officer. Dr. Pickett joins Biogen Idec from Schering-Plough Corporation, where he held several senior R&D positions since 1993, most recently as Corporate Senior Vice President & President, Schering-Plough Research Institute. In this capacity, Dr. Pickett helped bring several large and small molecule candidates into the Schering-Plough clinical development pipeline. Prior to joining Schering-Plough, he held several senior R&D positions at Merck & Company.

Use of Non-GAAP Financial Measures

The non-GAAP financial measures presented in this press releaseare utilized by Biogen Idec management to gain an understanding of thecomparative financial performance of the Company. Management believesthat the non-GAAP financial measures are useful because they excludethose non-operational activities or transactions that are notnecessarily relevant to understanding the trends of the Company or theprospects of future performance such as charges related to in-processR&D, amortization of intangibles, inventory step-up values, andemployee stock option expense. Management uses these measures toestablish operational goals and believes that non-GAAP measures mayassist investors in analyzing the underlying trends in the Company'sbusiness over time. The presentation of this information is not meantto be considered in isolation or as a substitute for GAAP financialmeasures.

Conference Call and Webcast

The Company's earnings conference call for the second quarter willbe broadcast via the Internet at 8:30 a.m. ET on July 26, 2006, andwill be accessible through the investor relations section of BiogenIdec's homepage, http://www.biogenidec.com.

About Biogen Idec

Biogen Idec (NASDAQ: BIIB) creates new standards of care inoncology, neurology and immunology. As a global leader in thedevelopment, manufacturing, and commercialization of novel therapies,Biogen Idec transforms scientific discoveries into advances in humanhealthcare. For product labeling, press releases and additionalinformation about the company, please visit http://www.biogenidec.com.

Safe Harbor

This press release contains forward-looking statements regardingexpected future financial results, including future growth rates,non-GAAP EPS and capital expenditures, and the potential for TYSABRIin MS and RITUXAN in RA.

A number of risks and uncertainties could cause actual results todiffer materially. For example, financial results and external growthopportunities may be affected by a number of factors, including anyunexpected slowness in the demand for TYSABRI, AVONEX, RITUXAN andZEVALIN, the impact of reimbursement and pricing decisions related tothe Company's products, the impact of competitive products on theCompany's products, any material decreases in royalties which theCompany receives, the impact of litigation, increases in costs relatedto or an inability for us to enter into in-licensing deals,collaborations or acquisitions on acceptable terms, increases in costsrelated to research and development of new products as well asincreases in costs related to development of existing products in newindications, and any material issues, delays or failures related tothe manufacturing or supply of the Company's products.

The potential for TYSABRI is subject to a number of risks anduncertainties. Factors which could cause actual results to differmaterially from the Company's current expectations include the riskthat the incidence and/or risk of PML or other opportunisticinfections in patients treated with TYSABRI may be higher thanobserved in clinical trials, that TYSABRI may not be accepted by themedical community and patients, or that the Company may encounterother unexpected issues.

Our long-term growth will depend on the successful development andcommercialization of new products, such as BG-12, as well as thedevelopment and commercialization of existing products in newindications. Drug development involves a high degree of risk. Forexample, the plans for our development programs could be negativelyaffected if unexpected concerns arise from additional data oranalysis, if regulatory authorities require additional information orfurther studies, or if we were to encounter other unexpected hurdles.

For more detailed information on the risks and uncertaintiesassociated with these forward looking statements and the Company'sother activities, see "Risk Factors" in the Company's quarterly reporton Form 10-Q for the fiscal quarter ended March 31, 2006 and the otherperiodic and current reports filed by the Company with the Securitiesand Exchange Commission. The Company does not undertake any obligationto publicly update any forward-looking statements, whether as a resultof new information, future events, or otherwise.
TABLE 1
Biogen Idec Inc.
June 30, 2006
Consolidated Statements Of Income
(in thousands, except per share amounts)

Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
---------- --------- ---------- ----------
REVENUES

