) recently announced that it has sold its royalty and other rights
) Benlysta to a fund managed by DRI Capital. Benlysta is approved
for the treatment of systemic lupus erythematosus.
With the sale of the rights, DRI will now receive royalties from
Glaxo. Biogen, in turn, will be entitled to receive a multiple of
certain of the royalties received by DRI for a particular
time-period (October 2011 to September 2014). Once this period
expires, DRI will be entitled to full royalty payments on Benlysta
sales barring certain cases. In the instance of cumulative
royalties to DRI exceeding an agreed amount, DRI will have to make
a one-time contingency payment to Biogen.
Biogen will be receiving $18.3 million for the royalty period
from October 1, 2011 to March 30, 2012. The company intends to
recognize this amount as a gain in the third quarter of 2012. We
expect the company to provide further updates regarding the
financial impact of this transaction at the time of reporting third
We currently have an Outperform recommendation on Biogen, which
carries a Zacks #1 Rank (short-term Strong Buy rating). Biogen's
second quarter 2012 earnings were impressive with the company
reporting earnings per share of $1.82, well above the Zacks
Consensus Estimate of $1.56 and 34.8% above the year-ago earnings
of $1.35. Higher revenues boosted earnings.
The company raised its earnings guidance for 2012. Key products,
Avonex and Tysabri, should continue contributing significantly to
Longer-term growth could be driven by BG-12. The company has a
series of important events lined up in the coming months including
a response on the approval status of BG-12 and data on its
BIOGEN IDEC INC (BIIB): Free Stock Analysis
GLAXOSMITHKLINE (GSK): Free Stock Analysis
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