Product $436,081 $398,822 $842,600 $796,406

Unconsolidated joint
business 206,095 184,934 389,476 345,387

Royalties 18,286 21,734 38,847 48,483

Corporate partner (421) 144 293 3,160
---------- --------- ---------- ----------

Total revenues 660,041 605,634 1,271,216 1,193,436
---------- --------- ---------- ----------

COST AND EXPENSES

Cost of goods sold and
royalty revenues 77,993 71,093 145,488 170,701

Research and development 161,985 179,843 307,877 358,611

Selling, general and
administrative 170,289 155,754 324,680 314,227

Amortization of acquired
intangible assets 76,260 77,078 146,967 152,756

Acquired in-process R&D 330,520 - 330,520 -

Impairment and loss on sale
of long lived assets (799) 75,565 (1,098) 75,565

Gain on settlement of
license agreement (34,192) - (34,192) -
---------- --------- ---------- ----------

Total cost and expenses 782,056 559,333 1,220,242 1,071,860
---------- --------- ---------- ----------

Income (loss) from
operations (122,015) 46,301 50,974 121,576

Other income (expense), net 21,806 6,051 40,471 (2,874)
---------- --------- ---------- ----------

INCOME (LOSS) BEFORE TAXES
AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGE (100,209) 52,352 91,445 118,702

Income taxes 70,404 17,848 142,868 40,738
---------- --------- ---------- ----------

INCOME (LOSS) BEFORE
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE (170,613) 34,504 (51,423) 77,964

Cumulative effect of
accounting change, net of
income tax - - 3,779 -
---------- --------- ---------- ----------

NET INCOME (LOSS) $(170,613) $34,504 $(47,644) $77,964
========== ========= ========== ==========

BASIC EARNINGS PER SHARE
Income (loss) before
cumulative effect of
accounting change $(0.50) $0.10 $(0.15) $0.23
Cumulative effect of
accounting change, net of
income tax - - 0.01 -
---------- --------- ---------- ----------
BASIC EARNINGS (LOSS) PER
SHARE $(0.50) $0.10 $(0.14) $0.23
========== ========= ========== ==========


DILUTED EARNINGS PER SHARE
Income (loss) before
cumulative effect of
accounting change $(0.50) $0.10 $(0.15) $0.23
Cumulative effect of
accounting change, net of
income tax - - 0.01 -
---------- --------- ---------- ----------
DILUTED EARNINGS (LOSS) PER
SHARE $(0.50) $0.10 $(0.14) $0.23
========== ========= ========== ==========

SHARES USED IN CALCULATING:

BASIC EARNINGS (LOSS) PER
SHARE 342,375 332,629 341,742 333,946
========== ========= ========== ==========

DILUTED EARNINGS (LOSS) PER
SHARE 342,375 344,735 341,742 348,086
========== ========= ========== ==========

Numbers may not foot due to rounding.




TABLE 2
Biogen Idec Inc.
June 30, 2006
Condensed Consolidated Balance Sheets
(in thousands)



ASSETS June 30, Dec. 31,
2006 2005
----------- -----------

Cash, cash equivalents and securities
available-for-sale $713,774 $850,753

Accounts receivable, net 290,325 265,742

Inventory 147,024 182,815

Other current assets 304,030 318,771
----------- -----------

Total current assets 1,455,153 1,618,081
----------- -----------

Long-term securities available-for-sale 1,417,482 1,204,378

Property and equipment, net 1,227,296 1,174,396

Intangible assets, net 2,856,292 2,975,601

Goodwill 1,150,935 1,130,430

Other 233,004 264,061
----------- -----------

TOTAL ASSETS $8,340,162 $8,366,947
=========== ===========


LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities $499,982 $583,036

Long-term deferred tax liability 691,395 762,282

Non-current liabilities 140,194 115,753

Shareholders' equity 7,008,591 6,905,876
----------- -----------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $8,340,162 $8,366,947
=========== ===========


Numbers may not foot due to rounding.




TABLE 3
Biogen Idec Inc.
June 30, 2006
Condensed Consolidated Statements Of Income - Non-GAAP
(in millions, except per share amounts)

Three Months Six Months
Ended Ended
June 30, June 30,
EARNINGS (LOSS) PER SHARE 2006 2005 2006 2005
-------- ------- ------- -------

GAAP Earnings (loss) per share -
Diluted $(0.50) $0.10 $(0.14) $0.23
Adjustment to Net Income (loss)
(as detailed below) 1.06 0.33 1.26 0.50
-------- ------- ------- -------
Non-GAAP Earnings per share -
Diluted $0.57 $0.43 $1.11 $0.73
======== ======= ======= =======


An itemized reconciliation between net
income (loss) on a GAAP basis and net
income on a non-GAAP basis is as
follows:

GAAP Net Income (loss) $(170.6) $34.5 $(47.6) $78.0
Adjustments:
COGS: Fair value step up of
inventory acquired from former
Biogen, Inc. 0.9 9.0 4.9 18.3
COGS: Stock option expense 0.1 - 0.1 -
R&D: Costs associated with sale
of Oceanside Manufacturing
Facility - 1.9 - 1.9
R&D: Severance and
restructuring 0.3 - 0.3 -
R&D: Stock option expense 6.4 - 11.2 -
SG&A: Merger related and
purchase accounting costs 0.1 - 0.1 0.4
SG&A: Severance and
restructuring 0.9 - 1.6 -
SG&A: Stock option expense 8.3 - 16.6 -
Purchase accounting: Amortization
of acquired intangible assets
related to the merger with former
Biogen, Inc. 76.3 77.1 147.0 152.8
Purchase accounting: In-process
research and development related
to the acquisition of Conforma
Therapeutics Corporation and
Fumapharm AG 330.5 - 330.5 -
Purchase accounting: Gain on
settlement of license agreement
with Fumapharm AG (34.2) - (34.2) -
Impairment and loss on sale of
long lived assets (0.8) 75.6 (1.1) 75.6
Income taxes: Income tax effect
of reconciling items (20.9) (49.0) (39.3) (72.1)
Cumulative effect of accounting
change from adoption of FAS123R,
net of income tax - - (3.8) -

-------- ------- ------- -------
Non-GAAP Net Income $197.3 $149.0 $386.4 $254.8
======== ======= ======= =======




Numbers may not foot due to rounding.

Shares used in calculating adjustments to net loss and diluted non-
GAAP earnings per share are 348,730,000 and 348,222,000 for the three
and six months ended June 30, 2006, respectively.

The non-GAAP financial measures presented in this table are utilized
by Biogen Idec management to gain an understanding of the comparative
financial performance of the Company. Management believes that the
non-GAAP financial measures are useful because they exclude those
non-operational activities or transactions that are not necessarily
relevant to understanding the trends of the Company or the prospects
of future performance. Management uses these measures to establish
operational goals and believes that non-GAAP measures may assist
investors in analyzing the underlying trends in the Company's business
over time. The presentation of this information is not meant to be
considered in isolation or as a substitute for GAAP financial
measures.




TABLE 4
Biogen Idec Inc.
June 30, 2006
Product Revenues
(in thousands)

Three Months Ended
June 30,
PRODUCT REVENUES 2006 2005
--------- ---------


Avonex(R) $429,377 $381,789

Amevive(R) $2,460 $12,456

Tysabri(R) $(196) $(897)

Zevalin(R) $4,440 $5,474


--------- ---------
Total Product Revenues $436,081 $398,822
========= =========


Six Months Ended
June 30,
PRODUCT REVENUES 2006 2005
--------- ---------


Avonex(R) $822,805 $755,374

Amevive(R) $10,737 $24,473

Tysabri(R) $(393) $5,049

Zevalin(R) $9,450 $11,510

--------- ---------
Total Product Revenues $842,600 $796,406
========= =========

Numbers may not foot due to rounding.